Qualifying as a payment account: as simple as it sounds?

Opportunities under PSD2: access to payment accounts, personal data and payment services for TPPs

In this second blog we do a deep dive in the PSD2 Trilemma. The goal of PSD2 is to open up the EU payment market to more competition. One of the most important changes of PSD2 is the possibility for third party providers (“TPPs”) to have access to payment accounts held at account servicing payment service providers (“ASPSPs”, most commonly banks). Consequently, banks no longer have a monopoly on payment account data and payment services.

Therefore, ‘payment account’ is a key definition to determine the applicability of PSD2: the interpretation of its meaning is decisive to which accounts are in scope of the directive, and it is thus relevant to determine what a ‘payment account’ exactly entails.  

From PSD1 to PSD2

According to its definition under the first Payment Services Directive (“PSD1”), a ‘payment account’ means an account held in the name of one or more payment service users which is used for the execution of payment transactions. Under PSD1, the Dutch legislator¹ has stated that all accounts seemed to be in scope that could affect (also sporadically) a payment. In Case C-191/17, the Court of Justice of the European Union (“CJEU”) ruled that the determining criterion for the purposes of the categorization lies in “the ability to perform daily payment transactions from such an account”. Furthermore, it is specified that the ability to make such payments through an intermediate account is not sufficient to meet this criterion. This means that an online direct savings account should not be considered as a ‘payment account’, unless the account can be used directly for daily payment transactions.

Although the definition of a payment account was not amended in PSD2, the question remains whether this interpretation can be copy-pasted under PSD2. At the time of the implementation of PSD1, the number of innovative payment products on the market were not as large nor as diverse as it is currently. According to the Dutch legislator, the interpretation of payment accounts under PSD1 is too strict for a proper functioning of PSD2.² The European Commission has, however, communicated that - subject to the provision that only the CJEU can give a definite interpretation – the CJEU ruling on the definition of ‘payment account’ under PSD1 is also applicable under PSD2.³ The Dutch financial authorities follow this guidance.

Different legal interpretations in the EU may lead to challenges for banks and FinTechs

As TPPs may gain access to payment accounts (“XS2A”) as provided for in PSD2, any party that offers payment accounts, will have to deal with providing XS2A services to other TPPs if such access is requested. This means TPPs will also have access to certain personal data related to those payment accounts. The question whether an account qualifies as a payment account, is not only challenging in relation to a savings account. Consider e-money for instance: if an e-wallet qualifies as a payment account, also that particular Electronic Money Institution (“EMI”) has to give XS2A to their user’s e-wallets – when requested. According to the interpretation of the CJEU, the determining criterion for a payment account is its ability to perform daily payment transactions. If thus, an e-wallet allows users to initiate a payment transaction from its account held at the EMI to a payee, the e-wallet may qualify as a payment account. A challenge however, is that such an e-money transaction may appear to be a regular transaction from the front side, but it is disputable whether the process behind that transaction constitutes an actual request to withdraw or transfer funds from the payer to the payee (i.e. a daily “payment transaction”).

Aside from the challenge that a payment account can exist in many different gray-scale flavors, an additional challenge is that the definition of a ‘payment account’ seems also to be subject to different interpretations in other EU Member States. The UK Financial Conduct Authority (“FCA”) for instance, is adopting a slightly broader interpretation of the definition in comparison to that under PSD1 as used by DNB and the CJEU. The FCA states that when determining whether or not an account is a ’payment account’, a number of elements have to be considered, among others the underlying purpose for which the account is designed and held out and its functionality. According to the FCA, amongst others, flexible savings accounts, credit card account, current account mortgages and e-money accounts can all qualify as payment accounts.⁴

This minor difference in interpretation might seem negligible at first glance. On a larger scale however, it will cause discussion and uncertainty as to which accounts will fall within the scope of PSD2. For the ASPSPs as well as for FinTech companies that offer products and services in various EU Member States, a challenge lies ahead: any account – varying from a savings account to an e-money account – that is considered a payment account in one Member State might not be considered as one in another.

Navigating the PSD2 landscape

The supervisory flexibility regarding strong customer authentication is bound to end on 31 December 2020. This could mark the beginning of increased supervisory pressure and enforcement. It remains to be seen whether this will also result in more guidance on the applicability of PSD2 and whether the European Banking Authority decides to interfere in advance.

With our multidisciplinary team of payment experts, Deloitte is able to assist in overcoming the challenges that your organization might be facing in the ever-changing PSD2 landscape and provide advice tailored to your situation. For more information, please reach out to Stephan Ong.

1-Kamerstukken II 2008/09, 31 892, MvT, nr. 3, p. 15
2-Kamerstukken II 2017/18, 34 813, Nota van wijziging, nr. 12, p. 6
3-https://www.toezicht.dnb.nl/3/50-237255.jsp
4-FCA, PERG 15.3 Payment services, Q16, last updated 22/05/2020