Selected issues under proposed amendments to the Payment Services Act
Although the Payment Services Act has been in force only a short time, there are already plans to revamp it.
The need for an amendment was dictated primarily by the requirement to achieve full implementation into Polish law of the Second Electronic Money Directive (2009/110/EC)—the deadline passed on 30 April 2011. Most of the planned changes are related to e-money issues, but other changes are also proposed, some of which may be of great practical importance. The most important changes included in the bill dated 23 January 2012 are discussed below.
Unification of regulations
A clearly positive change will be to include in the Payment Services Act practically all regulations concerning payment services. In practice this will mean repeal of the Electronic Payment Instruments Act. It has often been pointed out that the situation in which regulations of systemic significance are found elsewhere than in the Payment Services Act may, in practice, generate doubts in interpretation.
Electronic money regulations
The amendments to the Payment Services Act based on the Second Electronic Money Directive will establish extremely important regulations concerning issuance of e-money, significantly expanding the set of entities that will be authorised to conduct this type of business. It could even be argued that under the proposed new wording of Art. 4(11) of the Payment Services Act, the range of entities that could issue, redeem or settle e-money is, formally speaking, unlimited—notwithstanding the claim in the justification for the amendment that it is a closed list of entities. The amendment provides for three methods of operating in the field of e-money, which differ in terms of scale. Any entity would be authorised to issue e-money in the narrowest scope (under the new Art. 142l of the Payment Services Act as proposed in the bill). Payment institutions would be authorised to do so somewhat more extensively (without obtaining additional licences). Other payment service providers indicated in Payment Services Act Art. 4(2) would be fully capable of performing activities connected with e-money (with the exception of payment offices, which would be able to perform e-money services in the narrowest scope).
Under the proposed amendment, permissible activities connected with e-money would include issuance and redemption of e-money and settlement of transactions made using e-money. This raises the question of the scope in which such settlements (performed without the need to obtain an additional licence) will overlap with the activity of an acquirer, which under the Payment Services Act requires obtaining an additional licence. Without a more precise explanation at the statutory level, the scope of such activity may raise doubts in interpretation.
Change involving limited acceptance networks
An extremely important change would be introduced by adding a new subparagraph, Art. 5(4a), which would cut through the current rule under which the Payment Services Act does not apply to payment services that meet the criteria under Art. 6(11)—the common exception for a limited acceptance network. Under the proposed change, an entity providing services within a limited acceptance network (which services are formally not covered by the Payment Services Act) would nonetheless have to comply with “user protection regulations” and comply with requirements to report to the National Bank of Poland. The vagueness of the term “user protection regulations” is immediately noticeable, and it is unclear what regulations are meant. Did the drafters have in mind only regulations under Chapters II and III of the Payment Services Act, or also, for example, Art. 78 (providing rules for protection of users’ funds deposited with a payment institution)? It would be much more helpful to indicate the specific regulations that must be applied in this situation. Otherwise, the scope of the duty indicated in the proposed Art. 5(4a) will be controversial. Nor is it entirely clear whether the obligations indicated in this provision (particularly the requirement to report to the National Bank of Poland) will have to be met by entities providing payment services in Poland within a limited acceptance network on a cross-border basis.
Doubts concerning the definition of “payment card”
Despite the proposal to repeal the Electronic Payment Instruments Act (thus simplifying and unifying the regulations governing payment services), the drafters of the amendment propose retaining a separate definition of “payment card.” In my own view, there is currently no justification for a distinction between “payment cards” and “payment instruments,” and it would be entirely sufficient for proper functioning of payment services and protection of users to retain in the legal system only a definition of “payment instruments.” Retaining a definition of “payment card” would unnecessarily complicate the regulations, and the proposed changes could indeed make the complications worse. Under the proposed amendment, “the provisions of the act concerning payment cards shall apply as relevant to other payment instruments of a similar nature” (proposed new Art. 5(5b) of the Payment Services Act). Because it is difficult to determine precisely what criteria would give a payment instrument a “similar nature” under this provision, it would create doubts in the scope of application. For example, it would be debatable to determine precisely which entities are subject to requirements to report to the National Bank of Poland (because the relevant provision concerning such reporting requirements refers to issuers of “payment cards”).
With respect to the foregoing issue, it should be added that notwithstanding proposed changes in the Banking Law, the amendment would not modify the regulations concerning bank outsourcing, which would still be limited only to “payment cards” (Banking Law Art. 6a(1)(1)(f)). In my view there is no justifiable rationale for this limitation, in light of the ever-increasing number of payment instruments which will not necessarily qualify as payment cards (e.g. e-money instruments).
It should also be mentioned that the proposed amendment would eliminate the existing rule that the issuer of a payment card is the owner of the card by operation of law. The proposal would leave this issue to be determined by the parties.
Krzysztof Wojdyło, Regulatory practice, Wardyński & Partners