EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 26 November 2008 
at the request of Българска  народна  банка  (Bulgarian National Bank) 
on a draft law on payment services and payment systems  
(CON/2008/78) 
 
Introduction and legal basis  
On 22 October 2008 the European Central Bank (E CB) received a request from the Governor of 
Българска  народна  банка  (Bulgarian National Bank) (BNB) for an opinion on a draft law on payment 
services and payment systems (hereinafter the ‘draft law’). 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the third and fifth indents of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Ce ntral Bank by national authorities regarding draft 
legislative provisions1, as the draft law relates to the BNB and to payment and settlement systems. In 
accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central 
Bank, the Governing Council has adopted this opinion. 
 1.  Purpose of the draft law 1.1 The main purpose of the draft law is to transpose the following directives into Bulgarian 
legislation: (a) Directive 2007/64/EC of the European Parliament and of the Council of 
13 November 2007 on payment services in the inte rnal market amending Directives 97/7/EC, 
2002/65/EC, 2005/60/EC and 2006/48/EC and repea ling Directive 97/5/EC (hereinafter the 
‘Payment Services Directive’)
2; (b) Directive 98/26/EC of the European Parliament and of the 
Council of 19 May 1998 on settlement finality in payment and securities settlement systems 
(hereinafter the ‘Settlement Finality Directive’)3; and (c) Directive 2000/46/EC of the European 
Parliament and of the Council of 18 September 2000 on the taking up, pursuit of and prudential 
supervision of the business of electronic money ins titutions (hereinafter the ‘E-money Directive’)4. 
The draft law also contains provisions relating to: (a) the licensing and supervision of payment 
                                                 
1 OJ L 189, 3.7.1998, p. 42.  
2 OJ L 319, 5.12.2007, p. 1. 
3 OJ L 166, 11.6.1998, p. 45. The Settlement Finality Directive ha s already been transposed into Bulgarian legislation by 
several legal acts. The current transposition largely covers  payment systems, whereas final settlement in securities 
settlement systems is provided for in the Law on the public offering of securities published in Darjaven Vestnik  No 114 
on 30 December 1999, as last amended on 5.8.2008. 
4 OJ L 275, 27.10.2000, p. 39. The E-mone y Directive is already partly transposed by the Law on credit institutions 
published in Darjaven Vestnik  No 59 on 21 July 2006, as last amended on 5.8.2008. 
2 system operators by the BNB; (b) the operation a nd oversight of payment systems in Bulgaria; and 
(c) the functioning of the national real time gross settlement system (RINGS). In the light of the 
above, the scope of the draft law goes beyond th e mere implementation of the abovementioned 
Community directives. 
1.2 On the basis of Article 1(2) of Council Decision 98/415/EC and in accordance with the BNB’s 
consultation request, this opinion only covers the pr ovisions of the draft law that relate to licensing 
and supervising payment instituti ons and payment system operators  by the BNB, the operation and 
oversight of payment systems in Bulgaria and th e functioning of RINGS. Most provisions of the 
draft law relate to establishing a legal regime for the transposition of the Payment Services Directive. While acknowledging the importance of the Payment Services Directive for the realisation of the Single European Payments Area , the ECB provides no assessment in this opinion 
of the overall implementation of the Payment Serv ices Directive, the Settlement Finality Directive 
and the E-money Directive in Bulgaria.  
 2. General observations  
2.1 The ECB understands that the draft law will entrus t the BNB new tasks, in particular, the licensing 
and supervision of payment institutions, paymen t system operators and oversight of payment 
systems. The ECB welcomes this widening of the BNB’s powers and recommends that the BNB should be provided with sufficient financia l and personnel resources to implement them. 
2.2 Furthermore, the ECB notes that a proposal of the Commission relating to the review of the E-
money directive (hereinafter the ‘proposal’)
5 is currently under discussion. However, given that 
such legislative initiative is only at an early stage, the ECB recommends that the Bulgarian 
authorities should abide by the provisions of the E- money Directive currently in force and consult 
the ECB on any further draft legislative provisions  having regard to ongoing work at Community 
level concerning the finalisation of the proposal. 
 3. Specific observations 3.1 Supervision of payment institutions 
Article 122(1) of the draft law provides that th e BNB’s supervisory powers will cover ‘branches 
and agents of payment service providers having th eir head office in a Member State and operating 
on the territory of the Republic of Bulgaria by ex ercising the right of establishment’. Pursuant to 
Article 82(2) of the Payment Services Directive, the competent authorities of the host Member States only have the power to supervise foreign br anches and agents as regards the application of 
Titles III and IV of the Payment Services Directive. For reasons of legal certainty, therefore, Article 122 (1) of the draft law could be am ended to limit the BNB’s proposed powers over 
                                                 
5 See the Proposal for a Directive of the European Parliament and of the Council of on the taking up, pursuit and prudential 
supervision of the business of electronic money ins titutions, amending Directives 2005/60/EC and 2006/48/EC and 
repealing Directive 2000/46/EC (Text with  EEA relevance) (COM(2008)627 final).  
3 branches and agents of payment service providers  established in other Member States to the 
supervision of their compliance with the national law transposing Titles III and IV of the Payment 
Services Directive.  
3.2 Payment systems 
Irrevocability of transfer orders  
3.2.1  Article 83 of the draft law fixes the moment of irrevocability of a transfer order at ‘the point in time 
set in the rules of the system for accepting a tran sfer order’. The ECB presumes that the moment of 
acceptance of an order by a payment system means the same as the ‘entry of a transfer order’ under the Settlement Finality Directive
6. However, for reasons of legal certainty, the ECB strongly 
recommends that the draft law should be aligned w ith regard to this point by replacing the words 
‘for accepting a transfer order’ and ‘accepted by the system’ with the words ‘for entering a transfer 
order’ and ‘entered in the system’, respectively. 
RINGS 
3.2.2 The ECB notes that on adoption of the euro in  Bulgaria, RINGS will have to be assessed against 
the rules of the Trans-European  Automated Real-time Gross settlement Express Transfer system 
(TARGET2)7 and that the BNB may also be an operator of a TARGET2 component system. The 
ECB therefore welcomes the confirmation in the dr aft law that participation in TARGET2 will be 
effectuated in accordance with the rule s of the system adopted by the ECB8. The ECB’s comments 
in this opinion are, however, without prejudice to  a future detailed assessment of RINGS against 
the rules of TARGET2. 
Card fees 
3.2.3 Article 49(4) of the draft law forbids me rchants to charge for card transactions. The ECB 
acknowledges that pursuant to Article 52(3) of th e Payment Services Directive, Member States are 
allowed to forbid or limit the right to charge, if  it is considered necessary to encourage competition 
and promote the use of efficient payment instrume nts. However the ECB notes that charging is a 
way to balance the high costs (interchange fees ) of card transactions and should therefore be 
allowed. If merchants are not allowed to charge, ca rdholders tend to use the card which gives them 
the most benefits (miles, rebates, points etc.). Su ch cards usually have the highest interchange fees 
to enable cardholder benefits to be financed, which means the highest costs for merchants. 
Ultimately, such costs are passed on to all customers via higher prices on merchants’ goods or services. 
                                                 
6 See Article 3 of the Settlement Finality Directive. 
7 Article 111(1) of the draft law. 
8 Article 111(2) of the draft law. 
4 3.3 Alignment of legislation 
The draft law provides for amendments to Article s 2 and 3 of the Law on credit institutions. On 
22 October 2008 the ECB received another request from the Governor of the BNB for an opinion 
on a draft law amending the Law on credit instituti ons, which also provides for amendments to 
Articles 2 and 3 of the Law on credit institutions. As both draft laws provide for entry into force at 
different points in time, the ECB recommends that they should be properly aligned to eliminate any 
inconsistencies between them.  
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 26 November 2008. 
 
[signed] 
 
The Vice-President of the ECB 
Lucas D. PAPADEMOS