Why do banks have generally higher capital charges for payment services?
Banks hold deposits which they use for a variety of risk-taking activities, including providing credit, and can pose a systemic risk to the wider financial system. On the other hand, payments institutions cannot take deposits, cannot use monies in a payment account to finance its payment activities (including possible credit granting). Payment institutions are therefore subject to an extremely low level of risk which does not pose a systemic risk to the financial system (but even so payment institutions are still subject to oversight arrangements by the ECB and national central banks). These are not just theoretical considerations. Payment institutions are already making payments in some Member States and in other parts of the world with no or minimal capital requirements and have done so successfully with very low levels of risk. However, these payment institutions will now be required to respect the capital requirements laid down in the Directive.
