A Practical Guide - PSD Implementation From a to Z

8/11/2019 A Practical Guide - PSD Implementation From a to Z

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PRACTICLE GUIDE FROM A to ZPRACTICLE GUIDE FROM A to Z

TOWARDS THE IMPLEMENTATION OF THETOWARDS THE IMPLEMENTATION OF THE

PAYMENT SERVICES DIRECTIVEPAYMENT SERVICES DIRECTIVE

AND THE ESTABLISHMENT OFAND THE ESTABLISHMENT OF

A SINGLE MARKET FOR PAYMENT SERVICESA SINGLE MARKET FOR PAYMENT SERVICES

The preset!t"o "s #"$%& prep!re$ !$ $e%"'ere$ to &o(The preset!t"o "s #"$%& prep!re$ !$ $e%"'ere$ to &o(

)& Yor$! R!$e')& Yor$! R!$e'

Se"or E*pert+ EU P!&,et Ser'"-es Re.(%!t"o !$Se"or E*pert+ EU P!&,et Ser'"-es Re.(%!t"o !$

ECB/ESCB O'ers".ht Po%"-&ECB/ESCB O'ers".ht Po%"-&


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Legal Basis for the Payment ServicesLegal Basis for the Payment Services

Market in the European UnionMarket in the European Union

The provision of payment services in theThe provision of payment services in theEuropean Union is given a legal foundationEuropean Union is given a legal foundation

through the adoption of the Directive on Paymentthrough the adoption of the Directive on Payment

Services - PSD (Directive 2007!"E#$%Services - PSD (Directive 2007!"E#$%

The aim of the PSD is to esta&lish a modern andThe aim of the PSD is to esta&lish a modern andcomprehensive set of rules applica&le for allcomprehensive set of rules applica&le for all

payment services in the European Union%payment services in the European Union%

The PSD strives to &ring a level playing field forThe PSD strives to &ring a level playing field for

the harmoni'ation and coordination of thethe harmoni'ation and coordination of therespective EU-mem&ers national legislations )ithrespective EU-mem&ers national legislations )ith

regard to the access of payment servicesregard to the access of payment services

providers to the payment services mar*et%providers to the payment services mar*et%


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The PSD specifies the all the e+isting categoriesThe PSD specifies the all the e+isting categories

of authori'ed payment services providers, )hichof authori'ed payment services providers, )hich

legitimate to provide payment serviceslegitimate to provide payment services

Directive 2007!"E# introduces alsoDirective 2007!"E# introduces also a newa new

categorycategoryof payment services providers, namelyof payment services providers, namely.payment institutions (P/$.payment institutions (P/$

PSD esta&lishes a single license for P/s providingPSD esta&lishes a single license for P/s providing

payment servicespayment services


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The provisions of the PSD are implemented &y allThe provisions of the PSD are implemented &y allEuropean Union em&er States and areEuropean Union em&er States and aretransposed in their national legislationstransposed in their national legislations

em&er States had around t)o years to adoptem&er States had around t)o years to adoptthe national rules implementing the Paymentthe national rules implementing the PaymentServices Directive into their domestic la)Services Directive into their domestic la)

The provisions of the PSD are implemented inThe provisions of the PSD are implemented in1ulgaria through the adoption of the a) on the1ulgaria through the adoption of the a) on thePayment Services and Payment Systems (PSPS$Payment Services and Payment Systems (PSPS$on 3 4ovem&er 2005on 3 4ovem&er 2005


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6or the efficient application of the reuirements6or the efficient application of the reuirements

of the PSPS the 1ulgarian 4ational 1an* hasof the PSPS the 1ulgarian 4ational 1an* has

issues t)o ordinances8issues t)o ordinances8

- BNB Ordinance- BNB Ordinance 33on the Terms and Procedureon the Terms and Procedure

for the E+ecution of Payment Transactions andfor the E+ecution of Payment Transactions and

Use of Payment /nstrumentsUse of Payment /nstruments

- BNB Ordinance- BNB Ordinance 1616on Payment /nstitutions,on Payment /nstitutions,

Electronic oney /nstitutions and PaymentElectronic oney /nstitutions and Payment

System 9perators icensingSystem 9perators icensing


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What isWhat isa Payment Service Provider?a Payment Service Provider?

/n accordance )ith art% :(3$ of the a) on the/n accordance )ith art% :(3$ of the a) on the

Payment Services and Payment Systems (PSPS$Payment Services and Payment Systems (PSPS$

Payment Service Providers are8Payment Service Providers are8

#redit /nstitutions (&an*s$#redit /nstitutions (&an*s$

EElectronic money companieslectronic money companiesThe European #entral 1an* and the nationalThe European #entral 1an* and the national

central &an*s of the em&er States, )hen notcentral &an*s of the em&er States, )hen not

acting in their capacity as monetary politicsacting in their capacity as monetary politics

authority or other pu&lic authoritiesauthority or other pu&lic authorities

;nd the ne) category Payment Service Provider;nd the ne) category Payment Service Provider

esta&lished &y the PSD8esta&lished &y the PSD8

Payment /nstitutions


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Payment services. Scope of the PS.Payment services. Scope of the PS.

Payment services are defined and regulatedPayment services are defined and regulatedthrough the provisions and the scope of the PSD%through the provisions and the scope of the PSD%Payment services are8Payment services are8services related to placement of cashcashservices related to placement of cashcash

)ithdra)al onfrom a payment account, as )ell as)ithdra)al onfrom a payment account, as )ell asthe related operations of servicing of a paymentthe related operations of servicing of a paymentaccount%account%e+ecution of payment transactions, includinge+ecution of payment transactions, includingtransfers of funds on a payment account )ith thetransfers of funds on a payment account )ith the

users payment service provider or )ith anotherusers payment service provider or )ith anotherpayment service provider8 direct de&its, creditpayment service provider8 direct de&its, credittransfers, payment transactions through a paymenttransfers, payment transactions through a paymentcard or other similar instrumentscard or other similar instruments


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Payment services. Scope of the PS.Payment services. Scope of the PS.

E+ecution of payment transactions )here theE+ecution of payment transactions )here thefunds are covered &y a credit line for a paymentfunds are covered &y a credit line for a paymentservice user8 direct de&its, credit transfers,service user8 direct de&its, credit transfers,payment transactions through a payment card orpayment transactions through a payment card orother similar instrumentsother similar instruments/ssuing andor acuiring of payment instruments/ssuing andor acuiring of payment instrumentsoney remittance payment servicesoney remittance payment servicesE+ecution of payment transactions &y means ofE+ecution of payment transactions &y means oftelecommunication, digital or /T devices, )here thetelecommunication, digital or /T devices, )here the

payment is made to the telecommunication, /Tpayment is made to the telecommunication, /Tsystem or net)or* operator,system or net)or* operator, acting only as anacting only as anintermediaryintermediary&et)een the payment service user&et)een the payment service userand the supplier of the goods or servicesand the supplier of the goods or services


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Payment Services. efinitions !riefingPayment Services. efinitions !riefing

=hat is a Payment ;ccount >=hat is a Payment ;ccount >

;n account held in the name of one or more;n account held in the name of one or morepayment service users )hich is used for thepayment service users )hich is used for thee+ecution of payment transactions (provision ofe+ecution of payment transactions (provision ofpayment services$payment services$

Payment accounts are su&?ect to aPayment accounts are su&?ect to a contractualcontractualrelationshiprelationship&et)een the payment service&et)een the payment serviceprovider and the payment service user, )hichprovider and the payment service user, )hichspecify their respective rights and o&ligations inspecify their respective rights and o&ligations inaccordance )ith the relevant national legislationaccordance )ith the relevant national legislationPayment accounts are su&?ect to a uniuePayment accounts are su&?ect to a uniueidentifier codes assigned &y the respective paymentidentifier codes assigned &y the respective paymentservices providers (41@ /1;4 is used only forservices providers (41@ /1;4 is used only forpayment accounts *ept &y &an*s$payment accounts *ept &y &an*s$


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Payment ;ccountsPayment ;ccounts

9pening a payment account reuires provision of9pening a payment account reuires provision ofcertain documents and information to the paymentcertain documents and information to the paymentservice provider8 personal and other identity data ofservice provider8 personal and other identity data of

the account holder, )hich is specified in 141the account holder, )hich is specified in 1419rdinance9rdinance AA::

Payment accounts *ept &y &an*s can &e used forPayment accounts *ept &y &an*s can &e used forthe storage of money%the storage of money%

41@ Payment accounts *ept &y payment41@ Payment accounts *ept &y paymentinstitutions are usedinstitutions are usedonlyonly for the e+ecutions of thefor the e+ecutions of therelevant payment services for )hich a license )asrelevant payment services for )hich a license )asissued%issued%


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Payment TransactionsPayment Transactions#redit transfers8#redit transfers8 a payment transaction ordereda payment transaction ordered&y the payer&y the payerthrough his payment service providerthrough his payment service provider)ith the aim funds to &ecome availa&le to the)ith the aim funds to &ecome availa&le to thepayee through his payment service provider% Thepayee through his payment service provider% The

payer and the payee may &e one and the samepayer and the payee may &e one and the samepersonpersonDirect de&its8 Direct de&it transactions reuireDirect de&its8 Direct de&it transactions reuirethat thethat the payer grants apayer grants apreliminarypreliminaryconsentconsentto theto thepayment service provider that *eeps his paymentpayment service provider that *eeps his payment

account, and a copy of his consent shall &e sent toaccount, and a copy of his consent shall &e sent tothe payee% Direct de&it is athe payee% Direct de&it is a payment service forpayment service forde&iting a payerBsde&iting a payerBspayment account, )here apayment account, )here apayment transaction is initiatedpayment transaction is initiated&y the payee on the&y the payee on the&asis of the payerBs consent&asis of the payerBs consentgiven to thegiven to thepayeepayee%%


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Payment TransactionsPayment Transactions

oney Cemittance Payment Transactions8oney Cemittance Payment Transactions8

-; payment service )here funds are provided &y a; payment service )here funds are provided &y a

payer for the sole purpose of transferring thepayer for the sole purpose of transferring thecorresponding amount to the payee or to anothercorresponding amount to the payee or to another

payment service provider acting on &ehalf of thepayment service provider acting on &ehalf of the

payee, andor )here such funds are received onpayee, andor )here such funds are received on

&ehalf of and made availa&le to the payee&ehalf of and made availa&le to the payee

-withoutwithoutany payment accounts being opened inany payment accounts being opened inthe name of the payer or the payeethe name of thepayer or the payee,,


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Payment Services. efinitions !riefingPayment Services. efinitions !riefingPayment #ardsPayment #ards

TType of aype of apayment instrumentpayment instrumenton )hichon )hichinformation is electronically recordedinformation is electronically recordedUsed repeatedly for identification of theUsed repeatedly for identification of theauthori'ed users of payment servicesauthori'ed users of payment services

Used for remote access to a payment accountUsed for remote access to a payment accountandor to preliminary set credit limitandor to preliminary set credit limitThe payment card is o)ned &y the paymentThe payment card is o)ned &y the paymentservice provider, issuer of the card and it can &eservice provider, issuer of the card and it can &eused only &y the authori'ed user of paymentused only &y the authori'ed user of payment

services (card holder$services (card holder$Payment cards are personali'ed paymentPayment cards are personali'ed paymentinstruments and are characteri'ed &y a variety ofinstruments and are characteri'ed &y a variety ofsecurity features for the identification of thesecurity features for the identification of theauthori'ed card holders (e%g% P/4 codes and etc%$%authori'ed card holders (e%g% P/4 codes and etc%$%


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Payment #ards TransactionsPayment #ards Transactions

)ithdra)als andor depositing of cash through)ithdra)als andor depositing of cash through

;T terminals;T terminals

Payment of goods and services and cashPayment of goods and services and cash)ithdra)al through P9S terminals)ithdra)al through P9S terminals

Transfer of funds &et)een accounts through ;TTransfer of funds &et)een accounts through ;T

and P9S terminalsand P9S terminals

Payment of services through ;T terminalsPayment of services through ;T terminals

Ceceipt of statements and other payment andCeceipt of statements and other payment and

non-payment operationsnon-payment operations


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What does a Payment "nstitution mean?What does a Payment "nstitution mean?

Payment institutions (P/$ are a ne)Payment institutions (P/$ are a ne)category providers of payment servicescategory providers of payment servicesP/s are legal persons that are introducedP/s are legal persons that are introduced

to the payment services mar*et &y theto the payment services mar*et &y theprovisions of the Payment Servicesprovisions of the Payment ServicesDirectiveDirectiveP/s are a su&?ect to a set of strict andP/s are a su&?ect to a set of strict and

comprehensive authori'ation reuirementscomprehensive authori'ation reuirementsand conditions conducting &usinessand conditions conducting &usinessactivities as a P/ reuires o&taining aactivities as a P/ reuires o&taining alicenselicense


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What does a Payment "nstitution mean?What does a Payment "nstitution mean?P/s licensing reuirements are developed inP/s licensing reuirements are developed in

the PSD and are specially designed for allthe PSD and are specially designed for allproviders of payment services, )hich areproviders of payment services, )hich are

not connected to ta*ing deposits and issuingnot connected to ta*ing deposits and issuing

electronic moneyelectronic money

P/s are prohi&ited from accepting depositsP/s are prohi&ited from accepting deposits

from payment services users and they arefrom payment services users and they are

permitted only to use the funds they receivepermitted only to use the funds they receive

for rendering payment servicesfor rendering payment services#lient funds should &e#lient funds should &e kept separatekept separatefrom the P/s funds for other activitiesfrom the P/s funds for other activities


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9&taining a P/ license necessitates the9&taining a P/ license necessitates the

fulfillment of prudential reuirementsfulfillment of prudential reuirements

proportionate to the operational andproportionate to the operational and

financial ris*s, )hich are faced &y P/sfinancial ris*s, )hich are faced &y P/sCis*s generated &y P/s are the result ofCis*s generated &y P/s are the result of

more speciali'ed and limited activities, andmore speciali'ed and limited activities, and

are narro)er and easier to control andare narro)er and easier to control and

monitor than those generated &y the creditmonitor than those generated &y the creditinstitutions%institutions%


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Ta*ing into consideration theTa*ing into consideration the

specifics of the &usiness conducted &yspecifics of the &usiness conducted &y

the P/s they should &e a su&?ect tothe P/s they should &e a su&?ect to

effective anti-money launderingeffective anti-money launderingand anti-terrorist financingand anti-terrorist financing

requirementsrequirements


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Credit cti!itiesCredit cti!itiesof P/s are strictlyof P/s are strictlyregulatedregulated

The granting of credit lines and theThe granting of credit lines and the

issuance of credit cards,issuance of credit cards, onlyonly)here it is)here it isclosely lin*ed to payment services, i%e%closely lin*ed to payment services, i%e%

(3$(3$ facilitate payment services, andfacilitate payment services, and

(2$(2$ short-term nature, not e+ceeding 32short-term nature, not e+ceeding 32months, including on a revolving &asis%months, including on a revolving &asis%


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#egulators$ role?#egulators$ role?

Licensing and SupervisionLicensing and Supervision

;ll EU em&er States designate;ll EU em&er States designatecompetent authoritiescompetent authoritiesfor thefor theauthori'ation and prudential supervisionauthori'ation and prudential supervisionof payment institutionsof payment institutions

#ompetent authorities should &e either#ompetent authorities should &e eitherpu&lic authorities or &odies recogni'edpu&lic authorities or &odies recogni'ed&y national la) or &y pu&lic authorities,&y national la) or &y pu&lic authorities,

including national central &an*sincluding national central &an*s

#ompetent authorities should &e#ompetent authorities should &ee+pressly empo)ered &y national la)e+pressly empo)ered &y national la)


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#egulators$ role?#egulators$ role?

Licensing and SupervisionLicensing and Supervision

;fter license is &eing issued competent;fter license is &eing issued competent

authorities should ensure continued andauthorities should ensure continued and

adeuate compliance )ith the reuirementsadeuate compliance )ith the reuirements

P/s are su&?ect to8P/s are su&?ect to8- Statistical, financial reports su&missionStatistical, financial reports su&mission

- /nspections/nspections

-

/ssuing recommendations, guidelines and/ssuing recommendations, guidelines andetc%etc%

- Suspending or )ithdra)ing authori'ationSuspending or )ithdra)ing authori'ation


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%o& to get started in the !usiness?%o& to get started in the !usiness?

To &e registered or &e in the process ofTo &e registered or &e in the process of

esta&lishing a limited lia&ility companyesta&lishing a limited lia&ility company

or a ?oint-stoc* company in 1ulgariaor a ?oint-stoc* company in 1ulgaria

To cover the capital reuirementsTo cover the capital reuirements

(i$(i$ /nitial capital reuirements for/nitial capital reuirements for

institutions applying for a licenseinstitutions applying for a license

(ii$(ii$ 9ngoing capital reuirements for already9ngoing capital reuirements for already

licensed companieslicensed companies


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#ompanies )ishing to provide payment#ompanies )ishing to provide payment

services as P/s should o&tain aservices as P/s should o&tain a licenselicense&efore commencing the provision of the&efore commencing the provision of the

payment servicespayment servicesProvision of payment services )ithout aProvision of payment services )ithout a

license is prohi&itedlicense is prohi&ited

Payment institutions can only provide thePayment institutions can only provide the

payment services included in their licensepayment services included in their license


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The company that )ishes to o&tain aThe company that )ishes to o&tain a

license for conducting activity as a paymentlicense for conducting activity as a payment

institution should apply in )riting to theinstitution should apply in )riting to the

relevant competent authority (141$relevant competent authority (141$The applicant should concurrently complyThe applicant should concurrently comply

)ith specific conditions and reuirements)ith specific conditions and reuirements

defined in the PSD and PSPSdefined in the PSD and PSPS

The application dossier should consist ofThe application dossier should consist of

certain list of legal, financial and corporatecertain list of legal, financial and corporate

documentsdocuments


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'onditions for granting a P" license?'onditions for granting a P" license?

;ppropriate legal form;ppropriate legal form;deuate initial capital, corresponding to;deuate initial capital, corresponding tothe types of payment services that thethe types of payment services that theapplicant intends to provideapplicant intends to provide

Transparent and legal origin of the capitalTransparent and legal origin of the capitalEnsured ro&ust and relia&le companyEnsured ro&ust and relia&le companygovernance arrangements, including8governance arrangements, including8

- 9rgani'ational structure and clear and consistent9rgani'ational structure and clear and consistent

rules of responsi&ilityrules of responsi&ility- Cis* monitoring and management proceduresCis* monitoring and management procedures- ;deuate internal control mechanisms, sound and;deuate internal control mechanisms, sound andeffective accounting and administrative procedureseffective accounting and administrative procedures


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Business planBusiness plan- including a- including a forecast budgetforecast budgetcalculationcalculation

for the first three financial years )hichfor the first three financial years )hich

demonstrates that the applicant is a&le todemonstrates that the applicant is a&le to

employ the appropriate and proportionateemploy the appropriate and proportionate

systems, resources and procedures tosystems, resources and procedures to

operate soundlyoperate soundly


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;pplication of sound and adeuate;pplication of sound and adeuatemeasures for safeguarding payment servicemeasures for safeguarding payment service

users funds and payment instruments usedusers funds and payment instruments used6unds of payment services users should not &e mi+ed at6unds of payment services users should not &e mi+ed at

any time )ith o)n funds of the payment institution and anyany time )ith o)n funds of the payment institution and any

person other than the payment service usersperson other than the payment service users

6unds received for the e+ecution of payment services should6unds received for the e+ecution of payment services should

&e stored (if needed$ on a separate and special account held&e stored (if needed$ on a separate and special account held

&y a &an*&y a &an*

such accounts may not &e su&?ect to distraint or foreclosuresuch accounts may not &e su&?ect to distraint or foreclosure

&y a payment institution in respect of persons other than&y a payment institution in respect of persons other than

payment service userspayment service users


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;ppropriate and sufficient professional;ppropriate and sufficient professional

and management *no)ledge andand management *no)ledge and

e+perience of the persons managing ande+perience of the persons managing and

representing the P/ Food reputationrepresenting the P/ Food reputation #lose lin*s have &een identified &et)een#lose lin*s have &een identified &et)een

the applicant and other natural andorthe applicant and other natural andor

legal persons and they do not preventlegal persons and they do not prevent

the effective e+ercise of supervisionthe effective e+ercise of supervision


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Processing of a P" license application?Processing of a P" license application?

#ompliance assessment and chec* up#ompliance assessment and chec* up

procedures for all information andprocedures for all information and

documents to)ards the reuirements ofdocuments to)ards the reuirements of

the PSD, PSPS and 141 9rdinance 3!the PSD, PSPS and 141 9rdinance 3!

: months period for applications: months period for applications

consideration and ma*ing a decision onconsideration and ma*ing a decision on

granting or refusing P/ licensegranting or refusing P/ license


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Processing of a P" license application?Processing of a P" license application?

Should the informationdocuments &eShould the informationdocuments &e

considered incomplete or should anyconsidered incomplete or should any

additional clarifications informationadditional clarifications information

documents &e considered necessary8documents &e considered necessary8- official letter for provision of additionalofficial letter for provision of additional

informationinformation

- thus the : months period forthus the : months period for

consideration of documents revolves )ithconsideration of documents revolves )itha ne) : months period$a ne) : months period$


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(!taining a P" license?(!taining a P" license?

9nly after the applicant complies )ith9nly after the applicant complies )ith

the license reuirementsthe license reuirements

The license is for an indefinite period ofThe license is for an indefinite period of

time and may not &e transferred to othertime and may not &e transferred to otherpersons or &e su&?ect of legalpersons or &e su&?ect of legal

successionsuccession

141 enters the payment institution in a141 enters the payment institution in a

special P/ registerspecial P/ register


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License follo&)up?License follo&)up?

P/s are a su&?ect toP/s are a su&?ect to oversightoversight P/s inform 141 a&out any changes )hichP/s inform 141 a&out any changes )hich

may affect the accuracy of informationmay affect the accuracy of informationand documents provided in connectionand documents provided in connection)ith the license granting)ith the license granting

WithdrawalWithdrawalof a license )here8of a license )here8- P/s fail to start &usinessceases to engage in &usinessP/s fail to start &usinessceases to engage in &usiness- =here serious &reaches have &een identified=here serious &reaches have &een identified- P/s stop to meet the reuirements and the conditionsP/s stop to meet the reuirements and the conditions- P/s e+pressly states in )riting they )ish to stop &usinessP/s e+pressly states in )riting they )ish to stop &usiness- at 141s discretion, the payment institution )ould constitute a threat toat 141s discretion, the payment institution )ould constitute a threat to

the sta&ility of the payment system &y continuing its payment servicesthe sta&ility of the payment system &y continuing its payment services&usiness&usiness

- The P/The P/does not hold sufficient o)n funds or cannot &e considereddoes not hold sufficient o)n funds or cannot &e consideredcapa&le of continuing to repay its o&ligations to creditorscapa&le of continuing to repay its o&ligations to creditors


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*gents*gents

MerchantMerchant, )hich acts on &ehalf of a, )hich acts on &ehalf of alicensed payment institution in providinglicensed payment institution in providingpayment servicespayment services

Should payment institutions )ish toShould payment institutions )ish toengage agents they shall apply to theengage agents they shall apply to therelevant competent authority (141$relevant competent authority (141$

Liability:Liability:Payment institutions remainPayment institutions remain

fully lia&le for any acts of its employees,fully lia&le for any acts of its employees,oror any agentany agent, &ranch or entity to )hich, &ranch or entity to )hichactivities are outsourcedactivities are outsourced


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#ight to Esta!lishment and +reedom to#ight to Esta!lishment and +reedom to

Provide ServicesProvide Services

Licensed PILicensed PImay provide in em&ermay provide in em&erStates other than its home em&er StateStates other than its home em&er State(EU Passport$(EU Passport$

Should P/s )ish to &enefit from the EUShould P/s )ish to &enefit from the EUpassport they should inform theirpassport they should inform theircompetent authoritiescompetent authorities

The competent authorities of the homeThe competent authorities of the homeem&er State provide information a&outem&er State provide information a&outP/ )ishing to receive EU passport to theP/ )ishing to receive EU passport to thecompetent authorities of the hostcompetent authorities of the hostem&er Statesem&er States


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TG;4H I9U@TG;4H I9U@

A Practical Guide - PSD Implementation From a to Z

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Transcript of A Practical Guide - PSD Implementation From a to Z