Changes from report parliamentary committee draft to plenary report

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

▸7 unchanged paragraphs

on the proposal for a directive of the European Parliament and of the Council on payment services and electronic money services in the Internal Market amending Directive 98/26/EC and repealing Directives 2015/2366/EU and 2009/110/EC

(COM(2023)0366 – C90218/2023 – 2023/0209(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(2023)0366),

– having regard to Article 294(2) and Articles 53 and 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C90218/2023),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

Removed– having regard to Rules 59 of its Rules of Procedure,

Added– having regard to the opinion of the European Economic and Social Committee of 14 December 2023,

Changed– having regard to theRule report59 of the Committee on Economic andits MonetaryRules Affairsof (A90000/2023),Procedure,

Added– having regard to the report of the Committee on Economic and Monetary Affairs (A9-0046/2024),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Change 1

RemovedRecital 6: (6) As evidenced in the review conducted by the Commission and given the evolution of the respective markets, businesses and risks attached to the activities, it is necessary to update the prudential regime for payment institutions, including those issuing electronic money and providing electronic money services, by requiring a single licence for providers of payment services and electronic money services not taking deposits. Given that Regulation (EU) 2023/1114 of the European Parliament and of the Council32 lays down in its Article 48(2) that issuers of electronic money tokens shall be deemed to be electronic money issuers, the licensing regime for payment institutions, as they will replace the electronic money institutions, should also apply to issuers of electronic money tokens. The prudential regime applicable to payment institutions should be based on an authorisation, subject to a set of strict and comprehensive conditions, for legal persons offering payment services when not taking deposits. The prudential regime applicable to payment institutions should ensure that the same conditions apply Union-wide to the activity of providing payment services.

AddedAMENDMENTS BY THE EUROPEAN PARLIAMENT*

RemovedTechnical clarification on Electronic Money, clarifying the terms used for electronic money in terms of the instrument (token) and clarifying that it applies to the issuer

Addedto the Commission proposal

RemovedRecital 10: (10) Given the emergence of new types of payment instruments, the evolving technological solutions that provide for such instruments, and the uncertainties prevailing in the market as to their legal qualification, the definition of a ‘payment instrument’ should be further specified as to what constitutes or does not constitute a payment instrument, bearing in mind the principle of technology neutrality.

Added---------------------------------------------------------

RemovedRecital 18: (18) The EBA Peer Review on authorisation under Directive (EU) 2015/2366 published in January 202335 concluded that deficiencies in the authorisation process have led to a situation where applicants are subject to different supervisory expectations as regards the requirements for authorisation as a payment institution or electronic money institution across the Union, and that sometimes the process of granting an authorisation may take an exceedingly long time. To ensure a level playing field and a harmonised process for the granting of an authorisation to undertakings applying for a payment institution license, it is appropriate to impose to competent authorities a time limit of a maximum of 1 month for the authorisation process to be concluded, after the receipt of all the information required for the decision.

Added2023/0209 (COD)

RemovedRecital 31: (31) Considering the difficulties experienced by payment institutions in opening and maintaining payment accounts with credit institutions, it is necessary to provide for an additional option for the safeguarding of users’ funds, namely the possibility to hold those funds at a central bank. That possibility should however be without prejudice to the possibility for a central bank to not offer that option, based on its organic law. Any rejection of that option by a central bank should be duly justified to the relevant payment institution. Taking into account the need to protect users’ funds and to avoid that such funds are used for other purposes than to provide payment services or electronic money services, it is appropriate to require that payment service user funds are kept separate from the payment institution’s own funds. To ensure a level playing field between payment institutions providing payment services and payment institutions issuing electronic money and providing electronic money services, it is appropriate to align as much as possible the regimes applicable to the safeguarding of users’ funds, whilst preserving the specificities of electronic money. Concentration risk is a significant risk faced by payment institutions, in particular where funds are safeguarded in a single credit institution. It is therefore important to ensure that payment institutions avoid concentration risk to the extent possible. For that reason, the EBA should be instructed to develop regul…

AddedProposal for a

RemovedRecital 31 a (new): (31a) It might be the case that a credit institution refuses to open and maintain an account for a payment institution. That would be detrimental to the objective of diversification of risk for payment institutions. Therefore, where a credit institution refuses to open, or decides to terminate, a payment institution's account, it should be required to provide that payment institution with a duly justified response and reasoning.

AddedDIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

RemovedRecital 35: (35) Payment institutions should be allowed to grant credit, but this activity should be subjected to some strict conditions. It is therefore appropriate to regulate the granting of credit by payment institutions in the form of credit lines and the issuance of credit cards, insofar as those services facilitate payment services. It is appropriate to allow payment institutions to grant short-term credit with regard to their cross-border activities, on the condition that it is refinanced using mainly the payment institution’s own funds, as well as other funds from the capital markets, and not the funds held on behalf of clients for payment services. That possibility should however be without prejudice to Directive 2008/48/EC of the European Parliament and of the Council39 or other relevant Union law or national measures regarding conditions for granting credit to consumers. Given their principally lending nature, ‘Buy Now Pay Later’ services should not constitute a payment service. Those services are covered by the new Directive on consumer credits replacing Directive 2008/48/EC.

Addedon payment services and electronic money services in the Internal Market amending Directive 98/26/EC and repealing Directives 2015/2366/EU and 2009/110/EC

RemovedRecital 38: (38) To avoid abuses of the right of establishment and to avoid cases where a payment institution establishes itself in a Member State without planning to perform any activity in that Member State, it is appropriate to require that a payment institution requesting authorisation in a Member State provides at least part of its payment services business in that Member State. The obligation for an institution to carry out a part of its business in its home country, which was already imposed by Directive (EU) 2015/2366, has been interpreted very differently, with some home countries imposing that most of the business be carried out in their country. A ‘part’ should be interpreted to mean less than the majority of the institution’s business in order to preserve the “effet utile” of the payment institution’s freedom to provide cross-border services.

Added(Text with EEA relevance)

RemovedRecital 49: (49) To enable competent authorities to properly supervise payment institutions, it is appropriate to grant those authorities investigatory and supervisory powers and the possibility to impose administrative penalties and measures necessary to perform their tasks. For the same reason, it is appropriate to grant competent authorities the power to request information, conduct on-site inspections and issue recommendations, guidelines and binding administrative decisions. Member States should lay down national provisions, harmonised under the provisions set out in this Directive, with respect to the suspension or withdrawal of the authorisation of a payment institution. Member States should empower their competent authorities to impose administrative sanctions and measures aimed specifically at ending infringements of provisions concerning the supervision or pursuit of the payment service business.

AddedTHE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

RemovedRecital 50: (50) Due to the broad range of possible business models in the payments industry, it is appropriate to allow for a certain degree of supervisory discretion to ensure that the same risks are treated in the same way across all Member States.

AddedHaving regard to the Treaty on the Functioning of the European Union, and in particular Articles 53 and 114 thereof,

RemovedRecital 57: (57) Member States should be able to require payment institutions operating on their territory, whose head office is situated in another Member State, to report to them periodically on their activities in their territory for information or statistical purposes. Where those payment institutions operate pursuant to the right of establishment, the competent authorities of the host Member State(s) should be able to require that information also to be used for monitoring compliance with Regulation XXX [PSR]. The same should apply where there is no establishment in the host Member State(s), and the payment institution is providing services in the host Member State(s) on the basis of the free provision of services. To facilitate the supervision of networks of agents, distributors or branches by competent authorities, it is appropriate that Member States where agents, distributors or branches operate are able to require the parent payment institution to appoint a central contact point in their territory. Where a Member State does impose such a requirement, each payment institution should appoint only one central contact point per Member State. The EBA should develop regulatory standards setting out the criteria to determine when the appointment of a central contact point is appropriate and what its functions should be. While doing so, the EBA should take into account the experience gained in the application of Commission Delegated Regulations (EU) 2021/172244 and 2020/142345 . The re…

AddedHaving regard to the proposal from the European Commission,

RemovedRecital 62: (62) To further improve access to cash, which is a priority of the Commission, retailers should be allowed to offer, in physical shops, cash provision services even in the absence of a purchase by a customer, without having to obtain a payment service provider authorisation, registration or being an agent of a payment institution. Those cash provision services should, however, be subject to the obligation to disclose fees charged to the customer, if any. These services should be provided by retailers on a voluntary basis and should depend on the availability of cash by the retailer. To prevent unfair competition between ATM deployers not servicing payment accounts and retailers offering cash withdrawals without a purchase, and to ensure that shops do not rapidly run out of cash, it is appropriate to impose a cap of EUR 100 per transaction.

AddedAfter transmission of the draft legislative act to the national parliaments,

RemovedRecital 66 a (new): (66a) The EBA should coordinate a collaboration forum, at least once per year, between national competent authorities in order to facilitate further harmonisation as regards the transposition, implementation and enforcement of the provisions laid down in this Directive.

AddedHaving regard to the opinion of the European Economic and Social Committee,

RemovedRecital 71: (71) Payment institutions are not included in the list of entities which fall under the definition of “institutions” in Article 2, point (b) of Directive 98/26/EC of the European Parliament and of the Council47 . Consequently, payment institutions are effectively prevented from participating in payment systems designated by Member States pursuant to that Directive. That lack of access to certain key payment systems can impede payment institutions in providing a full range of payment services to their clients effectively and competitively. It is therefore justified to include payment institutions under the definition of ‘institutions’ in that Directive, but only for the purpose of payment systems, and not for securities settlement systems. Payment institutions should meet the requirements and respect the rules of payment systems to be allowed to participate in those systems. Regulation XXX [PSR] lays down requirements on operators of payment systems regarding the admission of new applicants for participation, including as regards an assessment of relevant risks. Given the importance of restoring as soon as possible the level playing field between banks and ‘non-banks’ and considering the impact that the current situation causes to competition in payment markets, it is necessary to grant Member States a shorter transposition and application deadline for this new provision in Directive 98/26/EC than for the other provisions of the present Directive. It is therefore appropriate t…

AddedHaving regard to the opinion of the Committee of the Regions,

RemovedRecital 74: (74) In keeping with the principles of better regulation, this Directive should be reviewed for its effectiveness and efficiency in achieving its objectives, as laid out in the accompanying impact assessment. The review should take place a sufficient time after the entry into force, to base the review on appropriate evidence. Five years is considered to be an appropriate period. While the review should consider the entire Directive, certain topics should be singled out for particular attention, namely the scope and the safeguarding of payment institutions funds which may be affected by the rules proposed by the Commission on 18 April 202350 which, when adopted, would amend Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes. Regarding the scope of this Directive, however, it is appropriate for a review to take place earlier, three years after its entry into force, given the importance attached to this subject in Regulation (EU) 2022/2554. That review of scope should consider both the possible extension of the list of covered payment services to include services such as those performed by payment systems and payment schemes, and the possible inclusion in the scope of some technical services currently excluded, including provisions related to account information service providers having regard to the relevant provisions contained in Regulation (EU) XXX (FIDA)50a. / 50a COM(2023)360 final.

AddedActing in accordance with the ordinary legislative procedure,

RemovedRecital 77: (77) The European Data Protection Supervisor was consulted in accordance with Article 42(1) of Regulation (EU) 2018/1725 and delivered an opinion on 22 August 2023,

AddedWhereas:

RemovedArticle 2 – paragraph 1 – point 24: (24) ‘technical service provider’ means a provider of services which supports the provision of payment services, without entering at any time into possession of the funds to be transferred;

Added(1) Since the adoption of Directive (EU) 2015/2366 of the European Parliament and of the Council, the retail payment services market underwent significant changes largely related to the increasing use of cards and other digital means of payment, the decreasing use of cash and the growing presence of new players and services, including digital wallets and contactless payments. The Covid-19 pandemic and the transformations it brought to consumption and payment practices has increased the importance of having secure and efficient digital payments.

RemovedAlignment with Definition in PSR

Added(2) The Communication from the Commission on a Retail Payments Strategy for the EU announced the launch of a comprehensive review of the application and impact of Directive (EU) 2015/2366 “which should include an overall assessment of whether it is still fit for purpose, taking into account market developments”.

RemovedArticle 2 – paragraph 1 – point 27: (27) ‘Information and communication technology (ICT) services’ means ICT Services as defined in Article 3, point 21, of Regulation (EU) 2022/2554;

Added(3) Directive (EU) 2015/2366 aimed at addressing barriers to new types of payment services and improving the level of consumer protection and security. The evaluation of the impact and application of Directive (EU) 2015/2366 by the Commission found that Directive (EU) 2015/2366 has been largely successful with regard to many of its objectives, but also identified certain areas where the objectives of the Directive have not been fully achieved. In particular, the evaluation identified problems regarding divergent implementation and enforcement of Directive (EU) 2015/2366, which have directly impacted competition between payment service providers, by leading to effectively different regulatory conditions in Member States because of different interpretation of the rules, encouraging regulatory arbitrage.

RemovedTechnical amendment

Added(4) There should be no room for ‘forum shopping’ where payment services providers would choose, as home country, those Member States where the application of Union rules on payment services is more advantageous for them and provide cross-border services in other Member States which apply stricter interpretation of the rules or apply more active enforcement policies to payment service providers established there. That practice distorts competition. The Union rules on payment services should be harmonised by incorporating rules governing the conduct of payment services in a Regulation and separating them from the rules on authorisation and supervision of payment institutions, which should be governed by this Directive (PSD3), and not continue to be governed by the Directive currently in force (PSD2).

RemovedArticle 2 – paragraph 1 – point 28: (28) ‘agent’ means a natural or legal person who acts on behalf of a payment institution in providing payment services, with the exception of electronic money services;

Added(5) Even though the issuance of electronic money is regulated under Directive 2009/110/EC of the European Parliament and of the Council, the use of electronic money to fund payment transactions is to a very large extent regulated by Directive (EU) 2015/2366. Consequently, the legal framework applicable to electronic money institutions and payment institutions, in particular with regard to the conduct of business rules, is already substantially aligned. Over the years competent authorities in charge of authorisation and supervision of payment institutions and electronic money institutions have experienced practical difficulties in clearly delineating the two regimes and in distinguishing electronic money products and services from payment and electronic money services offered by payment institutions. This has led to concerns about regulatory arbitrage and an uneven level playing field, as well as issues related to the circumvention of the requirements of Directive 2009/110/EC where payment institutions issuing electronic money take advantage of the similarities between payment services and electronic money services and apply for authorisation as a payment institution. It is therefore appropriate that the authorisation and supervision regime applicable to electronic money institutions is further aligned with the regime applicable to payment institutions. However, the licensing requirements, in particular initial capital and own funds, and some key basic concepts governing the electronic money business, including the issuance of electronic money, electronic money distribution and redeemability, are distinct from the services provided by payment institutions. It is therefore appropriate to preserve these specificities when combining the provisions of Directive (EU) 2015/2366 and Directive 2009/110/EC.

RemovedArticle 2 – paragraph 1 – point 38: (38) ‘ATM deployer’ means operators of automated teller machines who do not hold payment accounts.

Added(6) As evidenced in the review conducted by the Commission and given the evolution of the respective markets, businesses and risks attached to the activities, it is necessary to update the prudential regime for payment institutions, including those issuing electronic money and providing electronic money services, by requiring a single licence for providers of payment services and electronic money services not taking deposits. Given that Regulation (EU) 2023/1114 of the European Parliament and of the Council lays down in its Article 48(2) that that issuers of electronic money shall be deemed to be electronic money, the licensing regime for payment institutions, as they will replace the electronic money institutions, should also apply to issuers of electronic money tokens. The prudential regime applicable to payment institutions should be based on an authorisation, subject to a set of strict and comprehensive conditions, for legal persons offering payment services when not taking deposits. The prudential regime applicable to payment institutions should ensure that the same conditions apply Union-wide to the activity of providing payment services.

RemovedArticle 3 – paragraph 2: 2. The authorisation referred to in paragraph 1 shall only be required for those payment services that the applicant payment institutions actually intend to provide.