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)
Date: 2008-11-26
Institutions: European Central Bank
Subjects: Bulgaria, credit institution, intra-EU payment, payment system

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  (ECB)  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  Central  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  internal  market  amending  Directives  97/7/EC, 

2002/65/EC,  2005/60/EC  and  2006/48/EC  and  repealing  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 institutions (hereinafter the ‘E-money Directive’)4. 

The  draft  law  also  contains  provisions  relating  to:  (a)  the  licensing  and  supervision  of  payment 

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4 

OJ L 189, 3.7.1998, p. 42.  
OJ L 319, 5.12.2007, p. 1. 
OJ L 166, 11.6.1998, p. 45. The Settlement Finality Directive has 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. 
OJ  L  275,  27.10.2000,  p.  39.  The  E-money  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. 

 
 
 
 
                                                 
system operators by the BNB; (b) the operation and 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  the  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 provisions of the draft law that relate to licensing 

and supervising payment institutions and payment system operators by the BNB, the operation and 

oversight of payment systems in Bulgaria and the 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 Services 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 entrust the BNB new tasks, in particular, the licensing 

and  supervision  of  payment  institutions,  payment  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 financial 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  the  BNB’s  supervisory powers  will  cover  ‘branches 

and agents of payment service providers having their head office in a Member State and operating 

on the territory of the Republic of Bulgaria by exercising 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 branches 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  amended  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  institutions,  amending  Directives  2005/60/EC  and  2006/48/EC  and 
repealing Directive 2000/46/EC (Text with EEA relevance) (COM(2008)627 final). 

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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 transfer 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  Directive6.  However,  for  reasons  of  legal  certainty,  the  ECB  strongly 

recommends that the draft law should be aligned with 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 draft law that participation in TARGET2 will be 
effectuated in accordance with the rules 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  merchants  to  charge  for  card  transactions.  The  ECB 

acknowledges that pursuant to Article 52(3) of the 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 instruments. 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, cardholders tend to use the card which gives them 

the most benefits (miles, rebates, points etc.). Such 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 
7 
8 

See Article 3 of the Settlement Finality Directive. 
Article 111(1) of the draft law. 
Article 111(2) of the draft law. 

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3.3  Alignment of legislation 

The draft law provides for amendments to Articles 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  institutions,  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 

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