European Parliament Releases Industry-Friendly Amendments To PSD3

November 16, 2023
The Economic and Monetary Affairs Committee has shared its thoughts on the revised Payment Services Directive (PSD3), suggesting amendments in favour of payment and e-money institutions.

The Economic and Monetary Affairs (ECON) Committee has shared its thoughts on the revised Payment Services Directive (PSD3), suggesting amendments in favour of payment and e-money institutions.

The cogs are beginning to turn on PSD3 and the Payment Services Regulation (PSR), with members of the European Parliament outlining possible amendments to PSD3, with the PSR also due to be released this week. 

Documents seen by Vixio show that some members of the European Parliament want the directive to establish more ambitious measures than the European Commission has proposed. 

For example, an amendment to Recital 18 suggests speeding up the licensing process even more than envisaged in the commission’s proposal. 

Here, the Parliament has said it is appropriate to impose on competent authorities a time limit of a maximum of one month for the authorisation process to be concluded. This would reduce the commission’s already ambitious three-month process. 

The amendments also call for national competent authorities to make clear to payment institutions why they are not willing to offer a safeguarding account, in the event that they cannot access one from a commercial bank. 

Sources have questioned how viable this is, with one suggesting that it could lead to financial crime risks due to rushed decisions, and non-compliance from the national competent authorities if they are unable to complete the process in this timeframe. 

This proposal from the European Commission is intended to rein in de-risking problems that can be experienced by payments and e-money institutions. 

The European Parliament’s amendment puts in place a similar justification process to what is expected of the private sector when they turn down supplying a bank account. 

Further, lawmakers have added an additional recital stating that although it may be the case that credit institutions refuse to hold an account for a payment institution, that would be detrimental to the objective of diversification of risk for payment institutions. 

“Therefore, credit institutions should be required, in the case that they refuse to open, or decide to terminate, a payment institution's account, to provide the payment institution with a duly justified response and reasoning to the payment institution in the case it is not granted an account at that credit institution, or a duly justified reasoning behind the withdrawal of the payment institution's account,” the amendment says. 

The suggested amendments are an attempt to shore up enforcement and compliance with the laws by national competent authorities. Often, an issue that sources have discussed is that member state regulators have struggled to effectively implement the PSD2 rules, which has led to problems such as poor-performing application programming interfaces (API) and de-risking for payment institutions. 

Among the amendments suggested is a new recital that advocates that the European Banking Authority (EBA) should “coordinate a collaboration forum, at least once per year, between national competent authorities in order to facilitate further harmonisation on the transposition, implementation and enforcement of the provisions laid down” in the directive. 

For example, the lawmakers have put forward an amendment that says undertakings required for authorisation are professional indemnity insurance covering member states that they operate in, or a minimum initial capital of €500,000 until insurance is possible. 

Meanwhile, an amendment has been put down reducing the amount of capital that e-money institutions need to hold from €400,000 to €350,000.

The changes for PSD3 also try to cut down unnecessary burdens for payment institutions. 

For example, an amendment to Recital 57 says that although national competent authorities should have the right to request payment institutions report to them periodically on their activities in their territory for information or statistical purposes, this should be restricted to one “central contact only” from the payment institution. 

This should prevent member states from delineating from the legislation by demanding institutions passporting into the country also set up an office. This has been a problem, according to some sources, for payment and e-money institutions operating in some southern EU countries. 

The amendments laid down also go further than the European Commission's in extending the amount that consumers can withdraw in cash from merchants in Recital 62. 

Here, parliamentarians have suggested that the proposed cap of €50 should be increased to €100. This would go further than the UK’s cashback scheme, which is set at £50. 

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