In October last year, the European Court of Justice (CJEU or the Court) hammered home the circumstances under which an online savings account can be excluded from the definition of the 'payment account' under the Directive 2007/64 (Payment Services Directive or PSDI), thereby rendering the latter inapplicable. Case C-191/17, Bundeskammer für Arbeiter und Angestellte v ING-DiBa Direktbank Austria Niederlassung der ING-DiBa AG, was the first occasion wherein the Court had to:
- interpret the notion of a 'payment account' within the meaning of PSD; and
- to determine whether the bank account at issue in the case was bound to comply with obligations set out in PSDI. It is important to outline that Directive 2015/2366 (PSDII) which superseded PSDI, has retained an almost identical definition of "payment account" under the preceding directive.
In a nutshell, the case bloomed from a preliminary ruling request from the Austrian Supreme Court wherein the key issue raised was whether an online direct savings account, which allows a customer unlimited access to the funds but where all transfers to and from such account are to affected through another 'reference account', falls within the notion of a 'payment account' under Article 4(1)(14) PSDI. The CJEU ruled that the definition of 'payment account', "is to be interpreted as meaning that an online savings account with which a customer (without notice and without any particular involvement of the bank) may by way of telebanking make deposits into and withdrawals from a reference account (a current account [...]) held in his name, is not included within the term 'payment account' ...and thus does not fall within the scope of that directive."
The case which stemmed from a preliminary ruling request from the Austrian Supreme Court related to an action lodged by the Federal Chamber of Workers and Employees, who has standing under Austrian law to bring proceedings for the purposes of protecting consumers' interests against the respondent bank ING-DiBA Direktbank Austria. The applicant's underlying rationale was that the respondent bank's terms and conditions of a particular type of online savings account were unlawful and contrary to the Austrian laws transposing PSDI. Through these savings accounts, the respondent bank allowed consumers to make use of telephone banking to independently affect payments and withdrawals – which transfers always occurred through other current accounts in Austria, held in the customer's name either with the respondent bank or with other third party banks. Therefore, account holder could not make payments to third parties directly but could only move money into a reference account to make third party payments.
While the Federal Chamber asserted that many clauses of the terms of service are contrary to the Austrian Payment Services Act (transposing PSD in Austria), the defendant and the German Government, unlike the EU Commission, contended that the law on payment services does not apply to the online direct savings account in issue. To this effect, the Austrian Supreme Court prior to ruling on the lawfulness of such terms and conditions, referred the case to the CJEU to confirm the applicability (or otherwise) of the Payment Services Act to these savings accounts. In that context, the referring court stayed the proceedings and referred to the CJEU to determine whether the accounts proposed by ING-DiBa Direktbank Austria are to be categorised as 'payment accounts'.
Primarily, the Court set the scene by referring to the definition of:
- a payment account which namely refers to 'an account held in the name of one or more payment service users which is used for the execution of payment transactions';
- a payment transaction is defined in Article 4(5) of PSDI as being 'an act, initiated by the payer or by the payee, of placing, transferring or withdrawing funds, irrespective of any underlying obligations between the payer and the payee'; and
- a 'payment service' which under Article 4(3) PSDI covers 'any business activity listed in the Annex' of that directive...[which annex includes] 'services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account', 'the execution of payment transactions, including transfers of funds on a payment account with the user's payment service provider or with another payment service provider, which includes the execution of direct debits, of payment transactions through a payment card and of credit transfers.'
The Court noted that the definition in PSDI of 'payment account' in itself does not make it possible to determine whether or not such term includes accounts such as those at issue in the main proceedings. To this effect, the CJEU clarified it is vital to analyse and give weight to the legislative context in which PSDI was drafted. For that reason, the Court looked at the Payment Accounts Directive (PAD) which adopts very similar definition. Recital 12 of the PAD sets apart savings accounts from payment accounts, unless the former can be used for day-to-day payment transactions. Notwithstanding, the Court asserted that while savings accounts do not, in principle, fall within the definition of 'payment account', such an exclusion is not absolute.
The Court concluded that an account from which payment transactions cannot be made directly, but for which use, an intermediary account is necessary, cannot be regarded as being a 'payment account' within the meaning of PAD or PSDI. It thus follows that the defining factor of the concept of a 'payment account' is whether payments can be affected through the direct use of that same account.
In light of this judgement, it is key to consider the notion that one of PSDII's objectives was to promote the niche of open banking through the conception of two new services (namely through, (i) payment initiation service providers (PISPs) and (ii) account information service providers (AISPs)) both of which relate to payment accounts. As outlined by the international law firm Bird & Bird in their case commentary, this judgement has (by excluding "online savings accounts" from the scope of PSD) opened a Pandora's box evoking contentious methods adopted in the past by AISPs and PISPs to access online savings accounts similar to those offered by ING-DiBa Direktbank Austria, such as screen scraping or reverse engineering. As of today, the concept of open banking is not mandated by law in Malta, as the full transposition of the PSDII into Maltese law is still in progress. We will be monitoring closely any developments in this space.
This article was first published in The Malta Independent, 1 May 2019.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.