The revised Payment Services Directive (PSD2)
PSD2 was published in the European Union's Official Journal (link is external) on 23 December 2015. PSD2 was implemented in the UK by the Payment Services Regulations 2017 (PSRs 2017) on 13 January 2018. It will impact all firms that provide payment services. Firms that are authorised or registered under the PSRs will need to apply to be re-authorised or re-registered under the PSRs 2017 in order to continue providing payment services. New businesses that are seeking authorisation or registration will also be affected.
PSD2 aims to bring regulation up to date with developments in the payment services industry and to promote further innovation. It also aims to improve consumer protection, make payments safer and more secure, and drive down the cost of services by encouraging competition in the marketplace.
Registration and authorisation
You can now apply for registration or authorisation under the PSRs 2017.
Firms that need to be registered as a Small Payment Institution (SPI)
If your firm operates below an average monthly turnover in payment transactions of €3m, it may register as a small payment institution (SPI).
If, under the PSRs 2017, you intend to provide Account Information Services only, you can apply to become a Registered Account Information Service Provider (RAISP).
Firms that need to be authorised as an Authorised Payment Institution (API)
You can apply to become an authorised PI if your firm: doesn’t qualify as an SPI, or a RAISP, or wants to provide payment services in other European Economic Area (EEA) member states
Firms that need to be registered as Small Electronic Money Institutions
If you expect your total business activities will not exceed an average of €5m outstanding e-money immediately before registration, you may wish to apply to register as a small EMI.
You can also provide payment services that are unrelated to e-money but only if the average monthly turnover in payment transactions does not exceed €3m (unrelated payment services).
Firms that need to be authorised
You can apply to become an authorised EMI:
if your firm does not qualify as a small EMI, for example, if the expected average outstanding e-money will exceed €5m
if you want to issue e-money in other European Economic Area(link is external) (EEA) member states
Your firm can also provide other payment services not related to e-money (unrelated payment services).
Electronic Money:
What e-money services and payment services you want to provide, set out in a business plan
Who’ll be responsible for providing the services, for example, a manager or an agent on your behalf details of any person or firm with 10% or more of the capital or voting rights in your firm, and if you want to operate in other EEA states
Payment Institutions:
What payment services you want to provide
Who’ll be responsible for providing the services (for example, if a manager or an agent is acting on your behalf) details of any person or firm with 10% or more of the capital or voting rights in your firm whether or not you want to operate in other EEA states
Conduct of business requirements
All PIs must comply with the conduct of business requirements set out in the PSRs. These fall into 2 categories: information to be provided to the customer before and after carrying out a payment, and the rights and obligations of both the PI and the customer regarding payment transactions
The EMRs set out the obligations that apply to EMIs as you conduct e-money business. They relate to the issuing and redeeming of e-money and the prohibition on paying interest or other benefits linked to the length of time that e-money is held.
Reporting requirements for authorised or registered PIs
Authorised and registered PIs must: provide regular reporting information to comply with our supervisory and EU reporting obligations send ‘notifications’ when there’s a significant change in the firm’s circumstances