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Germany’s financial regulator BaFin has announced that it will temporarily relax enforcement of certain technical and reporting requirements under the revised Payment Services Directive (PSD2) for account-servicing payment service providers (ASPSPs).
In a recently published supervisory notice, BaFin said that until further notice it will not object if ASPSPs do not provide a dedicated technical endpoint for confirming the availability of funds to card-issuing payment service providers (PSPs).
The regulator has also said that it will refrain from enforcing the requirement for quarterly statistics to include the daily average response time for such fund confirmation requests.
The move provides breathing room for PSPs grappling with implementation of the access and reporting rules laid out in Germany's local legislative regime, the Payment Services Supervision Act (ZAG) and the EU’s regulatory technical standards under PSD2.
Requirements still in place
BaFin explained that no card-issuing PSP in Germany currently appears to rely exclusively on this specific interface functionality, reducing the immediate need for enforcement.
However, it emphasised that if a card-issuing PSP does submit a request to confirm fund availability, then ASPSPs must promptly inform the requester of available access options, and provide a technical endpoint without delay, if needed.
Despite the relaxation in its approach to enforcement, BaFin has made clear that its expectations regarding the functionality, performance and availability of dedicated and customer interfaces, particularly those related to the EU’s Payment Accounts Directive (PAD) and Key Information Documents (KID), remain unchanged.
The supervisory notice also reaffirms that PSPs are still under compliance requirements to provide access to online payment accounts for payment initiation service providers (PISPs), account information service providers (AISPs) and card-issuing PSPs.
PSPs planning to make fund confirmation functionality part of their future business models have been encouraged to contact BaFin in advance to discuss their plans with the relevant supervisory department.
A pragmatic solution
BaFin’s decision reflects a pragmatic approach overall, prioritising regulatory proportionality over a more rigid regime of compliance.
This should allow it to maintain an equilibrium between meeting the objectives of PSD2 while also acknowledging current market conditions in Germany, including an apparent lack of demand.
“BaFin is currently not aware of any card-issuing payment service provider in Germany whose business model relies solely on the technical endpoint of confirming the availability of a sum of money via the account access interfaces,” the regulator said.
In this context, requiring banks to develop and maintain technical infrastructure that is rarely used would impose unnecessary cost and operational burden, especially in a country where, much like the rest of Europe, the onus currently is on cutting red tape and boosting growth.
Putting funds and resources towards infrastructure that is not being used makes no sense, and banks will no doubt regard this as a win.
It primarily benefits the banking sector, in fact, as it spares organisations from having to build unused endpoints and reduces their reporting obligations.
On the other hand, card schemes such as Mastercard and Visa, as well as third-party providers developing card-linked innovations, could find that they face delays or added friction in launching and/or scaling services that depend on real-time fund confirmation.
However, there has been little appetite for such services in Germany, in contrast to other jurisdictions that have seen greater investment in open banking features.
In the UK, for example, Visa confirmed its launch of an account-to-account (A2A) solution last year.
Ultimately, the decision does risk undermining the broader spirit of open banking, which is built in Europe on the idea of uniform, standardised and enforceable access to account data and functionality.
These concessions could be read as a sign that the German regulator has lost faith in open banking’s ability to act as a payments disruptor in the way that it was supposed to after PSD2.
