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Industry analysis highlights that broad definitions of distributors risk imposing disproportionate compliance obligations, potentially reshaping the EU gift card ecosystem and limiting consumer choice.
Trade associations from across EU member states warn that misclassifying the sale or redemption of e-money products as a regulated payment service could impose disproportionate compliance obligations on small retailers and local shops.
The intervention comes as trilogue negotiations on the Payment Services Directive 3 (PSD3) and the Payment Services Regulation (PSR) reach a critical stage.
The PSD3/PSR payment services package, originally unveiled by the European Commission in June 2023, proposes merging e-money issuance and payment services regulation. However, its broad definition of “distributor” may capture third-party resellers, such as retailers of gift cards, potentially classifying them as agents requiring supervisory registration.
This, the trade associations argue, risks undermining both consumer access and the business models of hundreds of thousands of outlets across the trading bloc.
An unfair burden
“For PSD3 there was an initial push under the Belgian Presidency to remove the distributor definition so that only e-money agents under the control of an obliged entity would remain,” Atze Faas, payments adviser at Eurocommerce, told Vixio.
“The background seemed to be essentially wanting to stop the selling or redeeming of e-money products without a payment service, which is also what retailers and their outlets do.”
Faas explained that the position of merchant groups is that simply distributing and redeeming e-money or gift cards should not be classified as a payment service.
“Retailers, wholesalers and their outlets, whether in-store or online, should not be deemed to be providing payment services and therefore should not be subject to payment supervision. Supervisors themselves would not want to oversee millions of SMEs for such low-risk activities.”
Hannah Shimko, director of the Gift Card & Voucher Association, agreed. “Bringing third-party resellers and retail outlets into scope will place an excessive and disproportionate bureaucratic burden on them and the supervisory authorities overseeing them.
“It does not make sense for sellers to be registered, particularly as e-money gift cards are typically low risk and as mentioned above, the issuer remains fully accountable,” she added.
“Distributors and merchants play a limited but vital role in the distribution of these products to customers. Retailers should not face disproportionate compliance burdens for simply selling or redeeming gift cards.”
A risk to an ecosystem
E-money products such as gift cards and prepaid vouchers are sold in more than 800,000 retail locations in the EU, including supermarkets, petrol stations and convenience stores.
They are widely used as a budgeting and gifting tool, and offer a cash-like alternative for people without a bank account or credit card.
The joint statement argues that selling, distributing and redeeming e-money are not payment services. It urges negotiators from the European Commission, Parliament and Council to adopt the latter's proposed clarifications in Recital 45 and Article 20(4). This states that retailers should not be treated as payment agents for simply offering vouchers or redeeming gift cards.
“If supermarkets and other resellers were required to register as payment agents, many would withdraw from selling these products,” warned Hartwig Gerhartinger, chair of the Prepaid Association of Germany (PVD).
Gerhartinger told Vixio that consumers “would lose convenient access to gift cards and vouchers, which are widely used for gifting, budgeting, and as a payment method by people without bank accounts or credit cards”.
“It would also negatively impact the companies whose goods and services are purchased with these vouchers, as they would lose an important distribution and payment channel,” he said.
“In practice, a regulatory misstep here risks dismantling an effective ecosystem that today works well for consumers, merchants, and issuers alike.”
The Council position
Gift card representatives believe the Council’s text contains the solution to this problem. It removes the legal concept of “distributor” introduced by the European Commission and clarifies that the simple selling, distribution or redemption of e-money does not amount to a payment service.
Industry groups say this approach strikes the right balance, ensuring consumer protection and supervisory clarity without creating any unnecessary bureaucracy.
“We would like it recognised that the distribution and redemption of e-money is not a payment service activity and therefore doesn’t require a payment services licence or registration as an agent,” said Wendy Trienen, chair of the BrancheVereniging Cadeaukaarten Nederland, an association representing the gift card industry in the Netherlands.
“Our ultimate goal would be to see gift cards, as a niche and low-risk product, fully excluded from the PSD scope. Where exclusion is not possible, the Limited Network Exemption should be broadened to ensure that gift cards can continue to operate under a proportionate and workable framework.”
However, in the joint statement, the coalition warns that ambiguity remains around the definition of “redemption.”
Recital 45 states that redemption is not itself a payment service, but Article 20(4) does not explicitly reflect this. Industry groups fear this inconsistency could disrupt existing business models and call for the text to be amended.
Their proposed clarification would state that “the mere selling, or distribution or redemption of electronic money … shall not by itself constitute the activity of an agent.”
The coalition emphasises that the issuing payment institution always retains legal responsibility for the distribution chain, including oversight of retail partners through contractual arrangements. Entities providing additional services beyond simple distribution would still be subject to the full agent regime.
Industry representatives are now calling on co-legislators to endorse the Council’s approach and include an explicit reference to redemption in Article 20(4).
They argue that doing so would safeguard consumer access to trusted e-money products, reduce unnecessary regulatory burdens on SMEs, provide legal certainty for supervisors and issuers and maintain accountability with issuing institutions.
According to the joint statement, by adopting this technical clarification, the EU can strengthen financial inclusion, preserve consumer choice and ensure a proportionate and effective regulatory framework for e-money.
