2016-07-15
Amended provisions of the Law on Payments obligate banks and credit unions to offer a basic payment account with basic payment services already in February next year. The price of the basic services basket will be limited. The price threshold and the composition of the basket will be set by the Bank of Lithuania.
‘The basic payment account should change the payments market substantially. Residents will have more possibilities to choose basic payment services and use them at a lower price and therefore services will become more available and used more often,’ says Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania.
He notes that, once the amended Law on Payments comes into force, it will be much easier for the user to switch their account to another bank or other institution providing payment services that offers more favourable terms, which means that competition among service providers will increase.
According to him, the Bank of Lithuania has contributed to the preparation of the amendments to the Law on Payments and consistently and purposefully sought their adoption in the Seimas. The Law on Payments, which was approved on 30 June 2016, was signed by President Dalia Grybauskaitė. The basic payment account with the basket of payment services will come into effect as of 1 February 2017. The market has been given time to prepare for implementing this.
The Bank of Lithuania is already close to completing the methodology for setting the composition and price of the basket of basic services, which will be submitted for consultation with market participants in the near future. The Law sets a discount of at least 50 per cent on the price of the basic payment account for users who have been assigned social monetary assistance.
The basket of payment services will comprise handling of the account, issue of a payment card and its payment transactions, number of payment transactions, set by the Bank of Lithuania, in Lithuania and to other countries of the European Union and the European Economic Area, administration of funds received, setting of the amount of cash withdrawals from the account and cash deposits. The Bank of Lithuania will renew the composition of the basket when significant changes occur in the residents’ payment behaviour or in the payments market, while the price of the basket will be assessed on an annual basis and will be changed where appropriate.
The Law on Payments also provides that residents, whose payment account is linked to a mortgage loan agreement or another product, will have the right to close it unrestrictedly or switch it to another service provider should the payment services fees or the terms of other services change.
The updated Law on Payments also increases competition among payment service providers for business clients. The amended Law on Payments addresses the issue of the fee for the administration of received funds, i.e. it will not be able for the fee for the administration of received funds to vary subject to the payer’s bank. This means that companies receiving payment transfers in euro from clients or partners, in pursuit of efficiency, will no longer have to hold accounts in a number of banks or credit unions: they will be able to choose one service provider offering the most favourable terms for executing and receiving payments.