Key points in applying for a Payment Services Authorisation in Ireland under the European Union (Payment Services) Regulations as amended (PSRs)
paul@paulfoleylaw.ie
22 Northumberland Road, Ballsbridge, Dublin 4
PSD2 in Ireland: authorisation steps
Key points in applying for a Payment Services Authorisation in Ireland under the European Union (Payment Services) Regulations as amended (PSRs)
Public Limited Companies: Directive (EU) 2017/828
The SRD2 Regulations 2020 (implementing Directive (EU) 2017/828) seek to deal with a number of substantial issues related to listed companies, that have arisen since the financial crisis.
Online Platforms and business users: an EU regulatory first
The Platforms Regulation represents the first action at EU level specifically targeting commercial contracts between online platforms and their business users. It will benefit millions of European companies who rely on online platforms and online search engines to reach their customers.
Legal issues to think about for mobile app developers
The General Data Protection Regulation 2016/679 (GDPR) requires a data controller to implement data protection by design and by default (Article 25 GDPR). Organising for and engineering data protection and security requirements into a Mobile APP (APP) is difficult, particularly as APPs are generally developed using the Agile development process.
Payment Services Directive (PSD2) in short
The PSD2 regulatory framework aims to reduce costs, improve the security of payments and facilitate the emergence of innovative new mobile and internet payment methods.
(Published in Financier Worldwide magazine, December 2016)
Home loans without borders
EU cross-border residential mortgages: are they nearer a reality? (Published in Irish Public Sector magazine, April 2018)
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Application form currently accessible at this link >
Key Stages of Application Process are accessible here >
The legal requirement is set out at section 5(1)(m) of PSD2.
The foundation for these requirements is article 5 of PSD2. Article 5 (1) of PSD2 requires the submission by an application of:
“(m) the identity of persons holding in the applicant, directly or indirectly, qualifying holdings within the meaning of point (36) of Article 4(1) of Regulation (EU) No 575/2013, the size of their holdings and evidence of their suitability taking into account the need to ensure the sound and prudent management of a payment institution;
(n) the identity of directors and persons responsible for the management of the payment institution and where relevant, persons responsible for the management of the payment services activities of the payment institution, as well as evidence that they are of good repute and possess appropriate knowledge and experience to perform payment services as determined by the home Member State of the payment institution”.
See guideline 13 of the CBOI Application Form and see EBA/GL/2019/04 29 November 2019 FINAL REPORT EBA Guidelines on ICT and security risk management.
See page 15 of the CBOI application form and EBA/GL/2018/05 (consolidated version) 18 July 2018 Final Report Guidelines on fraud reporting under the Payment Services Directive 2 (PSD2) Application date 01.01.2019 Amended by EBA/GL/2020/01 01.07.2021.
See pages 14 and 15 of the CBOI application form and see also section 3.7 of EBA/GL/2019/04 29 November 2019 FINAL REPORT EBA Guidelines on ICT and security risk management.
Currently accessible at page 13 of this link >
See CBOI Application form guideline 9 on page 13; also CBOI Guidance Note (page 26) and EBA/GL/2017/10 27/07/2017 Final Report: Guidelines on major incident reporting under Directive (EU) 2015/2366 (PSD2).
governance arrangements and internal control mechanisms. See CBOI Application form guideline 8 on page 12; also the CBOI Guidance Note from pages 24 to 26 which specifies amongst things that the board has to have at least one independent director.
See the CBOI Application Form guideline 4, page 9; and the CBOI Guidance Note on the Business Plan is on pages 17 to 21 of the CBOI Guidance Note >
Program of operations. See section/guideline 3 on page 8 of the CBOI Application Form; and from pages 15 to 16 of the CBOI Guidance Note >
European Communities (Electronic Money) Regulations 2011 as emended by the PSRs.
EMI is an electronic money institution being a legal person that has been granted authorisation under Title II of Directive 2009/110 to issue electronic money; ‘electronic money’ means electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions as defined in point 5 of Article 4 of Directive 2007/64/EC, and which is accepted by a natural or legal person other than the electronic money issuer.
PI is a Payment Institution. A payment services provider where it is a Payment Institution as defined, requires a payment services authorisation.
ancillary activities are:
(a) the provision of operational and closely related ancillary services such as ensuring the execution of payment transactions, foreign exchange services, safekeeping activities, and the storage and processing of data;
(b) without prejudice to Regulation 43 (Access to payment systems), the operation of payment systems;
(c) business activities other than the provision of payment services, subject to any law of the State or of the Union applicable to such activities.
In Ireland PSD2 is implemented by the European Union (Payment Services) Regulations 2018 as amended (PSR2.)
SI No. 6 of 2018 as amended.
See EBA/GL/2017/08 07/07/2017 Final Report Guidelines on the criteria on how to stipulate the minimum monetary amount of the professional indemnity insurance or other comparable guarantee under Article 5(4) of Directive (EU) 2015/2366 (PSD2)
The legal requirement is set out at section 5(1)(k) of PSD2 of the Guidance Note >
see EBA/GL/2019/04 29 November 2019 FINAL REPORT EBA Guidelines on ICT and security risk management
This requirement is in article 5(1)(j) of PSD2.
EBA/GL/2018/05 (consolidated version) 18 July 2018 Final Report Guidelines on fraud reporting under the Payment Services Directive 2 (PSD2) Application date ØO 01.01.2019 Amended by EBA/GL/2020/01 01.07.2021.
Commission Delegated Regulation 2018/389
Commission Delegated Regulation 2018/389
see EBA-Op-2018-04 13 June 2018 Opinion of the European Banking Authority on the implementation of the RTS on SCA and CSC.
EBA/GL/2019/04 29 November 2019 FINAL REPORT: EBA Guidelines on ICT and security risk management and EDPD Guidelines 06/2020 on the interplay of the Second Payment Services Directive and the GDPR
personalised security credentials means personalised features provided by the payment service provider to a payment service user for the purposes of authentication (Article 4(31) of PSD2).
Safeguarding User’s Funds is in regulation 17(2) “A payment institution that provides payment services referred to in paragraphs 1 to 6 of the Schedule shall safeguard user’s funds in either of the following ways:
(a) user’s funds (i) shall not be mixed at any time with the funds of any person other than the payment service user on whose behalf the funds are held, and (ii) where the funds are still held by the payment institution and not yet delivered to the payee or transferred to another payment service provider by the end of the business day after the day of receipt, shall be deposited in a separate account in a credit institution or invested in assets designated or approved by the Bank for the purpose of these Regulations as secure, liquid and low risk assets;
(b) user’s funds shall be covered by an insurance policy.”
‘framework contract’ means a payment service contract which governs the future execution of individual and successive payment transactions and which may contain the obligation and conditions for setting up a payment account.
See pages 19 to 21 of the CBOI Guidance Note
The Minimum Competency Code 2017 (MCC 2017) and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48 (1)) Minimum Competency Regulations 2017 (MCR 2017) came into effect on 3 January 2018.
PCF means Pre-Approval Controlled Functions.
Qualifying Holding means a legal or natural person with a direct or indirect holding of shares or other interest in the applicant which represents 10 per cent or more of the capital or of the voting rights, or any direct or indirect holding of less than 10 per cent of the capital or of the voting rights but which makes it possible to control or exercise a significant influence over the management of the applicant in which a holding subsists.
This document is accessible if one inputs this title into one’s search box.
Guidance Note currently accessible at this link >
Regulation 21: “Where a payment institution has its registered office in the State, it shall have its head office in the State and shall carry out at least part of its payment service business in the State.”
Ireland. The Central Bank will expect decision-making at Board and Committee level to take place within the State. In addition, to ensure the central management is located within the ”head office”, its functions must include (where applicable):
(i) Financial Control;
(ii) Legal and Compliance; and
(iii) Risk Management.
It follows that there should be a significant senior management presence (within the applicant) in the State to ensure that full authority and effective control of the applicant rests within the “head office”.
Article 9 “Member States shall prohibit persons or undertakings that are not credit institutions from carrying out the business of taking deposits or other repayable funds from the public.
“Paragraph 1 shall not apply to the taking of deposits or other funds repayable by a Member State, or by a Member State's regional or local authorities, by public international bodies of which one or more Member States are members, or to cases expressly covered by national or Union law, provided that those activities are subject to regulations and controls intended to protect depositors and investors.”
Schedule par 4 Execution of payment transactions where the funds are covered by a credit line for a payment service user: (a) execution of direct debits, including one-off direct debits; (b) execution of payment transactions through a payment card or a similar device; (c) execution of credit transfers, including standing orders. Schedule par 5 Issuing of payment instruments and/or acquiring of payment transactions.
CBOI is the Central Bank of Ireland.
account information services means a payment service where funds are received from a payer, without any payment accounts being created in the name of the payer or the payee, for the sole purpose of transferring a corresponding amount to a payee or to another payment service provider acting on behalf of the payee, and/or where such funds are received on behalf of and made available to the payee.
payment initiation service means a service to initiate a payment order at the request of the payment service user with respect to a payment account held at another payment service provider.
'relevant proxy advisor' means a proxy advisor: (a) that provides services to shareholders with respect to shares that are admitted to trading on a regulated market in any Member State, and (b) in respect of which the competent Member State, within the meaning of Article 1(2)(b) of the Shareholders' Rights Directive, is the State (s1110K(7) of the SRD2 Regulations).
S1110D(5) (a) Subject to paragraph (b), an intermediary (in this subsection referred to as a ‘relevant intermediary’) who is provided with a confirmation under subsection (2) or (3) (in this subsection referred to as the ‘relevant confirmation’), shall, as soon as practicable, transmit the relevant confirmation to the shareholder to whom it relates. (b) Where: (i) it is not possible for the relevant intermediary to transmit the relevant confirmation directly to the shareholder to whom it relates, and (ii) the relevant intermediary is part of a chain of intermediaries, the relevant intermediary shall, as soon as practicable, transmit the relevant confirmation to each other intermediary in the chain of intermediaries known to the relevant intermediary as being part of the chain. (c) An intermediary to whom a relevant confirmation is transmitted under paragraph (b) and who can transmit the relevant confirmation directly to the shareholder to whom it relates shall, as soon as practicable, transmit the relevant confirmation directly to that shareholder.
Section 1110(4) Where a related party transaction entered into, or to be entered into, by a traded PLC involves a shareholder of the traded PLC, that shareholder shall not take part in the approval referred to in subsection s1110O(3).
‘material transaction’ means a transaction in which any percentage ratio, calculated in accordance with one or more class tests, is 5% or more; ‘percentage ratio’ means, in relation to a transaction, a figure, expressed as a percentage, that results from applying a calculation under a class test to the transaction.
Section 1110(O)(5)( (a) Subsections (1) to (3) shall not apply to: (i) a transaction entered into in the ordinary course of business and concluded on normal market terms, (ii) transactions entered into between a traded PLC and its subsidiary, or a number of its subsidiaries, provided that (I) the subsidiary or subsidiaries are wholly owned by the traded PLC, or (II) no related party of the traded PLC has an interest in the subsidiary or subsidiaries, as the case may be, (iii) transactions regarding remuneration of directors, or certain elements of remuneration of directors, awarded or due in accordance with section 1110M, or (iv) transactions offered to all shareholders on the same terms where equal treatment of all shareholders and protection of the interests of the traded PLC are ensured. (b) In subparagraph (iii) of paragraph (a), ‘director’ has the same meaning as it has in section 1110M.
It is important to note how director is defined in s1110N(11).
A traded PLC may temporarily derogate from its remuneration policy where (a) doing so is necessary in exceptional circumstances, to serve the long-term interests and sustainability of the traded PLC as a whole or to assure its viability, and (b) the derogation is in accordance with the procedural conditions and other provisions on derogation set out in the remuneration policy.(s1110M(8) of the SRD2 Regulations).
The Remuneration Policy and what it must contain are set out in 13 paragraphs in s1110M(6)
‘intermediary’ means a person, whether situated in a Member State or elsewhere, that provides services, in relation to a traded PLC, of safekeeping of shares, administration of shares or maintenance of securities accounts on behalf of shareholders or other persons, and includes -
(a) an investment firm as defined in Regulation 3 of the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No. 375 of 2017),
(b) a credit institution as defined in point (1) of Article 4(1) of Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/20128, and
(c) a central securities depository as defined in point (1) of Article 2(1) of Regulation (EU) No. 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No.236/2012.
relevant proxy advisor means a proxy advisor: (a) that provides services to shareholders with respect to shares that are admitted to trading on a regulated market in any Member State, and (b) in respect of which the competent Member State, within the meaning of Article 1(2)(b) of the Shareholders' Rights Directive (means SRD1, SRD II and Directive 2014/59 establishing a framework for the recovery and resolution of credit institutions and investment firms), is the State.
relevant asset manager means an asset manager:
(a) that invests in shares traded on a regulated market on behalf of investors, and
(b) in respect of which the competent Member State, within the meaning of Article 1(2)(a) of the Shareholders' Rights Directive, (means SRD1, SRD II and Directive 2014/59 establishing a framework for the recovery and resolution of credit institutions and investment firm) is the State
relevant institutional investor means an institutional investor: (a) that invests, whether directly or through an asset manager, in shares traded on a regulated market, and (b) in respect of which the competent Member State, within the meaning of Article 1(2)(a) of the Shareholders' Rights Directive (means SRD1, SRD II and Directive 2014/59 establishing a framework for the recovery and resolution of credit institutions and investment firms) is the State.
traded PLC means a PLC: (a) whose shares are admitted to trading on a regulated market in any Member State, and (b) that is neither:(i) an undertaking for collective investment in transferrable securities within the meaning of Article 1(2) of Directive 2009/65/EC (UCITS)5, nor (ii) a collective investment undertaking within the meaning of point (a) of Article 4(1) of Directive 2011/61/EU on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No. 1060/2009 and (EU) No. 1095/2010 (section 1109(4) of the Act).
Impact Assessment Part 2 page 51 footnote 32
Impact Assessment where used in this Article means, document reference “Brussels, 26.4.2018 SWD(2018) 138 final PART 1/2 COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on promoting fairness and transparency for business users of online intermediation services”. See Impact Assessment Part 2, page 51, footnote 32.
Article 15 of the Platforms Regulation
Recital (46) of the Platforms Regulation
see Article 14 generally of the Platforms Regulation
Article 12(6) of the Platforms Regulation
Article 12(2) of the Platforms Regulation
Article 12 (1) of the Platforms Regulation
Article 11 of the of the Platforms Regulation
Impact Assessment Part1, page 18 under par 2.1.2.
Impact Assessment, Part 1, page 17 under par 2.1.2
Article 10(2) of the Platforms Regulation
Article10(1) of the Platforms Regulation
Impact Assessment, Part 1, page 17 under par 2.1.1.6
Article 9(3) of the Platforms Regulation
Article 9(2) of the Platforms Regulation
Article 9(1) of the Platforms Regulation
Article 7(3) of the Platforms Regulation
Article 7(2) of the Platforms Regulation
Impact Assessment Part 1 page 16
Article 6 of the Platforms Regulation
Article 2(12) 'ancillary goods and services' means goods and services offered to the consumer prior to the completion of a transaction initiated on the online intermediation services in addition to and complementary to the primary good or service offered by the business user through the online intermediation services.
Impact Assessment page 17 of Part 1
Article 5(7) of the Platforms Regulation
Recital 27 of the Platforms Regulation
Article 5(6) of the Platforms Regulation
Article 5(5) of the Platforms Regulation
Article 5(4) and Recital 26 of the Platforms Regulation
Article 5(2) of the Platforms Regulation
In Article 5(3) of the Platforms Regulation
Article 5(1) of the Platforms Regulation
ranking means the relative prominence given to the goods or services offered through online intermediation services, or the relevance given to search results by online search engines, as presented, organised or communicated by the providers of online intermediation services or by providers of online search engines, respectively, irrespective of the technological means used for such presentation, organisation or communication; (Article 2(8))
Article 8 of the Platforms Regulation
Article 3(3) of the Platforms Regulation
Article 4 of the Platforms Regulation
Article 11 internal complaint-handling process
Article 3(2) of the Platforms Regulation
Recital (17) of the Platforms Regulation
Recital (16) of the Platforms Regulation
as defined in Article 2(10) of the Platforms Regulation
The Impact Assessment referred to potentially harmful trading practices. These included (i) sudden unexplained changes in terms and conditions unilaterally imposed by platforms without prior notice, (ii) delisting of products, services or businesses or suspension of accounts without clear statement of reasons (iii) issues related to ranking of business users or their offers (iv) Issues related to data access and use (v) discrimination of businesses and favouring of online platform's own competing services and (vi) lack of effective redress for business users. These amongst other matters are the drivers of the obligations below.
Article 1(3). of the Platforms Regulation
Article 1(2) of the Platforms Regulation
See Recital (11) of the Platforms Regulation for more detail.
business user means any private individual acting in a commercial or professional capacity who, or any legal person which, through online intermediation services offers goods or services to consumers for purposes relating to its trade, business, craft or profession (Article 2(1))
Online intermediation services’ means services which meet all of the following requirements: (a) they constitute information society services within the meaning of point (b) of Article 1(1) of Directive (EU) 2015/1535 (Laying down a procedure for the provision of information in the field of technical regulations and rules on Information Society services), (b) they allow business users to offer goods or services to consumers, with a view to facilitating the initiating of direct transactions between those business users and consumers, irrespective of where those transactions are ultimately concluded; (c) they are provided to business users on the basis of contractual relationships between the provider of those services and business users which offer goods or services to consumers (Article 2(2))
corporate website users means any natural or legal person which uses an online interface, meaning any software, including a website or a part thereof and applications, including mobile applications, to offer goods or services to consumers for purposes relating to its trade, business, craft or profession. (Article 2(7))
‘online search engine’ means a digital service that allows users to input queries in order to perform searches of, in principle, all websites, or all websites in a particular language, on the basis of a query on any subject in the form of a keyword, voice request, phrase or other input, and returns results in any format in which information related to the requested content can be found (Article 2(5))
Impact Assessment Part 1, Page 3, under paragraph 1.2
This is a test popup
A PEP means a natural person who is or has been entrusted with prominent public functions and includes:
Article 11 - Member States must ensure that obliged entities apply customer due diligence measures in the following circumstances:
(c) in the case of persons trading in goods, when carrying out occasional transactions in cash amounting to EUR 10,000 or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked;
(d) for providers of gambling services, upon the collection of winnings, the wagering of a stake, or both, when carrying out transactions amounting to EUR 2,000 or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked.
Correspondent relationship means:
(a) the provision of banking services by one bank as the correspondent to another bank as the respondent, including providing a current or other liability account and related services, such as cash management, international funds transfers, cheque clearing, payable-through accounts and foreign exchange services;
(b) the relationships between and among credit institutions and financial institutions including where similar services are provided by a correspondent institution to a respondent institution, and including relationships established for securities transactions or funds transfers (Article 3(8)).
Article 3 (6) ‘beneficial owner’ means any natural person(s) who ultimately owns or controls the customer and/or the natural person(s) on whose behalf a transaction or activity is being conducted and includes at least:
(a) in the case of corporate entities:
(i) the natural person(s) who ultimately owns or controls a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that entity, including through bearer shareholdings, or through control via other means, other than a company listed on a regulated market that is subject to disclosure requirements consistent with Union law or subject to equivalent international standards which ensure adequate transparency of ownership information.
A shareholding of 25 % plus one share or an ownership interest of more than 25 % in the customer held by a natural person shall be an indication of direct ownership. A shareholding of 25 % plus one share or an ownership interest of more than 25 % in the customer held by a corporate entity, which is under the control of a natural person(s), or by multiple corporate entities, which are under the control of the same natural person(s), shall be an indication of indirect ownership. This applies without prejudice to the right of Member States to decide that a lower percentage may be an indication of ownership or control.
Control through other means may be determined, inter alia, in accordance with the criteria in Article 22(1) to (5) of Directive 2013/34/EU of the European Parliament and of the Council
(ii) if, after having exhausted all possible means and provided there are no grounds for suspicion, no person under point (i) is identified, or if there is any doubt that the person(s) identified are the beneficial owner(s), the natural person(s) who hold the position of senior managing official(s), the obliged entities shall keep records of the actions taken in order to identify the beneficial ownership under point (i) and this point.
Directive 2015/2366/EU on payment services (PSD2)
Custodian wallet providers means an entity that provides services to safeguard private cryptographic keys on behalf of its customers, to hold, store and transfer virtual currencies.
The new EU AML/CTF regime comprises the Fourth Money Laundering Directive (Directive 2015/849)(MLD4), the Wire Transfer Regulation (Regulation 2015/847 (WTR), and the Fifth Money Laundering (Directive 2018/843 (MLD5).MLD5 which amends MLD4 is available as a consolidated document on Europa.
The new EU AML/CTF regime comprises the Fourth Money Laundering Directive (Directive 2015/849)(MLD4), the Wire Transfer Regulation (Regulation 2015/847 (WTR), and the Fifth Money Laundering (Directive 2018/843 (MLD5).MLD5 which amends MLD4 is available as a consolidated document on Europa.
Fiat currencies are coins and banknotes that are designated as legal tender and electronic money, of a country, accepted as a medium of exchange in the issuing country, such as the Euro. The Commission refers to this type of provider as a virtual currency exchange platform (VCEP)”.
Virtual currencies means a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically.
Gambling: With the exception of casinos, and following an appropriate risk assessment, Member States may decide to exempt, in full or in part, providers of certain gambling services from national provisions transposing this Directive on the basis of the proven low risk posed by the nature and, where appropriate, the scale of operations of such services.