The Directive is intended to harmonise the regulatory regime for payment services across the EU.

Ms Ussher suggested that opening up the EU payments market to greater competition as a result of the Payment Services Directive would improve consumer choice, and make cross-border payments cheaper, easier and more efficient while also providing effective consumer protection.

The Directive introduces a new EU-wide licensing regime to allow non-bank payment service providers (such as money transfer operators) to operate across borders, and new, pan-European conduct of business rules for all payment service provision providers.

Kitty Ussher announced that:

"The main aim of the Payment Services Directive is to support the Single Market in financial services. In implementing this Directive in the UK we will be seeking to balance consumer protection with a proporortionate, principles-based regulatory framework. In the consultation published today, we are looking to achieve an approach which will support further competition, choice, efficiency and innovation in the payments market, including opening up markets for UK firms."

She continued:

"In the context of the financial difficulties experienced by money transfer operator, First Solution, earlier this year, I am encouraging those affected or with an interest to participate actively in this consultation. Significantly, the money transfer sector, along with other payment service providers, will become subject to regulation under the Directive."

The Directive allows non-bank providers to passport their services around the EU on the basis of a single licence obtained in one Member State, and introduces a prudential authorisation regime for businesses operating cross-border, tiered according to the size of the operator.

It also introduces information and liability requirements to provide greater legal certainty for payment services users and providers in the event of a payment transaction going wrong, or of a payment card being lost or stolen, as well as agreed timescales for executing a transaction.

The Payment Services Directive must be implemented in all EU Member States by November 2009.