New PSD2 plans suggest new rules on access to payment accounts moving closer

Out-Law News | 27 Nov 2014 | 12:45 pm | 1 min. read

Banks and other 'credit institutions' could have to provide other 'third party' service providers (TPPs) with easier access to customers' payment accounts to help facilitate transactions and new account information services under proposed reforms to EU payments rules.

The presidency of EU law making body the Council of Ministers (the presidency) set out the latest compromise proposals for a new Payment Services Directive (PSD2) (172-page / 1.12MB PDF) late last week and a working party on the reforms was due to discuss the measures on Monday.

The proposals would, if introduced as drafted, require banks and other 'credit institutions' to consider and decide upon TPPs' requests for access to payment accounts under their control in a "non-discriminatory manner". The credit institutions would be able to reject access requests but only on non-discriminatory grounds.

The proposals are the latest in a string of PSD2 reforms suggested by the presidency. It does, however, look increasingly likely that the draft provisions on access to credit institutions' payment accounts by TPPs will be part of the final negotiations on the wording of the PSD2 framework with MEPs and the European Commission.

The planned PSD2 reforms reflect an acknowledgement by the European Commission and EU law makers that payment services have been evolving in the internet age. The reforms seek to bring more businesses that have become involved in the payments market within the scope of regulation in an effort to provide better consumer protection.

Under the proposals TPPs would be required to obtain a licence to operate in the EU. TPPs would be subject to stiffer rules in relation to customer authentication for transactions to help cut fraud levels. The rules also reflect the rise of third party participation in payment systems, and would, if introduced, put so-called payment initiation service providers and account information service providers under new obligations to obtain consumers' consent to facilitate transactions.

The proposed rules also require payment institutions to hold certain capital, generally require payment system operators to permit authorised payment service providers to access to payment systems on "objective, non-discriminatory and proportionate" terms, and place new obligations on payment service providers in relation to their outsourcing agreements. A separate regulation on interchange fees would also introduce new caps on the amount payment services providers can charge for processing payments.

There are exceptions to the rules in the presidency's proposals. They would not apply, for example, to low value electronic ticket purchases, and "trading platforms for the exchange of virtual currencies" would also be exempt from the new regime, under the current plans.