1. PAYMENTS

1.1 EBA updates Single Rulebook Q&A on PSD2

During the period 1 April 2021 to 30 June 2021, the European Banking Authority (EBA) updated its Single Rulebook Questions and Answers publication (Single Rulebook Q&A) on the Revised Payment Services Directive (2015/2366/EU) (PSD2). The Q&As in respect of the following articles have been updated:

  • Article 5 - Applications for authorisation;
  • Article 96(6) - Incident reporting;
  • Article 97 - Authentication; and
  • Article 98 - Regulatory technical standards on authentication and communication.

The Single Rulebook Q&A can be accessed here.

1.2 EBA publishes Guidelines on major incident reporting under PSD2

On 10 June 2021, the EBA published final revised Guidelines on major incident reporting under PSD2 (Guidelines).

The Guidelines apply in relation to the classification and reporting of major operational or security incidents in accordance with Article 96 PSD2. The Guidelines are addressed to payment service providers (PSPs) and the national competent authorities (NCAs) under PSD2. The Guidelines will be translated into the official EU languages and published on the EBA website. NCAs will then have two months within which to confirm whether they will comply with the Guidelines. We expect that the Central Bank of Ireland (CBI) will report that they intend to comply in full.

The Guidelines will apply as of 1 January 2022.

The Guidelines can be accessed here.

1.3 EBA publishes report on the data provided by PSPs on their readiness to apply strong customer authentication for certain transactions

On 11 June 2021, the EBA published a report on the data provided by PSPs on their readiness to apply strong customer authentication (SCA) for the subset of payment transactions that are e-commerce card-based payment transactions (Report).

The regulatory technical standards (RTS) on SCA and common and secure communication have applied since 14 September 2019. These requirements were introduced to decrease the risk of payment fraud and to ensure the safety of payment service users' funds and personal data. In 2019, the EBA granted supervisory flexibility for NCAs not to enforce the RTS until 31 December 2020, in order to allow issuing and acquiring PSPs to migrate to SCA-compliant approaches.

Based on the data received from PSPs, the EBA observed that significant progress has been made with regard to SCA-compliance, with large sections of the industry prepared for the application of SCA to e-commerce and card-based transactions. However, the EBA noted with concern that some jurisdictions are lagging behind others in enabling SCA on their payment cards and enrolling payment service users to SCA-compliant authentication solutions.

The Report can be accessed here.

1.4 European Commission adopts Delegated Regulation supplementing PSD2 on framework for home-host co-operation and information exchange

On 21 June 2021, the European Commission published a draft delegated regulation supplementing PSD2 with regard to RTS specifying the framework for cooperation and the exchange of information between competent authorities of the home and the host Member States in the context of supervision of payment institutions and electronic money institutions exercising cross-border provision of payment services (Delegated Regulation). The RTS specify:

  • The framework for cooperation and for exchanging information between the competent authorities of the home Member State and of the host Member State under Title II PSD2; and
  • How to monitor compliance with national law transposing Titles III and IV PSD2.

The Delegated Regulation will enter into force 20 days following its publication in the Official Journal of the European Union (OJ).

The Delegated Regulation, and its accompanying annex, can be accessed here.

1.5 Update on the proposal for codification of Regulation on cross-border payments

On 23 June 2021, the European Parliament adopted its position at first reading on the Commission proposal for a Regulation on cross-border payments in the European Union (Proposed Regulation). The purpose of the Proposed Regulation is to undertake a codification of the current Regulation on cross-border payments (Regulation (EC) No 924/2009), with the aim of simplifying and clarifying the law. The current Regulation has been amended several times. The Proposed Regulation will supersede the current Regulation and the various acts incorporated in it, however no changes of substance will be made.

The outcome of voting in the European Parliament reflects the compromise agreement reached between the institutions and should, therefore, be acceptable to the European Council.

If the Council approves the European Parliament's position, the Proposed Regulation will be adopted. The Proposed Regulation will then be published in the OJ.

The text of the Proposed Regulation can be accessed here, its accompanying annexes can be accessed here.

2. DIGITAL FINANCE & CRYPTO-ASSETS

2.1 ECB publishes report on public consultation on a digital euro

On 14 April 2021, the European Central Bank (ECB) published a report on its public consultation on a digital euro (Report).

On 8 October 2020, the ECB published a report on the digital euro which examined the issuance of a digital euro - that is an electronic form of central bank money similar to banknotes but in a digital form. The report was followed by a public consultation. The Report sets out the findings of the public consultation, notably:

  • Privacy is considered the most important feature of a digital euro by both citizens and professionals - a digital euro should also be secure, cheap and easy to use throughout the euro area;
  • Integration with existing payment solutions is important - licensed intermediaries should play a role in the provision of digital euro services. They would be best suited to provide innovative and efficient services, integrating them into existing banking and payment systems; and
  • Cards, wallets and smartphones could provide cash-like features - all currently available hardware and software solutions could be adapted to use a digital euro and make payments similar to cash transactions, so long as they continue to do so safely and securely.

The Report will be considered by the Eurosystem (that is, the ECB and the national central banks of those countries that have adopted the euro) when deciding on the possible launch of a digital euro project, as well as in any potential related work on the design and future launch of a digital euro.

The Report can be accessed here.

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