Response to consultation on draft RTS on central contact points under PSD2
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On page 5 of the EBA consultation: “Article 29(4) of the directive (EU) 2015/2366 provides that host Member States MAY require payment institution, whose head office is situated in another Member State that operate through agents in their territory, under the right of establishment, to set up a central contact point in their territory, …”
From this paragraph Article 29(4) of Directive (EU) 2015/2366 we understand that:
- the host member state is not obliged to request the appointment of the central contact point and that it applies only to the PI that have established agents in the host member state. The freedom of the host CA to not request the appointment of a central contact towards the host CA is not reflected in the wording of Article 1 §1 of the RTS: “…., in which it is appropriate to require PI …. to appoint a central contact point in the territory of those Member States, ….”
The EBA RTS proposal does not explain how a host competent authority:
- will inform/notify a PI/EM of its requirement to establish a local central contact point.
- the scope of interaction that the host competent authority is allowed to conduct
- the frequency of interaction,
- the alignment process between the home and host CA member states, nor the arbitration process between CAs.
Concerning question1: No, we do not agree.
We consider that the “option 2” selected by EBA, with a fixed volume threshold applied in the same way for every host country is, to our opinion, not providing a level playing field across countries.
It leads to the provisioning of more control rights to host Competent Authorities having large markets compared to the small ones (like Luxembourg, Malta, Cyprus …).
We would be in favor of criteria that would establish a percentage of the market share (in volume or value of transactions) performed by a PI / EM via Agents. This % could be computed based on the ECB country statistic reporting published every year and already requested by CA.
• We agree with the criteria in article 2 (a) related to >= to 10 agents
• We do not agree with criteria in article 2 (b):
“ the total value of the payment transactions carried out by a payment institution or electronic money institution in the host Member State in the last financial year, and including the value of payment transactions initiated when providing payment initiation services, through agents located in the host Member State
(WE ASK TO SUPPRESS and operating under either the right of establishment or the freedom to provide Services),
exceeds EUR 3 million and the respective institution has engaged at least 2 of those agents under the right of establishment; or “
We consider that the transaction volumes performed via the FREEDOM TO PROVIDE services are not considered in the article 29(2), that EBA proposal is including in its 2(b) text above, more volume than foreseen in article 29(4)(5) of the PSD2.
On top, we consider that the limit of 3 million total values of transactions is much too low and does not reflect the type of market the PI/EM are operating in.
By example:
• For a PI that performs credit card acquiring services (under service 5), the average trx value is around 100 Euro/trx, this represents 30.000 trx/year.
• With a so low number of transactions, any cross border PI acquirer will meet the amount volume criteria.
The notion of proportionality is to our opinion not respected.
We are from the opinion that this low volume criteria, is in contradiction with the EU commission objective to have a large EU payment market in EU.
In practice, it will give back a lot of control power to each host Competent Authority, without reinforcing collaboration between home CA and host CA,
which is the initial objective of this RTS.
We recommend to significantly increase the criteria related to the total value of payment transactions eg minimum 50 Million euro.
As alternative proposal, we are in favor of a regulation that would require the establishment of a central contact point only if the Payment institution active in cross border mode via agent starts to have an important market share into the host member state. By example, if the total value of transaction is above eg 20% of the host country total value of transaction/year.
This percentage of market share criteria would meet the proportionality aspect, that is present into the PSD2. It would limit the cost for PI & EMI to operate a full network of central contact point in the 28 EU countries for very low transaction volumes.
• We do not agree with criteria in article 2 (c):
“the total volume of payment transactions carried out by a payment institution or electronic money institution in the host Member State in the last financial year and including the (value) VOLUMES of payment transactions initiated when providing payment initiation services, through agents located in the host Member State ( WE ASK TO SUPPRESS: "and operating under either the right of establishment or the freedom to provide Services,") exceeds 100,000 transactions and the respective institution has engaged at least 2 of those agents under the right of establishment.“
We believe the text is not referring to value but volume (see above)
We consider that the transaction volumes performed via the freedom to provide services are not considered in the article 29(2), that EBA proposal is including in its 2(b) more volume than foreseen in article 29(4)(5) of the PSD2. The focus should remain the volumes of transactions coming via agents.
We consider that the limit of 100.000 transactions is much too low.
• With a so low number of transactions, any cross border acquirer will be meet the volume of transaction criteria, the notion of proportionality is to our opinion not respected.
We are from the opinion that this low volume criteria, is in contradiction with the EU commission objective to have a large EU payment market in EU. It will give back a lot of control power to each host Competent Authority and miss the objective to reinforce the collaboration between home CA and host CA.
We recommend to significantly increase the criteria related to the total payment transactions eg minimum 100 million transactions."
Comments on articles:
The article 3 §1 point (a) “Serve as single provider and single point of collection of the reporting obligations of the appointing payment institution to the competent authorities of the host Member State ….”;
We need to make sure that the reporting obligation and format will be coherent across all host member states.
The RTS must insure that each host competent authority will not have the right to develop its own reporting format and their own definition into their reporting request.
We want also to stress that other EBA guidelines are also defining reporting obligations, we need to keep the coherency across the different guideline. The frequency of reporting must be limited to the maximum possible (eg to one time per year). As this will create heavy costs to the PI/EM and will limit the development of the cross boarder services in the EU.
The article 3 §1 point (b) “Serve as single point of contact of the appointing payment institution in communications with the competent authorities of the home and host Member States in relation to the payment services provided in the host Member State through agents under the right of establishment, including by providing competent authorities with documents and information on request;”
We need to make sure that the host CA that requires additional information to the central contact point (host member state) is informing the home member state CA of their demand and the raison for such request.
Without a minimum alignment between the home and the host competent authorities, we may see host member state CA performing a heavy control on agents to limit passporting on their territory (protectionist attitude).
We are from the opinion that the host member state reporting request should be limited to specific topics such as the compliance with Titles III and IV in the host member state.
The article 3 §1 point (b): “facilitate the on-site inspection by competent authorities of the agents of the appointing payment institution operating in the host Member State under the right of establishment and the implementation of any supervisory measures adopted by the competent authorities of the home or host Member States pursuant to Directive (EU) 2015/2366 “
Inspection should be coordinated by the home member state that can delegate to the host member state CA. We are not in favor to let each host CA to take initiative of inspection without a formal alignment with the home member state CA.
Question 1: Do you agree with the option chosen by the EBA regarding the determination of the criteria for assessing when the appointment of a central contact point is appropriate? In particular, do you agree that the RTS should establish a single set of thresholds applicable across all the EU Member States, based on the indicative criteria set out in Article 29(5) of the PSD2? Please explain your reasoning and provide any alternatives that the EBA should consider, and why.
Introduction commentOn page 5 of the EBA consultation: “Article 29(4) of the directive (EU) 2015/2366 provides that host Member States MAY require payment institution, whose head office is situated in another Member State that operate through agents in their territory, under the right of establishment, to set up a central contact point in their territory, …”
From this paragraph Article 29(4) of Directive (EU) 2015/2366 we understand that:
- the host member state is not obliged to request the appointment of the central contact point and that it applies only to the PI that have established agents in the host member state. The freedom of the host CA to not request the appointment of a central contact towards the host CA is not reflected in the wording of Article 1 §1 of the RTS: “…., in which it is appropriate to require PI …. to appoint a central contact point in the territory of those Member States, ….”
The EBA RTS proposal does not explain how a host competent authority:
- will inform/notify a PI/EM of its requirement to establish a local central contact point.
- the scope of interaction that the host competent authority is allowed to conduct
- the frequency of interaction,
- the alignment process between the home and host CA member states, nor the arbitration process between CAs.
Concerning question1: No, we do not agree.
We consider that the “option 2” selected by EBA, with a fixed volume threshold applied in the same way for every host country is, to our opinion, not providing a level playing field across countries.
It leads to the provisioning of more control rights to host Competent Authorities having large markets compared to the small ones (like Luxembourg, Malta, Cyprus …).
We would be in favor of criteria that would establish a percentage of the market share (in volume or value of transactions) performed by a PI / EM via Agents. This % could be computed based on the ECB country statistic reporting published every year and already requested by CA.
Question 2: Do you agree with the criteria proposed in Article 2 of the draft RTS for determining when the appointment of a central contact point is appropriate? In particular, do you agree with the threshold of 10 agents and with the annual thresholds of EUR 3 million and, respectively, of 100,000 transactions, as set out in Article 2 of the draft RTS? Please explain your reasoning and provide any alternatives that the EBA should consider, and why.
No, we do not agree, with the threshold selected for the volume criteria’s are too low and not acceptable as not in line with market:• We agree with the criteria in article 2 (a) related to >= to 10 agents
• We do not agree with criteria in article 2 (b):
“ the total value of the payment transactions carried out by a payment institution or electronic money institution in the host Member State in the last financial year, and including the value of payment transactions initiated when providing payment initiation services, through agents located in the host Member State
(WE ASK TO SUPPRESS and operating under either the right of establishment or the freedom to provide Services),
exceeds EUR 3 million and the respective institution has engaged at least 2 of those agents under the right of establishment; or “
We consider that the transaction volumes performed via the FREEDOM TO PROVIDE services are not considered in the article 29(2), that EBA proposal is including in its 2(b) text above, more volume than foreseen in article 29(4)(5) of the PSD2.
On top, we consider that the limit of 3 million total values of transactions is much too low and does not reflect the type of market the PI/EM are operating in.
By example:
• For a PI that performs credit card acquiring services (under service 5), the average trx value is around 100 Euro/trx, this represents 30.000 trx/year.
• With a so low number of transactions, any cross border PI acquirer will meet the amount volume criteria.
The notion of proportionality is to our opinion not respected.
We are from the opinion that this low volume criteria, is in contradiction with the EU commission objective to have a large EU payment market in EU.
In practice, it will give back a lot of control power to each host Competent Authority, without reinforcing collaboration between home CA and host CA,
which is the initial objective of this RTS.
We recommend to significantly increase the criteria related to the total value of payment transactions eg minimum 50 Million euro.
As alternative proposal, we are in favor of a regulation that would require the establishment of a central contact point only if the Payment institution active in cross border mode via agent starts to have an important market share into the host member state. By example, if the total value of transaction is above eg 20% of the host country total value of transaction/year.
This percentage of market share criteria would meet the proportionality aspect, that is present into the PSD2. It would limit the cost for PI & EMI to operate a full network of central contact point in the 28 EU countries for very low transaction volumes.
• We do not agree with criteria in article 2 (c):
“the total volume of payment transactions carried out by a payment institution or electronic money institution in the host Member State in the last financial year and including the (value) VOLUMES of payment transactions initiated when providing payment initiation services, through agents located in the host Member State ( WE ASK TO SUPPRESS: "and operating under either the right of establishment or the freedom to provide Services,") exceeds 100,000 transactions and the respective institution has engaged at least 2 of those agents under the right of establishment.“
We believe the text is not referring to value but volume (see above)
We consider that the transaction volumes performed via the freedom to provide services are not considered in the article 29(2), that EBA proposal is including in its 2(b) more volume than foreseen in article 29(4)(5) of the PSD2. The focus should remain the volumes of transactions coming via agents.
We consider that the limit of 100.000 transactions is much too low.
• With a so low number of transactions, any cross border acquirer will be meet the volume of transaction criteria, the notion of proportionality is to our opinion not respected.
We are from the opinion that this low volume criteria, is in contradiction with the EU commission objective to have a large EU payment market in EU. It will give back a lot of control power to each host Competent Authority and miss the objective to reinforce the collaboration between home CA and host CA.
We recommend to significantly increase the criteria related to the total payment transactions eg minimum 100 million transactions."
Question 3: Do you agree with the functions of a central contact point, as set out in Article 3 of the draft RTS? Please explain your reasoning.
General remarks: We can agree with the objective of establishing a central contact point in the host member state to interface with the local CA, but we believe that this should occur under the clear leadership of the Home Member state CA, if we do not want to lose the benefit of the single EU payment market.Comments on articles:
The article 3 §1 point (a) “Serve as single provider and single point of collection of the reporting obligations of the appointing payment institution to the competent authorities of the host Member State ….”;
We need to make sure that the reporting obligation and format will be coherent across all host member states.
The RTS must insure that each host competent authority will not have the right to develop its own reporting format and their own definition into their reporting request.
We want also to stress that other EBA guidelines are also defining reporting obligations, we need to keep the coherency across the different guideline. The frequency of reporting must be limited to the maximum possible (eg to one time per year). As this will create heavy costs to the PI/EM and will limit the development of the cross boarder services in the EU.
The article 3 §1 point (b) “Serve as single point of contact of the appointing payment institution in communications with the competent authorities of the home and host Member States in relation to the payment services provided in the host Member State through agents under the right of establishment, including by providing competent authorities with documents and information on request;”
We need to make sure that the host CA that requires additional information to the central contact point (host member state) is informing the home member state CA of their demand and the raison for such request.
Without a minimum alignment between the home and the host competent authorities, we may see host member state CA performing a heavy control on agents to limit passporting on their territory (protectionist attitude).
We are from the opinion that the host member state reporting request should be limited to specific topics such as the compliance with Titles III and IV in the host member state.
The article 3 §1 point (b): “facilitate the on-site inspection by competent authorities of the agents of the appointing payment institution operating in the host Member State under the right of establishment and the implementation of any supervisory measures adopted by the competent authorities of the home or host Member States pursuant to Directive (EU) 2015/2366 “
Inspection should be coordinated by the home member state that can delegate to the host member state CA. We are not in favor to let each host CA to take initiative of inspection without a formal alignment with the home member state CA.