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Working as a Payment Institution: The implementation of the PSD in France

Working as a Payment Institution: The implementation of the PSD in France. 25 February 2010 Olympe Leflambe Flawless Money Limited. Overview. 1- The implementation of the PSD in France .

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Working as a Payment Institution: The implementation of the PSD in France

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  1. Working as a Payment Institution: The implementation of the PSD in France 25 February 2010 Olympe Leflambe Flawless Money Limited

  2. Overview • 1- The implementation of the PSD in France. • 2- The regime applicable to Payment Institutions (By-law of the 29th of October 2009 on the prudential regulation of Payment Institutions). • 3- Conduct of Business requirements. • 4- Passporting activities in France. • 5- The current status.

  3. 1. The implementation of the PSD in France • The PSD has been implemented through multiple texts: • Ordinance 2009-866 relating to the conditions regulating the provision of payment services and creating Payment Institutions; • Decree n. 2009-934 for the application of Ordinance 2009-866 relating to the conditions regulating the provision of payment services and creating Payment Institutions; • By-law of the 29th of October 2009 on internal control of credit institutions and investment companies; • By-law of the 29th of October 2009 on the regulation of ELMIs; • By-law of the 29th of October 2009 on the prudential regulation of Payment Institutions.

  4. 2. The regime applicable to PIs • What is the content of the By-law on the prudential regulation of PIs? • Capital requirements, • Own funds and ring fencing requirements, • Procedures of notification to the supervisory authority, • Conditions for freedom of establishment and freedom to provide services, • Withdrawal of authorization, • Rules applicable to agents, • …

  5. Main points of the regime applicable to PIs: • Competent authorities for authorization and supervision : the Committee for credit institutions and investment companies (CECEI) and the Banking Commission (Commission Bancaire). • Procedure: the agreement must be delivered within 3 months from the reception of the application.

  6. 3) Capital requirements for payment institutions are: • 20 000 € for money remittance. • 50 000 € for the execution of payment transactions where the consent of the payer has been given by means of telecommunication, digital or IT device and the payment is made to the system operator or telecommunications network or computer, acting solely as an intermediary between the PSU and the provider of goods/services. • 125 000 € for the provision of at least one of the other payment services. • 4) Own funds must be calculated on the basis of one the three methods presented in the PSD. The Banking Commission can impose one of the methods if it is more appropriate.

  7. 5) Safeguarding requirements: funds received for the execution of payment transactions must be protected and placed in accounts opened in a credit institution and separated from the operating accounts of the PI. 6) Funds of payment transactions can be invested in financial assets without risk. 7) All funds received from the public must be covered, either by the written engagement of a credit institution, or by the subscription of an insurance.

  8. 3. Conduct of Business requirements • A few of the most significant options adopted by France and which differ from the UK options: • At the request of the payer or payee, the information must be provided on paper once a month free of charge; • The burden of proof for information requirements lies on the PSP; • Safeguarding requirements apply to non-hybrid PIs (same as in the UK); • Micro-enterprises are not to be treated as consumers; • The waiver for authorization/supervision for small PIs has not been implemented; • Application of COB rules and rights and obligations in relation to the provision of payment services (Titles III & IV) to one-leg transactions; • Surcharging is allowed only in limited cases (not defined yet).

  9. 4. Passporting into France 1) Branches can be set up in the same way as for other payment service providers, by notifying the FSA (for the UK) which will inform the CECEI. 2) To passport their activities into France, payment institutions must notify their supervisory authority, who will then notify the CECEI. There are no additional conditions. The CECEI can ask for the verification of the AML procedures of the payment institution. The CECEI is extremely careful to the differentiation between freedom to provide services and freedom of establishment.

  10. 5. The current status • Number of licences granted to French PIs: 1 (subject to a “suspensive” condition). • Number of pending applications: confidential. • Number of foreign PIs providing their services through a branch: 0. • Number of European passports: 22 (UK: 19, IE: 2, DK: 1). 16 of these passports have been granted for PIs offering money remittance services.

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