Response to consultation on draft Guidelines on the limited network exclusion under PSD2
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We welcome this guideline, which no doubt helps competent authorities to enforce the requirements set forth in PSD2 in connection with limited networks.
In this sense, we kindly suggest clarifying the type of information that the competent authorities will check to verify that the service providers are applying technical and contractual restrictions. We are mainly concerned about technical restrictions, provided it is a very broad concept, and it could be difficult to give evidence in this regard.
Also, please note that Guideline 1.6 and Guideline 1.7 are not coherent: Guideline 1.6 allows the combination of more than one payment instrument within the scope of Article 3(k) of PSD2 in the same means of payment, whereas Guideline 1.7 does not allow a single means of payment to accommodate simultaneously payment instruments within the scope of PSD2 and specific payment instruments within the scope of Article 3(k) of PSD2. It should not be determining whether the different payment instruments are within the scope of PSD2 or within the scope of Article 3(k) of PSD2, provided that the exemption applies to the payment instrument and not to the means of payment, and provided that they comply with the technical and contractual restrictions specified in Guidelines 1.4 and 1.5.
Combining payment instruments within the scope of Article 3(k) and ‘regulated’ instruments in the same means of payment should be permitted, as long as each instrument within the means of payment is clearly differentiated from the rest of instruments available in the same device through differentiated naming (not necessarily differentiated brands) or by attributing the instrument different numbers, and provided that the payment users have been properly informed and are aware of the features of the different payment instruments.
This is in line with Article 8.6 of the REGULATION (EU) 2015/751 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 29 April 2015 on interchange fees for card-based payment transactions, regarding co-badging and choice of payment brand or payment application, that expressly foresees that “payment card schemes, issuers, acquirers, processing entities and other technical service providers shall not insert automatic mechanisms, software or devices on the payment instrument or at equipment applied at the point of sale which limit the choice of payment brand or payment application, or both, by the payer or the payee when using a co-badged payment instrument.”
Giving the user this choice, plus establishing clear limits between the different instruments under a single card-base means of payment should enable the user to clearly distinguish such instruments. To this end, we suggest naming the instruments in a different way (not necessarily with different brands) or attributing them different numbers.
Furthermore, it would be aligned with Guideline 5.2, regarding provision of regulated and not regulated services/electronic money by the same service provider or electronic money issuer, where it suffices to distinguish between them in a clear and easily recognisable way.
Finally, we draw your attention to the fact that, in practice, combining instruments within the scope of Article 3(k) and ‘regulated’ instruments in the same means of payment has the effect that the non-regulated instruments benefit from the regulatory requirements that must be met by regulated instruments. For instance, a credit card including regulated and non-regulated payment instruments complies with all the security obligations set forth in PSD2.
Furthermore, Section 34 of the Consultation Paper (from which this Guideline derives from) states that the competent authorities can take into account complementary optional indicators in their assessment for determining a limited network of service providers. However, the drafting of this Guideline (i) does not indicate that such indicators are optional; and (ii) uses the modal verb “should”, which may imply an obligation. In order that Section 34 and Guideline 2.2 are coherent we kindly propose inserting the adverb “optionally” in the first paragraph of the aforementioned Guideline as follows:
“Complementary and optionally to the assessment under Guideline 2.1, and depending on the specific business model for provision of services and the size and specificity of the market within the respective Member State, competent authorities should take into account the following additional indicators: (…)”
On the other hand, we propose narrowing down the list of indicators to g), being the rest considered as additional factors to be reported by the service providers, so that the competent authorities have complete information in this regard. Otherwise, factors such as size of the geographical area could be used on an asymmetrical way by the competent authorities across the EU, when they are just descriptive characteristics that do not determine how limited a network is.
Particularly, indicator f) should be taken into consideration by the payment services providers and be supervised by the competent authorities, but not be established beforehand by the competent authorities.
“Competent authorities should take into account that instruments allowing the holder to acquire goods or services only in the premises of the issuer can be used both in physical premises and in online stores.”
*Please find enclosed the document for further insight
Furthermore, we draw your attention to the fact that this criterion should not be decisive for limited networks of general retailers that sell diverse good and/or services.
“Competent authorities should ensure that in the cases where authorised payment service providers or electronic money issuers provide also services under Article 3(k) of PSD2, the regulated entities distinguish the regulated payment services/electronic money from the services excluded under Article 3(k) of PSD2 in a clear and easily recognisable way, including through the use of different brands and naming.”
Q1. Do you have comments on Guideline 1 on the specific payment instruments under Article 3(k) of PSD2?
[*Please find enclosed the document for further insight.We welcome this guideline, which no doubt helps competent authorities to enforce the requirements set forth in PSD2 in connection with limited networks.
In this sense, we kindly suggest clarifying the type of information that the competent authorities will check to verify that the service providers are applying technical and contractual restrictions. We are mainly concerned about technical restrictions, provided it is a very broad concept, and it could be difficult to give evidence in this regard.
Also, please note that Guideline 1.6 and Guideline 1.7 are not coherent: Guideline 1.6 allows the combination of more than one payment instrument within the scope of Article 3(k) of PSD2 in the same means of payment, whereas Guideline 1.7 does not allow a single means of payment to accommodate simultaneously payment instruments within the scope of PSD2 and specific payment instruments within the scope of Article 3(k) of PSD2. It should not be determining whether the different payment instruments are within the scope of PSD2 or within the scope of Article 3(k) of PSD2, provided that the exemption applies to the payment instrument and not to the means of payment, and provided that they comply with the technical and contractual restrictions specified in Guidelines 1.4 and 1.5.
Combining payment instruments within the scope of Article 3(k) and ‘regulated’ instruments in the same means of payment should be permitted, as long as each instrument within the means of payment is clearly differentiated from the rest of instruments available in the same device through differentiated naming (not necessarily differentiated brands) or by attributing the instrument different numbers, and provided that the payment users have been properly informed and are aware of the features of the different payment instruments.
This is in line with Article 8.6 of the REGULATION (EU) 2015/751 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 29 April 2015 on interchange fees for card-based payment transactions, regarding co-badging and choice of payment brand or payment application, that expressly foresees that “payment card schemes, issuers, acquirers, processing entities and other technical service providers shall not insert automatic mechanisms, software or devices on the payment instrument or at equipment applied at the point of sale which limit the choice of payment brand or payment application, or both, by the payer or the payee when using a co-badged payment instrument.”
Giving the user this choice, plus establishing clear limits between the different instruments under a single card-base means of payment should enable the user to clearly distinguish such instruments. To this end, we suggest naming the instruments in a different way (not necessarily with different brands) or attributing them different numbers.
Furthermore, it would be aligned with Guideline 5.2, regarding provision of regulated and not regulated services/electronic money by the same service provider or electronic money issuer, where it suffices to distinguish between them in a clear and easily recognisable way.
Finally, we draw your attention to the fact that, in practice, combining instruments within the scope of Article 3(k) and ‘regulated’ instruments in the same means of payment has the effect that the non-regulated instruments benefit from the regulatory requirements that must be met by regulated instruments. For instance, a credit card including regulated and non-regulated payment instruments complies with all the security obligations set forth in PSD2.
Q2. Do you have comments on Guideline 2 on the limited network of service providers under Article 3(k)(i) of PSD2?
We suggest broadening the reference to a “common brand” to a “common payment instrument brand”. This way, the user would identify and differentiate the service providers belonging to a limited network.Furthermore, Section 34 of the Consultation Paper (from which this Guideline derives from) states that the competent authorities can take into account complementary optional indicators in their assessment for determining a limited network of service providers. However, the drafting of this Guideline (i) does not indicate that such indicators are optional; and (ii) uses the modal verb “should”, which may imply an obligation. In order that Section 34 and Guideline 2.2 are coherent we kindly propose inserting the adverb “optionally” in the first paragraph of the aforementioned Guideline as follows:
“Complementary and optionally to the assessment under Guideline 2.1, and depending on the specific business model for provision of services and the size and specificity of the market within the respective Member State, competent authorities should take into account the following additional indicators: (…)”
On the other hand, we propose narrowing down the list of indicators to g), being the rest considered as additional factors to be reported by the service providers, so that the competent authorities have complete information in this regard. Otherwise, factors such as size of the geographical area could be used on an asymmetrical way by the competent authorities across the EU, when they are just descriptive characteristics that do not determine how limited a network is.
Particularly, indicator f) should be taken into consideration by the payment services providers and be supervised by the competent authorities, but not be established beforehand by the competent authorities.
Q3. Do you have comments on Guideline 3 on the instruments used within the premises of the issuer under Article 3(k)(i) of PSD2?
Nowadays we live in a digital world, where websites are considered more and more as “extensions” of the corporate addresses, and the relationships between service providers and users are physical and digital indistinctly (sometimes even simultaneous. For example, when the user transacts online while being physically in the service provider premises). We kindly ask the EBA to bear this in mind and consider the following amendment:“Competent authorities should take into account that instruments allowing the holder to acquire goods or services only in the premises of the issuer can be used both in physical premises and in online stores.”
*Please find enclosed the document for further insight
Q4. Do you have comments on Guideline 4 on the limited range of goods or services under Article 3(k)(ii) of PSD2?
In order to avoid interpretation issues, a definition of “leading good or service” and some examples would be needed.Furthermore, we draw your attention to the fact that this criterion should not be decisive for limited networks of general retailers that sell diverse good and/or services.
Q5. Do you have comments on Guideline 5 on the provision of services under Article 3(k) of PSD2 by regulated entities?
While we fully embrace this Guideline, we suggest including the use of different naming as additional criterion to the use of different brandings, reading the text as follows:“Competent authorities should ensure that in the cases where authorised payment service providers or electronic money issuers provide also services under Article 3(k) of PSD2, the regulated entities distinguish the regulated payment services/electronic money from the services excluded under Article 3(k) of PSD2 in a clear and easily recognisable way, including through the use of different brands and naming.”