Relevant Exclusions under the PSD3/PSR

On 23 April 2024, the European Parliament announced that it had adopted, at first reading, the revised versions of the EU Commission's legislative proposals from June 2023 for a Directive on payment services and electronic money services (PSD3) and a Regulation on payment services within the EU (PSR). These are part of the so-called Financial Data Access and Payments Package. The PSD3 is intended to replace the current PSD2 and must be implemented into national law by the EU Member States. Unlike previous directives, PSD3 is complemented by the PSR, which has direct effect. Currently, both PSD3 and PSR are still proposals. Once finalised, they will become effective 20 days after being published in the Official Journal of the EU. The PSR will be directly applicable in all EU Member States 18 months later, while the PSD3 must be implemented by national legislators within the same timeframe.

This article provides an overview of some important changes to exclusions from the licensing requirement.

There are various exclusions available under PSD2 which allow companies to offer payment services without a licence from the national supervisory authority of their Home State, all of which have been incorporated into the PSR. This creates a uniform and binding framework for exclusions across the entire EU, preventing unilateral national actions - at least in theory.

Reform of the commercial agent exclusion?

Significant changes are likely to occur for German companies and those operating in Germany, particularly concerning the exclusion for commercial agents. The existing requirement under PSD2, that the commercial agent must be authorised via an agreement to negotiate or conclude the sale or purchase of goods or services (interpretated as requiring the commercial agent to have their own discretion to do this), will be retained. This will now be supplemented by the requirement that, in the future, the payer or payee must also have such discretion. This raises questions regarding implementation, such as whether "pre-established" offers, where clients cannot negotiate any conditions, will no longer be covered by the exclusion. It would be welcome to interpret this negotiating leeway on the part of the client as a potential requirement, without generally excluding the aforementioned cases, even though this cannot be inferred from the current wording.

The aim of the EU Commission is to standardise the very different handling of the commercial agent exclusion in the Member States at EU level, thereby eliminating competitive differences. Looking ahead, the definition of a commercial agent in terms of payment services law will also be set in the PSR by reference to Directive 86/653 - noting that this in itself may cause issues on the basis that the commercial agent under this directive is defined as having authority to 'negotiate and conclude' sale or purchase transactions which doesn't align with the CAE.

No significant changes for limited networks

With regard to the exclusion for limited networks, which is very relevant in practice, there should not be any significant changes in implementation, as the PSR only makes fairly minor changes to the wording from PSD2.

Under the current legal situation, the exclusion requires the issuance of a payment instrument (e.g., a fuel card) that can then be used at the premises of the issuer or a limited network of its service providers to purchase certain goods or services. Helpfully, 'premises' now expressly includes both.

For the use of payment instruments to buy a limited range of goods or services, there won't be any changes to scope under the PSR. However, there will be a change to the definition of payment instruments, with the EU Commission already citing various new examples of payment instruments in the recitals to the PSR, the impact of which on the exclusion remains to be seen. This is a response to technological progress, which is constantly opening up new possibilities for users, particularly in the area of digital payments

Cashback in retail

The draft of the PSR includes a significant innovation regarding cashback. Retail stores will be able to dispense cash at the explicit request of the payment service user, even if no purchase has been made and no other payment transaction has been conducted. This exclusion applies to all retail stores; however, there is no obligation to dispense cash without the purchase of goods or services. The EU Commission aims to improve the general availability of cash with this measure. It is important that customers are informed about possible fees before the cash is dispensed. Unlike ATM operators, the supervisory authorities do not monitor compliance with this transparency rule, which is a politically motivated decision that is likely to be positively received, especially in Germany where cash plays a significant role.

Exclusion for ATM operators

Another significant change, which is likely to have high practical relevance, concerns operators of ATMs that do not maintain payment accounts. These operators are to be exempted from the licensing requirement, which represents a substantial change from the previous practice by BaFin. Previously, BaFin only covered purely manual service activities, particularly cases where a service provider sets up ATMs for a licensed credit or payment institution, maintains them, and supplies them with cash, without providing any additional payment services. The independent operation of ATMs does not fall under this exclusion according to BaFin's administrative practice. However, the current draft of the PSR stipulates that such operators will still be subject to transparency obligations regarding fees and exchange rates in accordance with Art. 5(2) and Art. 20(c)(ii) PSR-E, which will be monitored by BaFin. These regulations are, however, less stringent than those of the EU Price Regulation.

Conclusion

The harmonisation of the exclusion regime in EU payment services law through the PSR aims to bring the consistent application of the rules in all EU Member States that was not achieved in some cases under PSD2. Particularly noteworthy are the newly regulated exclusions for retailers and ATM operators, which could offer practical relief for both service providers and users. The changes to the commercial agent exclusion and the introduction of cashback in retail stores are of high practical importance and may require adjustments in business practice. Overall, the reform aims to eliminate competitive differences and modernise payment transactions in the EU.