The European Banking Authority (EBA) has launched a public consultation on draft Guidelines providing clarity on the application of the limited network exclusion requirements, which certain payment instruments might benefit from, as laid down in the revised Payment Services Directive (PSD2). Such payment instruments include store cards, fuel cards, public transport cards, and meal vouchers. Given the significant inconsistencies the EBA has identified on how this exclusion is applied across the EU, the proposed Guidelines aim at clarifying specific aspects of its application, including on how a network of service providers or a range of goods and services should be assessed in order to qualify as ‘limited’, the use of payment instruments within limited networks, the provision of excluded services by regulated financial institutions and the submission of notification to competent authorities (CAs). The consultation runs until 15 October 2021.
In line with its statutory objective of contributing to the convergence of supervisory practices, the EBA arrived at the view that it should issue own-initiative Guidelines aimed at bringing about convergence on a number of issues related to the application of this exclusion.
In particular, the draft Guidelines propose requirements, and where relevant, criteria and indicators, aimed at ensuring that excluded payment instruments are used in a limited way, thus reducing potential risks that may arise for the users of such instruments.
In addition, in order to address potential concerns on any possible circumvention of the PSD2 requirements and to increase transparency for consumers who may not be aware that they do not benefit from the protection the PSD2 provides to regulated services, the draft Guidelines propose requirements on the provision of excluded services by regulated firms.
Finally, to ensure transparency on the provision of excluded services, the draft Guidelines provide clarity on the calculation of the thresholds set out in Article 37(2) of the PSD2, the submission of the related notifications to competent authorities and the information to be covered in the description of the excluded activity on the national and EBA registers.
However, the proposed Guidelines cannot address all the inconsistencies that the EBA has identified, as the EBA is not in a position to change definitions or amend legal requirements set out in the PSD2.
Responses to this consultation can be sent to the EBA by clicking on the “send your comments” button on the consultation page. Please note that the deadline for the submission of comments is 15 October 2021.
All contributions received will be published following the close of the consultation, unless requested otherwise. A public hearing will take place online on 8 September 2021 from 10.00 to 12.00 CEST.
Legal basis and background
Following the publication of PSD2 in November 2015, the EBA and the European Commission (EC) have received a number of queries on the interpretation and application of the exclusion under Article 3(k) of the PSD2 and the related notification requirements articulated in Article 37 of the PSD2. The EBA assessed these queries and arrived at the view that the implementation and application of the requirements diverges significantly between Member States, thus impeding the Single Market for payment services in the EU and creating opportunities for regulatory arbitrage.
The EBA issued the draft Guidelines under Article 16 of the EBA Regulation, which mandates the Authority to issue guidelines and recommendations addressed to Competent Authorities or financial institutions with a view to establishing consistent, efficient and effective supervisory practices, including, where appropriate, to conduct open public consultations.
Article 3(k) of Directive (EU) 2015/2366 on payment services in the internal market (PSD2) specifies that the ‘Directive does not apply to services based on specific payment instruments that can be used only in a limited way, that meet specified conditions.
Article 37(2) of PSD2 prescribes that ‘Member States shall require that service providers carrying out either of the activities referred to in points (i) and (ii) of point (k) of Article 3 or carrying out both activities, for which the total value of payment transactions executed over the preceding 12 months exceeds the amount of EUR 1 million, send a notification to competent authorities containing a description of the services offered, specifying under which exclusion referred to in point (k)(i) and (ii) of Article 3 the activity is considered to be carried out.’