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PSD2: EBA consults on guidelines on limited network exclusion
The European Banking Authority (EBA) is consulting on guidelines on the limited network exclusion (LNE) under the revised Payment Services Directive (PSD2).
The EBA explains that Article 3(k) of PSD2 introduced an exclusion for services based on specific payment instruments that can be used only in a limited way. However, Article 37(2) of PSD2 provides that for payment transactions over EUR1 million, payment service providers (PSPs) relying on the exclusions under Article 3(k)(i) or (ii) of PSD2 must notify their competent authority. Competent authorities, in turn, must assess whether or not the activity qualifies as a limited network. Payment instruments that could be covered by the LNE include store cards, fuel cards, membership cards, public transport cards, parking ticketing and meal vouchers.
The EBA believes that the implementation and application of the LNE requirements diverges significantly between member states, which impedes the single market for payment services in the EU and creates opportunities for regulatory arbitrage. The EBA also believes that consumers are sometimes unaware that they do not benefit from the protection envisaged under PSD2.
Therefore, the EBA is proposing guidelines to bring about convergence on a number of aspects of the LNE. In particular, the draft guidelines address specificities for each type of limited network exclusion envisaged under Article 3(k) of PSD2, including, where relevant, criteria and indicators on how to qualify a limited network of service providers and limited range of goods and services as such. The guidelines also cover the EBA's expectations on the use of payment instruments within a limited network, the application of the LNE by regulated PSPs and electronic money issuers, and the application of the notifications to competent authorities.
The deadline for responses is 15 October 2021 following which the EBA will publish final guidelines.
Use of CBDCs to enhance cross-border payments: CPMI, BIS, IMF and World Bank report
The Committee on Payments and Market Infrastructures (CPMI), the BIS Innovation Hub, the International Monetary Fund (IMF) and the World Bank jointly published a report for the G20 on the use of central bank digital currencies (CBDCs) for cross-border payments.
This report takes stock of the international dimension of CBDC projects and the extent to which they could be used for cross-border payments. It also investigates possible macro-financial implications associated with the cross-border use of CBDCs.
The G20 has made enhancing cross-border payments a priority and endorsed a comprehensive programme to address the key challenges. The report is part of this work.
UK-US collaboration in digital payments: TheCityUK report
TheCityUK has published the first report in a series of six focussing on financial innovation between the UK and the US markets: "UK-US financial innovation: digital payments". The report argues that removing regulatory obstacles to establish a deep and successful digital payments market would offer substantial mutual benefits to both markets. Recommendations fall under the headings of open banking; privacy and international data transfer; licensing regimes; cross-border payments; and financial inclusion. TheCityUK intends to work closely with HM Treasury and the industry to progress these issues in the coming months.
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Authored by Yvonne Clapham
