#62025CC0274EU payment services: direct debit licensing for payee-side providers
AI-generated summary for informational purposes only. Not legal advice. See the original source for the authoritative text.
Clarifies when a payment provider is treated as offering a SEPA direct debit service, even if it does not directly debit the payer’s bank account. The Advocate General recommends that both the payer’s provider and the payee’s provider can be part of the direct debit service when the payee-side provider sends direct debit instructions, collects funds based on payer mandates, and routes money to merchant accounts, including restricted-function accounts. For fintechs and payment institutions, the practical message is licensing risk. A provider licensed only for acquiring or money remittance may still need direct debit authorisation if its role is central to SEPA direct debit collections. The opinion also says this activity should not be reclassified as payment acquiring or a payment initiation service just because the provider does not itself operate the payer’s account. This is an Advocate General opinion, not the Court’s final ruling, but it signals how the EU court may read PSD2 and SEPA rules.
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Key Changes
- Treats payee-side payment providers as potential direct debit service providers when they transmit SEPA direct debit instructions and collect funds based on payer mandates.
- Signals that restricted merchant accounts can still support a finding that the provider is offering direct debit services.
- Rejects treating the same activity as payment acquiring or payment initiation where the provider’s role is tied to SEPA direct debit collections.
Obligations
What this law requires
Informational note: The Advocate General discusses PSD2 Article 4(23) and Annex I points 3(a) and 4(a), together with Regulation 260/2012 Article 2(2), as provisions defining a SEPA direct debit service as debiting a payer’s payment account where the transaction is initiated by the payee on the basis of the payer’s consent.
Informational note: The Advocate General’s view is that a payee-side payment service provider can be treated as participating in the direct debit service, not only the payer’s payment service provider, where it transmits direct debit orders and performs the collection process for the payee.
Informational note: The Advocate General proposes that a payment institution acting for the payee is providing a direct debit service where it sends SEPA direct debit instructions, collects funds on the basis of payer mandates given to merchants, and routes the collected funds to merchant accounts, including accounts with restricted functionality.
Informational note: The national measure under challenge is the Bank of Lithuania’s revocation of Alternative Payments UAB’s payment institution licence, including the finding that the company provided direct debit services without authorisation while licensed only for acquiring of payment transactions and money remittance.
Informational note: The opinion indicates that a payee-side provider’s direct debit collection role should not be reclassified as acquiring of payment transactions under PSD2 Article 4(44) and Annex I point 5 merely because the provider contracts with merchants and transfers funds to them.