consensus has been reached by the European Parliament in favour of the proposed Payment Services Directive (PSD), and the proposed legislation is due to be adopted shortly by the EU Council, following two years of intensive negotiations. The proposed directive is an ambitious effort to create a single EU-wide market for electronic (cashless) payments, in particular credit transfers, direct debit and card payments. With a common set of rules applicable to all payment services in the Union, it is

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... intended to make cross-border payments between member states as easy and efficient as national transactions. The proposed Directive seeks to simultaneously enhance product quality and reduce costs by opening the payments market to new entrants, including non-bank institutions. Further intensification of competition will benefit consumers and banks as well as various other stakeholders. It is also seen as the foundation of the Single European Payments Area which is to be launched by 1 January 2008. Pending the formal adoption by the Council, member states are to implement the Directive no later than 1 November 2009. The Financial Services Action Plan (FSAP)-encompassing more than 40 measures aimed at achieving greater integration of financial services across the EU-has not yet had a major impact on payment systems. This is not surprising, given that the integration of some of these services, such as retail banking or mortgages, has also not lived up to the expectations invested in them. Seven years after the Lisbon Council adopted the FSAP to harmonise existing regulations, national rules are still heavily fragmented across the EU member states, especially in the case of payment services. Currently, there are geographical boundaries of existing payment services due to high transactions costs, which seriously hamper or even prevent cross-border trade. In order to secure the EU economy's growth potential and competitiveness, there is an urgent need to focus attention on financial services. Taking into consideration that payment transactions amounting to €52 trillion in total value are currently being carried out in the EU each year, the Directive tackles a market with great savings potential for the EU. These savings are estimated to be at least as high as €50 billion per year for the EU economy. With the Payment Services Directive, the European Commission aims to address issues of market inefficiencies, lack of competition and perceived stagnating product quality.