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New EU payment laws: final negotiations could be sanctioned today

Out-Law News | 05 Dec 2014 | 9:40 am | 3 min. read

The opening of negotiations between the presidency of the Council of Ministers (the presidency) and the European Parliament on the final wording of the new EU Payment Services Directive (PSD2) could be sanctioned today.

The presidency has asked the Council of Ministers' Permanent Representatives Committee (COREPER) to give it a mandate to open negotiations with MEPs on the PSD2 reforms. It follows months of negotiations between EU countries on the proposed new payments laws within the structures of the Council.

COREPER is scheduled to meet to discuss the presidency's request on Friday afternoon, a Council spokesperson told Out-Law.com.

The presidency has published a new compromise proposal for PSD2 (170-page / 1.10MB PDF) which it hopes COREPER will give it the go-ahead to use as a basis during negotiations with the Parliament on the final wording of the new rules.

However, according to a report prepared by the presidency for COREPER (4-page / 202KB PDF), not all of the EU countries that have been debating what should be included in the new PSD2 framework agree with its compromise proposal. However, it said there is "broad agreement" with its plans.

An unnamed EU country has raised opposition to the presidency's plans on "cross-border supervision of payment institutions", the presidency said.

Under the plans, payment service providers (PSPs) would need to obtain a licence from a national regulator to operate in an EU country. PSPs would be able to provide payment services across other EU countries but would be subject to a regulatory regime involving regulators in both their 'home' EU country, which is either where PSPs' head office is or where they have a registered office, and the 'host' countries in which they wish to also provide services.

Under the presidency's proposals, PSPs would need to provide certain information to home regulators about their plans to expand into other EU countries. The home and host regulators would have to liaise with one another on the application and host regulators could raise objections with PSPs plans to expand into their jurisdiction. However, home regulators would be free to disregard those concerns and extend PSPs' licence to operate in that country.

If PSPs are authorised to provide services in other EU countries then the home regulator would retain most of the power of supervision, although the presidency's proposals do envisage close cooperation with host regulators. The regime won't prevent host regulators from identifying and flagging any breaches of the PSD2 regime but will require those regulators to notify the home regulator of the cases. In those circumstances the home regulator would be required to "take all appropriate measures to ensure that the payment institution concerned puts an end to its irregular situation" without undue delay.

According to the presidency's report to COREPER, however, one EU country believes that the new regulatory regime "would lead to disproportionate obstacles for cross-border activities" and would represent a "backtrack from the existing passporting regime", which is where the licensing of business operations by a regulator in one EU country is recognised by regulators in other countries.

The presidency defended its proposals and said most EU countries were behind its plans.

"Most member states are of the opinion that the compromise addresses in a balanced manner cooperation and coordination between home and host competent authorities, and duly takes into account the specific features of cross-border provision of payment services by payment institutions, which usually operate through networks than can comprise hundreds of agents," the presidency said. "Moreover, the compromise is considered to be fully compliant with the principles underpinning the internal market."

The presidency said that another EU country had raised a separate objection to its proposals on how account information service (AIS) providers should be regulated under PSD2.

The presidency has proposed that AIS providers should not be subject to the authorisation procedure but instead only have to register their business with national regulators so as to be able to provide services in those countries. It said its plans are supported by most EU countries but that one unnamed EU country wants AIS providers to be subject to the same full authorisation procedures that other PSPs will be.

The presidency said: "Since these service providers, offering information services, do not hold payment users’ funds and do not manage payment transactions, the information requirements and the regulatory regime provided for are considered sufficient and well-balanced."