Response to consultation on draft RTS on central contact points under PSD2
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Paysafe believes that the €3m threshold would include a more significant proportion of the market than was envisaged by the Directive. For an electronic money institution, it equates to an average of just over €8,000 per day. We believe that a more appropriate and proportionate de minimis figure would be in the region of €25,000 of electronic money issued per day, ie a threshold of about €10m per annum.
Both the RTS and PSD2 make clear that the primary purpose of the CCP is to function as an intermediary between the EMI or PI and the host Member State. Many EEA-wide businesses operate a single Compliance regime, with a centre of excellence often located in the home Member State. This ensures access to business leaders and facilitates strong business-wide communication. In some cases, the central compliance team may choose to sub-contract in-country regulatory relations to, for example, a local law firm. These outsourcing arrangements may be a good approach to sourcing in-country CCPs, but in such cases the role of the CCP would be limited to ensuring an understanding of local requirements is communicated for implementation to the business, to acting as a capable and authoritative representative of the firm to the competent authority, and being a conduit of information between competent authority and firm. Paysafe believes that the RTS allow for such an approach and we welcome the EBA’s thoughtful drafting.
In addition, it is important that the RTS allow flexibility for the firm to choose how to carry out the requirements of a CCP. This not only helps reduce cost and maintain effectiveness and efficiency, it also ensures no unintended tax liabilities would arise.
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.
Paysafe agrees with the EBA’s chosen option being a single set of thresholds across all EU Member States, for the reasons set out in the consultation document, ie simplicity and consistency across the single market. Additionally, it is important that CCPs do not become a solution to poor communication between home and host Member State regulatory authority.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.
Paysafe believes that it is important to recognise that the requirement for a CCP under PSD2 is based on their significance to the host Member State’s market, rather than on any specific concerns such as could be the case when requiring a CCP under anti-money laundering regulation. As a result, we believe that the thresholds need to be set at a high level, commensurate with significance.Paysafe believes that the €3m threshold would include a more significant proportion of the market than was envisaged by the Directive. For an electronic money institution, it equates to an average of just over €8,000 per day. We believe that a more appropriate and proportionate de minimis figure would be in the region of €25,000 of electronic money issued per day, ie a threshold of about €10m per annum.
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.
Paysafe is comfortable with the functions of a CCP as set out in Article 3.Both the RTS and PSD2 make clear that the primary purpose of the CCP is to function as an intermediary between the EMI or PI and the host Member State. Many EEA-wide businesses operate a single Compliance regime, with a centre of excellence often located in the home Member State. This ensures access to business leaders and facilitates strong business-wide communication. In some cases, the central compliance team may choose to sub-contract in-country regulatory relations to, for example, a local law firm. These outsourcing arrangements may be a good approach to sourcing in-country CCPs, but in such cases the role of the CCP would be limited to ensuring an understanding of local requirements is communicated for implementation to the business, to acting as a capable and authoritative representative of the firm to the competent authority, and being a conduit of information between competent authority and firm. Paysafe believes that the RTS allow for such an approach and we welcome the EBA’s thoughtful drafting.
In addition, it is important that the RTS allow flexibility for the firm to choose how to carry out the requirements of a CCP. This not only helps reduce cost and maintain effectiveness and efficiency, it also ensures no unintended tax liabilities would arise.