The Spanish Banking Association (AEB) welcomes the effort EBA is making for the harmonization of practices on the application of article 3(k) of PSD2 and Article 37(2) and agrees on the importance of avoiding that non-regulated service providers take advantage of article 3(k) to develop general-purpose means of payment.
Nevertheless, as regards Guideline 1.4 clarification on the type of information that the competent authorities will check in order to verify that the service providers are applying technical and contractual restrictions will be welcomed. The concept of technical restrictions is a very broad concept, and it could be difficult to give evidence in this connection.
Additionally, please note that guideline 1.6 and guideline 1.7 are not coherent and could have adverse effects. While Guideline 1.6 allows the issuers of a means of payments to combine more than one payment instrument within the scope of Article 3(k) of PSD2 in the same means of payment, 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 as established in Guideline 1.7.
Once the combination of more than one payment instrument is allowed to be accommodated within the same means of payment 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. With those requirements, payment users will be better protected by allowing the combination of exempted and non-exempted payment instruments in the same means of payment as far as these are issued by a single service provider. This will create incentives for unlicensed service providers to get a PSP license in order to be able to combine regulated and exempted payment instruments in the same means of payment, thus limiting the number of non-regulated players in the market, that provide only payment services beyond the PSD2 scope.
Therefore, combining payment instruments within the scope of Article 3(k) and ‘regulated’ instruments in the same means of payment should always be possible, provided that each instrument within the means of payment is autonomous and independent, is clearly differentiated from the rest of instruments embedded in the same device through unequivocal elements such as the procedure of use, the functionalities or differentiated credit lines, and the payment user has been properly informed and is aware of the features of the different payment instruments combined in a single means of payment.
The means of payment in such cases are to be considered as a wallet of payment instruments regardless the physical or electronic format. On the contrary, physical payment instruments such as cards would be left at a competitive disadvantage before electronic payment solutions such as mobile wallets. These electronic payment solutions allow users to aggregate different payment instruments within one single device despite the provider of the mobile wallet (typically the mobile manufacturer / OS provider) is not regulated under PSD2.
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.
Bearing all the above in mind, guideline 1.7 should be removed and guideline 1.6 reworded as follows:
“Competent authorities should take into account that a single card-based means of payment can accommodate simultaneously more than one specific payment instrument within the scope of Article 3(k) of PSD2. Competent authorities should ensure that the technical and contractual restrictions specified in Guidelines 1.4 and 1.5 apply to each specific payment instrument within the scope of Article 3(k) of PSD2.”
Guidelines 2.1 and 2.2 set the criteria to be taken into consideration to decide if a payment instrument benefits from the limited network exemption or not, but do not set any rule on how these criteria should be evaluated by the National Competent Authorities, what could lead to different understanding by authorities and the fragmentation of supervision.
For that reason, it would be highly useful that the EBA provides more details on how to apply these criteria, in particular, clarifying that the assessment of all the criteria in guideline 2.1 does not imply that the payment instruments benefiting from Article 3(k)(i) exclusion have to reach a certain threshold to all of them.
Furthermore, rationale Nº 34 of the Consultation Paper (from which Guideline 2.2 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 the insertion of the adverb “optionally” in the first paragraph of the aforementioned Guideline is proposed 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: (…)”
The Guideline 3 seems to ignore the growing trend of physical commerce going online as well as the growing trend to mix both modalities.
In order to avoid interpretation issues, a definition of “leading good or service” and some examples would be highly appreciated. Furthermore, this criterion should not be decisive for limited networks of general retailers that sell diverse good and/or services.
As stated in response to question 2, it is paramount that payment users are aware of the conditions and functionality of the payment instruments they hold, including its regulatory status.
Nevertheless, it is also important that non-regulated service providers issuing payment instruments equivalent to those benefiting from the exclusion under Article 3(k) inform their users of the unregulated nature of the payment instruments and any other relevant condition for use.
In guideline 5.2 we propose 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 authorized 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 recognizable way, including through the use of different brands and naming.”