PSD2 – narrowing the digital device / telco exclusion

(Note: the below is a high level review of certain potential issues and is not to be relied upon in any definitive manner nor as legal and/or regulatory advice).

PSD2 | telco exclusion

What is the proposal?

The Commission has proposed that the ‘digital device’ / telco exclusion under the PSD be further narrowed, for example, by placing strict monetary limits on the payment transaction values associated with it.

Why is it being introduced?

It has been noted by the Commission that the application of the existing ‘digital device’ / telco exclusion has been applied differently in various Member States and in particular, not permitted the development of the market it was intended to serve. The Commission has sought it necessary to focus specifically on micro-payments for digital content, such as ringtones, wallpapers, music, games, videos, or applications. The exemption should also only apply to payment services when provided as ancillary services to electronic communications services (i.e. the core business of the operator concerned).

Why is this important?

  • Widens the scope of businesses that will need to be regulated and authorised under the PSD.
  • The current wording appears to make the exclusion available mainly to ‘telco’ / ‘mobile network operators’ as opposed to other network operators and does not appear to be technology neutral.
  • The financial caps will need to factored into the business and product requirements of businesses wishing to take advantage of the exclusion – with inflation these could be shortly out dated and revenue limiting to such businesses.

Comments

  • In addition to the above, the Council’s proposal appears to add further exemptions and other requirements related specifically to the purchase of tickets and charitable activities. If implemented, this could add further complexity in achieving compliance.

Key draft provisions

Commission Proposal (24 July 2013)  EU Parliament (3 April 2014) Council composite text (1 December 2014) ‘Final Compromise Text’ (2 June 2015)
Article 3 – Negative Scope.This Directive shall not apply to any of the following:…(l) payment transactions carried out by a provider of electronic communication networks or services where the transaction is provided for a subscriber to the network or service and for purchase of digital content as ancillary services to electronic communications services, regardless of the device used for the purchase or consumption of the content, provided that the value of any single payment transaction does not exceed EUR 50 and the cumulative value of payment transactions does not exceed EUR 200 in any billing month; This Directive shall not apply to any of thefollowing:…(l) payment transactions carried out in an intermediary capacity by a provider of electronic communication networks or services and payment transactions that are ancillary to the core business of the provider where the transaction is provided for a subscriber to the network or service and for purchase of digital content or services, regardless of the device used for the purchase or consumption of the digital content or service, provided that the valueof any single payment transaction does not exceed EUR 20 and the cumulative value of payment transactions does not exceedEUR 100 in any calendar month; This Directive shall not apply to any of the following:…(l) payment transactions which are carried out by a provider of electronic communication networks or services as ancillary services to electronic
communication services for a subscriber to the network or service and for purchase
of digital content and voice-based services, regardless of the device used for the
purchase or consumption of the digital content, provided that the value of any single
payment transaction does not exceed EUR 50 and either:(a) the cumulative value of payment transactions for one single subscriber does not
exceed EUR 200 in any billing month, or(b) where a subscriber pre-funds his/her account with the provider of the electronic communication network or service, the cumulative value of payment transactions does not exceed EUR 200 in any calendar month;
(la) payment transactions by a provider of electronic communication networks or
services for a subscriber to the network or service which are performed from or via
an electronic device and charged to the related bill within the framework of a
charitable activity, provided that any single payment transaction does not exceed the
value of EUR 50 and the cumulative value of payment transactions does not exceed
EUR 200 on a monthly basis for each subscriber;(lb) payment transactions by a provider of electronic communication networks or
services for a subscriber to the network or service which are performed from or via
an electronic device and charged to the related bill for the purchase of tickets, provided that any single payment transaction does not exceed the value of EUR 50 and the cumulative value of payment transactions does not exceed EUR 200 on a monthly basis for each subscriber;
Article 3 Negative scope This Directive shall not apply to any of the following:…

 

(l) payment transactions by a provider of electronic communication networks or services provided in addition to electronic communication services for a subscriber to the network or service:

 

(a) for purchase of digital content and voice-based services, regardless of the device used for the purchase or consumption of the digital content and charged to the related bill; or

 

(b) performed from or via an electronic device and charged to the related bill within the framework of a charitable activity or for the purchase of tickets;

 

provided that the value of any single payment transaction referred to in points (a) and (b) above does not exceed EUR 50 and either:

 

(a) the cumulative value of payment transactions for one single subscriber does not exceed EUR 300 on a monthly basis for each subscriber; or

 

(b) where a subscriber pre-funds his/her account with the provider of the electronic communication network or service, the cumulative value of payment transactions does not exceed EUR 300 in any calendar month.

 

Article 30 Prohibition for persons other than payment service providers to provide payment services and duty of notification

3. Member States shall require that service providers carrying out an activity referred to in Article 3(l) send a notification to competent authorities. and that these service providers provide competent authorities an annual audit opinion, testifying that the activity complies with the limits set out in Article 3 (l).

 

Leave a Reply

Your email address will not be published. Required fields are marked *