Intended proposal of a new Act on Payment Services (PSD2)

Intended proposal of a new Act on Payment Services (PSD2)

On 16 July 2020 the Minister of Finance and Economic Affairs’ published its intentions to propose a bill for a new Act on Payment Services. The aim is to implement EU Directive no. 2015/2366 (PSD2) and repeal Act no. 120/2011 on Payment Services which transposed EU Directive no. 2004/64/EB (PSD1). The Ministry aims to submit the proposal before Parliament in January 2021, and that the Act will enter into force on 1 July 2021.

The overall revision of the Act is intended to harmonize rules that apply in Iceland with those that apply in the European Economic Area. The main purpose of the intended proposal is to increase competition in the field of payment services, increase supervision of new parties in the payment services market and to increase information security and consumer protection.

The proposal suggests that main changes following the new Act are that the scope of the Act will expand and new parties, so-called payment processors and account information service providers, now fall within the scope of the Act. Supervision of these parties will be increased as at the same time they will be able to access the consumers payment accounts, with their consent, from banks through an online interface, that banks are required to offer.

Furthermore, it is expected that the delegated EU regulation 2018/389 on regulatory technical standards on strong customers authentication and common and secure open standards of communications will enter into force at the same time as the revised Act on Payment Services, i.e. 1 July 2021, but will not be fully implemented until 10 January 2022. This means that payment services (i.e. banks) must be prepared with a testing facility when the Act enter into force. The six-month test period on banks’ online interfaces with third parties shall be fully completed on 10 January 2022.

It is presumed that following the entry into force of the new Act on Payment Services, the Central Bank of Iceland will issue rules in order to transpose implemented and delegated acts of the Payment Services Directive.

Should you require assistance or information about to the above topic, please contact Benedikt Egill Arnason or Olafur Arinbjorn Sigurdsson, partners at LOGOS, or Freyr Snaebjornsson, senior associate.

Benedikt Egill Árnason

Benedikt Egill Árnason

Ólafur Arinbjörn Sigurðsson

Ólafur Arinbjörn Sigurðsson

Freyr Snæbjörnsson

Freyr Snæbjörnsson