On 24 February 2022, the European Banking Authority ("EBA") published its guidelines (the "Guidelines") on the limited network exclusion ("LNE") under Directive (EU) 2015/2366 on payment services in the internal market ("PSD2").
BACKGROUND
Pursuant to Article 3(k) of PSD2 services based on specific payment instruments that can be used only in a limited way, are excluded from the scope of that directive – the LNE. Specific instruments that fall within the scope of the LNE include cards that can only be used in a particular chain of stores or a particular shopping centre, fuel cards, membership cards, public transport cards, parking ticketing, meal vouchers and others.
Article 37(2) of PSD2 sets a threshold of EUR 1 million for the value of payment transactions, which, if being exceeded, would require the issuers excluded under Article 3(k)(i) or (ii) of PSD2 to notify the respective competent authority (CA). CAs, in turn, shall assess whether the activity qualifies as a limited network or whether it requires authorisation as a payment or electronic money institution.
MAIN AIM OF THE GUIDELINES
The Guidelines aim at clarifying specific aspects of the application of the LNE requirements, including on how a network of service providers or a range of goods and services should be assessed in order to qualify as ‘limited’, the use of payment instruments within limited networks, the provision of excluded services by regulated financial institutions and the submission of notification CAs.
NEXT STEPS
The Guidelines will apply as of 1 June 2022 with an additional 3-month transitional period for issuers that already benefit from the exclusion to submit a new notification to their national competent authority.
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