Ireland: Payments, E-Money And Crypto-Assets Quarterly Legal And Regulatory Update, July - September 2021

1. PAYMENTS

1.1 EBA updates Single Rulebook Q&A on PSD2

During the period 1 July 2021 to 30 September 2021, the European Banking Authority (EBA) updated its Single Rulebook Questions and Answers publication (Single Rulebook Q&A) on the Revised Payment Services Directive (2015/2366/EU) (PSD2). The Q&As in respect of the following articles have been updated:

• Article 4(30) – Definitions: strong customer authentication;
• Article 24 – Professional secrecy;
• Article 66 – Rules on access to payment account in the case of payment initiation services;
• Article 97 - Authentication; and
• Article 98 – Regulatory technical standards on authentication and communication.

The Single Rulebook Q&A can be accessed here.

1.2 EBA consults on the draft guidelines on the limited network exclusion under PSD2

On 15 July 2021, the EBA launched a public consultation on draft guidelines providing clarity on the application of the limited network exclusion requirements laid down in PSD2. The excluded payment instruments include store cards, fuel cards, membership cards, public transport cards, parking tickets, meal vouchers and others.

The EBA identified inconsistencies on how this exclusion is applied across the EU. The proposed guidelines aim to bring about convergence on a range of aspects of PSD2's application, including on how a network of service providers or a range of goods and services should be assessed in order to qualify as 'limited' for the purposes of the exclusion requirements, the use of payment instruments within limited networks, the provision of excluded services by regulated financial institutions and electronic money issuers, and the submission of notification to competent authorities.

The consultation period runs until 15 October 2021. The final guidelines will be published following the end of the consultation period.

The consultation paper can be accessed here and the consultation is available here.

1.3 European Commission Regulation for the codification of cross-border payment rules in the EU

On 30 July 2021, Regulation (EU) 2021/1230 (the New Regulation) of 14 July 2021 on cross-border payments in the Union was published in the Official Journal of the EU (OJ).

The New Regulation codifies Regulation (EC) No 924/2009 on cross-border payments in the Community and repeals Regulation (EC) No 2560/2001. The New Regulation supersedes the existing rules on cross-border payments but the content of the acts being codified is fully preserved.

The New Regulation entered into force on 19 August 2021, 20 days following publication in the OJ.

The New Regulation can be accessed here.

Irish legislation has been updated for the purpose of giving effect to the New Regulation by way of:

• the European Communities (Cross Border Payments) (Amendment) Regulations 2021 (S.I. No. 417 of 2021) amending the European Communities (Cross Border Payments) Regulations 2010 (S.I. No. 183 of 2010), which can be accessed here; and
• the European Union (Payment Services) (Amendment) Regulations 2021 (S.I. No. 418 of 2021) amending the European Union (Payment Services) Regulations, which can be accessed here.

The Irish regulations came into effect on 24 August 2021.

1.4 EBA report on the use of digital platforms in the EU banking and payments sector

On 21 September 2021, the EBA published a report on the use of digital platforms in the EU banking and payments sector (the Report). The EBA published the Report following a sharp acceleration in the digitalisation of both front and back-office processes in the EU banking and payments sector, and observing rapid growth in the use of digital platforms to 'bridge' customers with financial institutions.

The EBA found that the majority of competent authorities currently have a limited understanding of platform-based business models, particularly in the context of interdependencies between financial institutions and technology companies outside the perimeter of competent authorities' direct supervision. As a result, the EBA intends, as a priority in 2022, to help competent authorities deepen their understanding of platform-based business models and the opportunities and risks arising by supporting competent authorities in:

• developing common questionnaires for regulated financial institutions on digital platform and enabler use; and
• sharing information about financial institutions' reliance on digital platforms and enablers in order to facilitate coordinated EU-wide monitoring.

Following from this more comprehensive monitoring by competent authorities, the EBA will:

• develop a framework to facilitate the aggregation of information about financial institutions' dependencies on digital platforms and enablers in order to identify cumulative dependencies in the context of the marketing and distribution of financial products and services; and
• establish indicators that could help in assessing potential concentration, contagion and potentially future systemic risks that could be taken into account in the context of supervision.

The proposals will be considered in the context of the European Supervisory Authorities (ESAs) work following the European Commission's Call for Advice on digital finance and related issues in February 2021. The proposals intend for the EBA to continue to enable greater supervisory knowledge sharing for financial sector supervision, consumer protection, data protection and competition.

The Report also emphasises the EBA's previous recommendation to the European Commission to update its interpretative communications relating to when a digital activity should be considered as a cross-border provision of services.

The Report can be accessed here.

1.5 Delegated Regulation supplementing PSD2 with RTS on framework for home-host co-operation and information exchange

On 28 September 2021, Commission Delegated Regulation (EU) 2021/1722 supplementing PSD2 with regard to regulatory technical standards (RTS) was published in the OJ. The Delegated Regulation establishes the framework for co-operation and the exchange of information between competent authorities of the home and the host member states in the context of supervision of payment institutions (PIs) and electronic money institutions (EMIs) exercising cross-border provision of payment services.

To view the full article please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.