On 24 February 2022, the European Banking Authority (EBA) issued a final report containing guidelines on the limited network exclusion under the revised Payment Services Directive (PSD2).
Following the publication of the PSD2 in November 2015, the EBA and the European Commission received a number of queries on the application of the ‘exclusion’ under Article 3(k) of the PSD2 (limited network exclusion, or LNE), the related notification requirements articulated in Article 37 of the PSD2 and the meaning of Recitals 13 and 14 in the PSD2. The EBA assessed these queries and arrived at the view that the implementation and application of these requirements diverges significantly between Member States. In line with its statutory objective of contributing to the convergence of supervisory practices, the EBA arrived at the view that it should issue guidelines aimed at bringing about convergence on a number of issues which were explained in detail in a consultation paper that was published on 15 July 2021. The public consultation closed on 15 October 2021, the feedback table in chapter 5 of the final report provides an exhaustive list of all the distinct concerns raised by the respondents and their respective analysis by the EBA.
Following the responses to the consultation the most substantive change to the guidelines relates to the assessment of the functional connection between goods and services, which is now based on a specific category of goods and services with a common purpose as identified by the issuer of the excluded instrument, rather than a leading good or service as proposed in the consultation paper. The EBA also clarified the nature of the assessment indicators, that all of them are mandatory for the assessment by the competent authority and that each can be used as a reason to reject granting the exclusion.
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 Member State competent authority.