(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 widening scope by regulating
Third Party Payment Service Providers
What is the proposal?
The Commission has proposed that a new set of business models be expressly regulated under the PSD, what it collectively refers to as “third party payment service providers”. These include services based on access to payment accounts provided by a payment service provider who is not the account servicing payment service provider, in the form of:
(a) payment initiation services;
(b) account information services.
Examples of these services, as provided by the Commission include Sofort in Germany, Ideal in The Netherlands and Trustly in Scandanavia. Perhaps it may also include ApplePay when implemented in the EU.
Why is it being introduced?
To reflect developments in payment innovation and to mitigate perceived security, data protection and liability concerns.
Why is this important?
- Widens the scope of businesses that will need to be regulated and authorised under the PSD.
- It narrows the exclusion used by many payment related service providers that do not ‘touch’ the underlying payment funds. Regardless of whether or not a Third Party Payment Service Provider “touches” the funds or not, they will (subject to not falling within another exclusion) fall within scope.
Comments
- The current drafting of the services that make up Third Party Payment Service Providers still appears very broad and unclear and may inadvertently capture many very low risk business models related to payment processing – particularly those which do not come into possession of an end user’s funds. However, the definitions and scope of these provisions is still up for debate and yet to be settled.
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 |
| Regulated Payment Services.Annex 1 para 7. Services based on access to payment accounts provided by a payment service provider who is not the account servicing payment service provider, in the form of:(a) payment initiation services;(b) account information services. | No change to Commission text. | Annex 1 …7. Payment initiation services.8. Account information services. | ANNEX I PAYMENT SERVICES (DEFINITION 3 IN ARTICLE 4)7. Payment initiation services.8. Account information services.
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| Definition of ‘Payment Initiation Services” Article 4(32)‘payment initiation service’ means a payment service enabling access to a payment account provided by a third party payment service provider, where the payer can be actively involved in the payment initiation or the third party payment service provider’s software, or where payment instruments can be used by the payer or the payee to transmit the payer’s credentials to the account servicing payment service provider; | 4(32) ‘payment initiation service’ means a payment service enabling access to a payment account where a payment transaction is initiated by a third party payment service provider at the request of the payer, from a payment account held by the payer with an account servicing payment service provider; | 4(32) ‘payment initiation service’ means a service to initiate a payment order at the request of the payment service user with respect to a payment account held at another payment service provider; |
4(32) ‘payment initiation service’ means a service to initiate a payment order at the request of the payment service user with respect to a payment account held at another payment service provider;‘payment initiation service provider’ means a payment service provider pursuing business activities referred to in point 7 of Annex I; |
| Definition of ‘Account Information Service’ Article 4(33)‘account information service’ means a payment service where consolidated and user-friendly information is provided to a payment service user on one or several payment accounts held by the payment service user with one or several account servicing payment service providers; |
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4(33) ‘account information service’ means an online service to provide consolidated information on one or more payment accounts held by the payment service user with one or more other payment service providers;4(11a). ‘account information service provider’ means a payment service provider pursuing business activities referred to in point 8 of Annex I; |
4(33) ‘account information service’ means an online service to provide consolidated information on one or more payment accounts held by the payment service user with either another payment service provider or with more than one payment service provider;4(11a). ‘account information service provider’ means a payment service provider pursuing business activities referred to in point 8 of Annex I;‘
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| Definition of ‘Account Servicing Payment Service Provider’ Article 4(10)‘account servicing payment service provider’ a payment service provider providing and maintaining payment accounts for a payer; | No change to Commission text. | ‘account servicing payment service provider’ means a payment service provider providing and maintaining the payment account from which the payer wants the specific payment transaction to be made; |
4(10). account servicing payment service provider’ means a payment service provider providing and maintaining payment accounts for a payer; |
| Negative scope Article 3(j)This Directive shall not apply to any of the following: …(j) services provided by technical service providers, which support the provision of payment services, without them entering at any time into possession of the funds to be transferred, including processing and storage of data, trust and privacy protection services, data and entity authentication, information technology (IT) and communication network provision, provision and maintenance of terminals and devices used for payment services, with the exclusion of payment initiation services and account information services; | 3(j) services provided by technical service providers, which support the provision of payment services, without them entering at any time into possession of the funds to be transferred, including processing and storage of data, trust and privacy protection services, data and entity authentication, information technology (IT) and communication network and secure channels provision, provision and maintenance of terminals and devices used for payment services, with the exclusion of payment initiation services and account information services; | (j) services provided by technical service providers to payment service providers, which support the provision of payment services, without them entering at any time into possession of the funds to be transferred, including processing and storage of data, trust and privacy protection services, data and entity authentication, information technology (IT) and communication network provision, provision and maintenance of terminals and devices used for payment services; |
Negative scope Article 3 (j) services provided by technical service providers, which support the provision of payment services, without them entering at any time into possession of the funds to be transferred, including processing and storage of data, trust and privacy protection services, data and entity authentication, information technology (IT) and communication network provision, provision and maintenance of terminals and devices used for payment services, with the exclusion of payment initiation services and account information services; |