PSD3/PSR: Harmonisation and enforcement of the legal framework

Introduction

As reported here at the start of our newsletter series on PSD3, the European Commission presented the long-awaited Financial data access and payments package at the end of June 2023, consisting of, among other things, drafts for a new Payment Service Directive (PSD3) and a new Payment Service Regulation (PSR).

In addition to improving consumer rights and increasing the competitiveness of open banking services, another objective of the regulatory package is to further harmonise and enforce the legal framework on payment services.

Since the current Payment Services Directive (PSD2) was introduced in 2015, the payment market in Europe has changed significantly. However, some of the provisions of PSD2 proved to be too unclear and formulated too generally for the purposes of the market practice. In this blog of our newsletter series you can read which changes the European Commission proposes to remedy these deficits in the new PSR and PSD3.

Authorisation and transitional provision for existing payment institutions

As we already reported here at the start of our newsletter series, it is planned that the majority of the regulations contained in PSD2 will be included in the new PSR regulation in order to ensure consistency of the legislation in the member states and to minimise deviations in the national implementation. Only the provisions on authorisation and supervision of payment institutions will remain in PSD3.

The authorisation procedure will remain essentially unchanged and only selective adjustments will be made. Forum shopping, which is quite popular, is to be prevented by requiring payment institutions to maintain their head office in their country of first authorisation and also to provide part (but not the majority) of their payment service business in the country of first authorisation ( Article 13 no. 3 PSD3 draft).

Authorisations already granted to payment institutions will remain valid for a period of 18 months from the entry into force of PSD3. However, no later than 24 months after the entry into force of PSD3, these payment institutions must provide the competent national authorities with all necessary information to determine whether the requirements of PSD3 are met and, if not, what measures need to be taken to fulfill them (Article 45 PSD3 draft).

Adjustments to payment services and exemptions from the scope of application

In order to better reflect market reality and to make terminology clearer, the following adjustments are planned:

• Elimination of the separate regulatory regime for electronic-money (e-money). As the European Banking Authority (EBA) stated in an assessment, national supervisors often have difficulties in distinguishing e-money services from payment services (Impact Assessment, p. 175). Therefore, it is now envisaged that the E-Money Directive 2009/110/EC will be completely merged into the PSD3, so that e-money institutions will in future only be covered by the term “payment institution” and the issuance of e-money will in future constitute a “payment service”.
• In the PSD2, the payment services of "issuing of payment instruments" (issuing) and "acceptance and settlement of payment transactions" (acquiring) are stipulated in one provision (see. Sec. 1 (2) no. 5 Austrian Payment Services Act 2018 - ZaDiG 2018). Now these payment services are listed separately from each other in order to clarify that issuing and acquiring services can also be offered separately by payment service providers (recital to PSR draft (8); Article 3 (48) and (49) PSR draft).
• The requirements for the "commercial agent exception" will be restricted. In addition to the already existing requirement that the commercial agent holds the commercial power of attorney for only one party (payer or payee) of the transaction, it is now required that the payer or payee must have a real margin to negotiate with the commercial agent or conclude the sale or purchase of goods or services (Article 2 no. 2 (b) PSR draft).
• In connection with "cashback" services, cash may in future be provided to customers at the supermarket checkout even if the customer has not made any purchase of goods or other payment transactions. This facilitation is intended to promote cash supply in rural regions in particular (Article 37 PSD3 draft).
• The exemption for limited networks does not change in terms of content, but the EBA shall stipulate conditions for the use of this exemption in its own technical standards (Article 2 no. 8 PSR draft).

Levelling the playing field between banks and non-bank payment service providers

In order to further level the playing field between banks and non-bank payment service providers (non-bank PSP), non-bank PSPs are to be granted access to all payment systems in the EU. Payment system operators shall only be allowed to reject applications from non-bank PSPs if they are not able to comply with the rules of the system or if the authorisation would create an unacceptable high risk for the payment system (Article 31 no. 2 and no. 3 PSR draft). In addition, non-bank PSPs are to be granted a secured right to a bank account. For this purpose, non-bank PSPs shall have the right to appeal to the national authority if an application to open a payment account with a credit institution is rejected (Article 32 no. 4 PSR draft).

Supervision and sanctioning of payment service providers

PSD2 defines only very vague options for sanctions in case of violations of the law. In order to ensure effective enforcement of the regulations of the PSR and PSD3, the powers of the national authorities with regard to the imposition of sanctions are to be adapted and expanded. In addition, the sanction provisions will be transferred to the PSR in order to ensure extensive uniformity within the Union. Among others, the following adapted sanction options are planned:

• Supervisory measures against members of the payment institution's management body will also be possible (Article 96 no. 3 PSR draft).
• More extensive inspection and investigation rights for the national competent authorities (Article 96 no. 4 PSR draft).
• The PSD2 already provided for the possibility for Member States to publish sanction decisions. With the introduction of the PSR, corresponding publications will be mandatory (Article 101 no. 1 in conjunction with no. 2 PSR draft).

Binder Grösswang's Financial Services Regulatory Team will be happy to assist you in preparing for the upcoming requirements at an early stage.

Please note: This blog is for general information purposes only and in no way constitutes legal advice from Binder Grösswang Rechtsanwälte GmbH. The blog cannot replace individual legal advice. Binder Grösswang Rechtsanwälte GmbH accepts no liability of any kind for the content and accuracy of the blog.

Please note: This blog is for general information purposes only and in no way constitutes legal advice from Binder Grösswang Rechtsanwälte GmbH. The blog cannot replace individual legal advice. Binder Grösswang Rechtsanwälte GmbH accepts no liability of any kind for the content and accuracy of the blog.