Payment institutions are entities that are authorised, either by holding a licence issued by the Austrian Financial Market Authority or an authorisation from a supervisory authority in another EU Member State, to provide and conduct payment services commercially throughout the entire European Economic Area.
In this section you can find out more about the European background as well as detailed information about the Austrian Payment Services Act (ZaDiG – Zahlungsdienstegesetz).
The tasks performed by payment institutions address a broad range of aspects relating to payment services. Each type of activity requires a separate licence, which is granted by the respective supervisory authority. Payment services requiring a licence are set out in the Payment Services Act (ZaDiG), and under Austrian law may be any of the following:
- Deposit and withdrawal transactions (no. 1)
- Payment transactions (no. 2)
- Direct debit transactions
- Payment card transactions
- Credit transfer transactions
- Payment transactions involving the granting of credit (no. 3)
- Payment instrument transactions (no. 4)
- Money remittance transactions (no. 5) and
- Digitalised payment transactions (no. 6)
This is stipulated in Article 1 para. 2 ZaDiG.
In addition to payment institutions, credit institutions, electronic money institutions as well as the Oesterreichische Nationalbank, the Government of the Republic of Austria and the provinces are also permits to provide payment services within their administrative jurisdiction. In the case of credit institutions, which services they are allow to provide depends upon which banking transactions they are authorised to conduct. Unlike credit Institutions, payment institutions are not permitted to conduct other services over and above those listed above. Other business, which requires a banking licence, in particular deposit-taking business, is not permitted to be conducted by payment institutions.
The Federal Act on the Provision of Payment Services (ZaDiG – Zahlungsdienstegesetz) entered into force on 01.11.2009. The entry into force of ZaDiG heralded two significant innovations: the detailed legal framework for the provision of payment services as well as the introduction of the aforementioned payment services (businesses/licence categories).
Before then, the provision of payment services, in particular transfers, credit card payment and payment using mobile phones was not fully regulated. Following the entry into force of ZaDiG, precise legal provisions now exist, primarily to favour the consumer.
Increased consumer protection
A significant amendment, is for example the obligation for payment institutions to conclude transfers denominated in euro that have been initiated electronically to be processed by the next business day. Amounts that are transferred are to be credited to the recipient’s account without delay. Comprehensive information obligations form a significant additional change. Customers must be information about all fees that are incurred. Similarly, in the case of an error occurring in relation to a transfer or a payment transaction, clear rules on liability have been established. The legal provisions for these issues are covered in Articles 26 to 48 ZaDiG. These rules in principle apply to all providers of payment services (primarily credit institutions, payment institutions and electronic money institutions).
ZaDiG implements the European Directive 2007/64/EC, the Payment Services Directive (PSD). Since 13.01.2016 a new Directive, “PSD2”, has been in force. The Member States have two years to transpose this Directive into national law. The most important innovations of PSD2 are:
- New payment services / payment initiation services and account information services
- Increasing IT security requirements for the systems of payment service providers
- The new role of European banking supervision
- Strong customer authentication
- Technical solutions for secure online payments
The Single European Payment Area – SEPA has been in force since 2012. As a result transfers within Europe have become quicker and cheaper. Since 01.08.2014 credit institutions are only allow to process transactions using IBAN and BIC.