Payments View – January 2026

Welcome back to Payments View after an extended break - we imagine you've missed us! We're now back to our usual programming and this includes a busy start to the year. This edition of Payments View includes updates on:

• Reminder: 'Farage' Termination Changes Incoming  
• PSR MIF Cap Powers Confirmed
• EBA PSD2 Authorisation Process Review
• MoU on PSP Access to EU Central Bank Systems

Also by way of an update on PSD3 timing in late November 2025, the European Parliament and the Council of the EU announced that they reached a provisional political agreement on the texts (PSD3 and PSR). However, we understand that the technical trilogues are still underway and we have yet to see versions of the final texts published. We had expected that it would be only a matter of weeks from the announcement before we'd see the texts, but the wait continues!

As always, don't hesitate to reach out to us if you would like to discuss any of the developments in this edition.

Reminder: 'Farage' Termination Changes Incoming

A reminder that the new termination provisions under the Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 will come into force on 28 April. These will require at least 90 days' notice (with reasons) before terminating indefinite period framework contracts entered into from that date.

We are assisting a number of firms with the necessary changes and, although the focus of most discussions has been the uplift on notice periods, we want to flag that in practice the amendments are requiring teams to spend time getting compliance procedures set up (to deal with the new 'reason requirement') as well as needing to consider whether the existing broad termination provisions we see across the market can still aligned with the new requirements.

If you would like to discuss how these changes may affect your contracts or approach, please get in touch.

PSR MIF Cap Powers Confirmed

As the PSR inches towards being abolished, it has welcomed a High Court decision that clarifies that it does indeed have powers to (re)impose the proposed cap on multilateral interchange fees (MIFs) for UK-European Economic Area EEA card-not-present (CNP) outbound transactions.

The judgment in R (Mastercard Europe SA) v PSR [2026] EWHC 64 (Admin) followed judicial review claims brought by Mastercard Europe SA, Revolut Bank UAB and Visa Europe Ltd which challenged the PSR's decision to develop a price cap on MIFs for UK-EEA CNP outbound transactions, arguing that the PSR lacked the necessary powers under section 54 of the Financial Services (Banking Reform) Act 2013 (a subject close to our hear!) and that section 108 of the FSBRA precluded the regulator from exercising these powers specifically in relation to Mastercard.

The Court, however, found that the PSR does have the authority under section 54 to impose such caps and is not prevented from doing so by section 108. Mr Justice Cavanagh's judgment concludes that section 54 of FSBRA does indeed empower the PSR to impose price caps by way of general direction, and that this power is not limited to operational or technical matters. The Court was clear that pricing decisions, including the imposition of caps on interchange fees, are an integral part of the operation and management of a payment system, and therefore fall within the scope of the PSR's general direction powers. The judgement also held that section 108 of FSBRA, which restricts the PSR from using its section 54 powers for the purposes of enabling POND access or participation in a payment system, did not preclude the PSR from imposing price caps on Mastercard. The Court accepted the PSR's position that the purpose of the proposed price caps was to advance competition and service-user objectives, not to facilitate access or participation as such. The fact that a measure may have some impact on access or participation does not, in itself, bring it within the prohibition in section 108.

While the legal position is now clearer, the regulatory process remains ongoing following the PSR's October 2025 consultation paper (MR22/2.8) which closed for comment at the end of last year. The PSR has consulted on the methodology for assessing an appropriate cap for outbound multilateral interchange fees and that the outcome of that consultation will inform the regulator's next steps.

EBA PSD2 Authorisation Process Review

Although this one came out over the Christmas period, we wanted to mention that the EBA has published a follow-up report on its peer review of the authorisation of payment institutions and e-money institutions under PSD2. This latest report builds on the EBA's 2022 assessment and examines authorisations granted between 2022 and 2024, with a particular focus on how national supervisors have responded to the recommendations issued in 2023. Areas under review include the authorisation process itself, the application of EBA guidelines, and the robustness of governance and internal controls.

The EBA's findings highlight several ongoing trends and challenges. Since the previous review, the market has continued to evolve, with the volume and speed of authorisations varying considerably across member states. Most jurisdictions have seen a reduction in new applications compared to the period from 2019 to 2022, a shift largely attributed to a maturing market and the waning of Brexit-related activity. While many supervisors have taken steps to improve efficiency - such as offering clearer guidance to applicants, engaging earlier in the process, and streamlining internal procedures - these efforts have not always translated into shorter timelines, and delays remain a feature in some markets. They are some very interesting charts for those readers looking for a more detailed breakdown.

A further area of focus is the assessment of governance and internal controls. Supervisors generally report improvements in their scrutiny of these aspects, but the EBA notes that divergent approaches persist across the EU. This lack of consistency risks creating an uneven playing field and opens the door to regulatory arbitrage. Of particular concern are the remaining gaps in anti-money laundering (AML) and countering the financing of terrorism (CFT) controls, where further alignment is needed.

The EBA is encouraging national supervisors to address these outstanding issues and to work towards greater convergence in governance and internal control standards. For firms, the message is clear: expectations around governance, internal controls, and AML/CFT compliance are only likely to increase, and the direction of travel is towards more consistent and robust supervision across the EU. Firms considering authorisation, or those already authorised, should ensure that their frameworks are not only compliant with local requirements but also aligned with emerging best practice at the European level with all of this being before the changes that are due under PSD3.

While not expressly called out in the report, there is also the issue around the interpretation and scope of e-money that has created uncertainty for firms applying for e-money and payment account permissions in some EU jurisdictions.

Let us know if you'd like to reach out to discuss, either on the best practices that we're seeing or our PSD3 Ready Rulebook which a number of firms are already using for their PSD3 implementation projects.

MoU on PSP Access to EU Central Bank Systems

The EBA, ECB, national central banks (NCBs) and national supervisory authorities (NSAs) across the EEA have signed a MoU establishing a new co-operation framework to support non-bank payment service providers' (NB-PSPs) access to central bank operated payment systems. This development marks a significant step in harmonising and facilitating NB-PSPs' participation in core payment infrastructure across the EU.

The MoU is designed to operationalise the access rights granted to NB-PSPs under Articles 35 and 35a of PSD2. These provisions permit NB-PSPs to access central bank operated payment systems, including both TARGET and retail payment systems run by euro-area NCBs. The ECB's decision (covered in our Spring edition last year) to implement a uniform approach to direct access for NB-PSPs across the euro area laid the groundwork for this latest agreement.

The primary aim of the MoU is to establish clear procedures and channels for information sharing between NSAs and NCBs. This is intended to support NCBs in assessing whether NB-PSPs meet the necessary requirements for access to central bank payment systems. In particular, the MoU sets out how information should be exchanged in cross-border scenarios, ensuring that the NCB operating the payment system in the host member state notifies the NSA of the NB-PSP's home member state about both the application and the outcome of the access decision. The framework also specifies the types of information to be shared, as well as the timing and means of exchange, with the aim of harmonising processes across the EEA and reducing friction for NB-PSPs seeking access in multiple jurisdictions.

According to the EBA's press release, all relevant NCBs and NSAs, as well as the EBA and ECB, have now signed the agreement.

News Flash

• A slightly niche one, but payment firms in / looking at the Netherlands will be interested that the Dutch House of Representatives received a proposed amendment to narrow the scope of the Dutch 20% variable remuneration cap. The current regime is stricter than EU rules, applying the cap to all employees of all financial firms, but the amendment would limit its application to "identified staff" - those who materially influence the risk profile of the undertaking, in line with EU standards. The 20% cap itself and its sectoral reach remain unchanged, but most employees would no longer be subject to the cap or related requirements. The proposal is now awaiting debate in the Dutch House of Representatives, where further changes may be introduced.

• A quick reminder from last year: the EBA consulted on draft Guidelines for the sound management of third-party risk, set to replace the 2019 Outsourcing Guidelines and align non-ICT third-party arrangements with the supervisory standards under DORA. Once finalised, the Guidelines (which will apply to payments firms) will require firms to update existing non-ICT third-party contracts and registers within two years, following the consultation which closed on 8 October 2025. Firms should ensure their frameworks can distinguish between ICT and non-ICT arrangements, as the new regime will bring greater consistency and operational clarity across third-party risk management.

• BVNK has announced a partnership with Visa to power stablecoin payments for Visa Direct, Visa's $1.7 trillion real-time payments network. As part of Visa Direct's pilot programmes, customers will be able to fund and receive payouts in stablecoins, enabling digital dollars to be sent directly to recipients' wallets. The initial rollout will focus on markets with strong demand for digital asset payments, with plans for broader expansion in future.