ABC Projektai (C-661/22): Court of Justice EU interprets notion of “payment services” under PSD2

The Italian regulatory framework on payments and e-money remain largely aligned with PSD2 and EMD2 currently. Given the international nature of payments business, and these common underpinnings, this decision is of interest to Italian firms, although it is not binding. Local discussions on the matter mainly focused, over time, on the particularly broad definition of “payment account” which sometimes made it difficult to frame the different products offered by operators. Such wide definition currently also includes – and subject to PSD2 rules – also products such as local current accounts, which may also (but not only) be used for the execution and settlement of payment transactions, without this determining a requalification of the relevant stored funds as e-money.

Based on BaFin's administrative practice, with the requirement of the formal step of “issuing” the e-money, there should already be an explicit requirement in Germany for the act of conversion now also deemed necessary by the CJEU to qualify as e-money and, therefore, also a clear distinction between e-money and payment services in this regard. Nevertheless, we experience currently a lot of questions and to some extent legal uncertainty for payment services providers regarding the treatment of funds. Therefore, we consider further harmonisation of the EU-wide understanding of the actual and technical requirements for payment service providers, particularly with regard to the management of funds and the respective safeguarding requirements, is important and desirable.

The decision of the CJEU is aligned with the existing position of the National Bank of Belgium, which was also of the view that funds cannot be transformed “magically” into e-money when put on a payment account. This decision will nevertheless bring further clarification at EU level and will therefore be welcomed by Belgian payment institutions providing their services across the European Economic Area.