ACM calls for fix to legislation related to payment services directive
There is a flaw in legislation as a result of which the Netherlands Authority for Consumers and Markets (ACM) is unable to conduct effective oversight over Dutch banks that refuse to offer payment institutions from other EU countries a bank account. This is one of the conclusions of a study that ACM conducted following complaints filed by payment institutions that were unable to get bank accounts in the Netherlands. ACM has requested the Dutch Ministry of Finance to fix this flaw as soon as possible.
Martijn Snoep, Chairman of the Board of ACM, explains: “In Europe, banks and payment institutions enjoy a level playing field, which is ensured by the European Payment Services Directive (PSD2). However, enforcement of those rules in the Netherlands has not been properly enshrined in national legislation. As a result thereof, not all initiatives may reach their full potential, which means businesses compete less on price, quality, and innovation.”
Background
ACM has conducted a study into the extent to which payment institutions such as fintechs and money remittance providers have access to business bank accounts. ACM had received reports that not all payment institutions were able to open a bank account, even though they need one in order to do business.
In Europe, banks and payment institutions must comply with certain rules: the Payment Services Directive (PSD2). This directive, in principle, mandates banks to offer access to business bank accounts in order to stimulate entry by non-banking market participants.
Payment institutions from other EU member states are active in the Netherlands, too. Because of a flaw in legislation, ACM can only take action if a payment institution has been granted a license by the Dutch central bank (DNB). As a result thereof, ACM is unable to conduct effective oversight. ACM cannot handle complaints or reports about banks filed by other EU payment institutions (which have been granted licenses from other EU banking regulators), when PSD2 is actually meant to stimulate payment services within the EU, and, in that way, realize a better-functioning payment market.
ACM and the financial sector
ACM conducts oversight over businesses in the financial sector, and checks whether they comply with competition rules. In addition, we also enforce compliance with a number of specific rules that apply to payment service providers. For example, ACM makes sure that new payment methods and payment services have access to underlying payment systems, or that payment institutions are able to open a bank account. We also regulate the maximum fees that banks charge each other when consumers pay using their debit or credit cards, for example.
Since 2019, ACM enforces part of the European payment services directive PSD2. The aim of this European directive is that not only banks but also other EU businesses are able to offer payment services to consumers and businesses. Such market participants are called ‘payment institutions’. Examples include businesses that develop innovative payment apps or that are able to facilitate international money transfers.
The study has revealed that some payment institutions such as money remittance providers have a hard time opening business bank accounts or that the accounts of such payment institutions have been closed by their banks, sometimes after years of patronage.
Some banks decide not to offer a bank account to payment institutions or require them to have a minimum turnover. Such requirements may be a violation of the Dutch Financial Supervision Act (Wft).
Banks must assess each request from an EU payment institution on a case-by-case basis, and, when doing so, apply reasonable, proportional, and non-discriminatory criteria. For example, financial thresholds are not always feasible for startups, and are thus unreasonable. If banks refuse to grant access to business bank accounts, they will have to notify ACM of such decisions.
As gatekeepers, banks must pay close attention to integrity risks. At the same time, however, banks should also look for alternative, less far-reaching measures before deciding to refuse a payment institution as customer.
Until the law has been amended, and until ACM is mandated to enforce the rules, ACM expects banks to comply with the law, and thus properly assess and accept payment institutions from other EU member states as well.