Q45. We are a UK payment institution - when will we need to make a passport notification?
You will need to make a notification if you intend to exercise passport rights either for the purposes of:
- establishment (for example, setting up a branch in another EEA State); or
- providing services in another EEA State.
As to the circumstances in which you may need to exercise these rights, this gives rise to issues of interpretation both under the PSD regulations and the local law of the EEA State in which you wish to do business. Our guidance below relates only to the PSD regulations and may differ from the approach in other EEA States. We cannot give guidance on the local law of other EEA States and you may therefore wish to take professional advice if you think your business is likely to be affected by these issues (for instance, if you are soliciting clients in other EEA States).
As regards the provision of payment services in other EEA States and passport notification, in our view the Commission Interpretative Communication (Freedom to provide services and the interest of the general good in the Second Banking Directive (97C 209/04)) provides a useful starting point, in particular because payment services form part of the BCDpassport. On this basis, we would identify the following factors as being relevant to whether you need to make a passport notification.
Factors indicating the provision of payment services in another EEA State and the need for passport notification
- The establishment of a physical presence (for example, offices) in another EEA State, for use by you, triggers the need for a branch notification.
- The appointment of an agent established in another EEA State is likely to amount to an exercise of a right of establishment where the agent (a) has a permanent mandate in relation to payment services, (b) is subject to your management and control and (c) is able to provide payment services on your behalf.
- The installation of an ATM in another EEA State, where the ATM is your only presence in that other EEA State, gives rise to the need for a services (and not an establishment) notification.
Actions which are not sufficient alone to constitute cross-border services into another EEA State and the need for passport notification
- The act of executing direct debits/standing orders/credit transfers from the UK where the payee is located in another EEA State.
- The act of remitting money from the UK to a payee in another EEA State.
- The act of executing a payment transaction to a payee located in another EEA State upon receipt of an instruction from the payer received by e-mail, text, or other electronic means (for example, internet banking).
- Where you provide an execution service enabling your credit or debit cardholders to use their credit card/debit card within the territory of another EEA State, for example for the purposes of a hotel bill (see the services in PERG 15 Annex 2, paragraphs (c) and (d)).
Q46. We are a non-EEA payment institution providing payment services to UK customers from a location outside the EEA. Do we require authorisation or registration under the regulations?
No. When considering whether you fall within the scope of the regulations, our starting point is to consider whether a UK payment services provider would be providing cross-border services in analogous circumstances (for example, when it provides payment services to EEA customers from a location in the UK). Accordingly, we would not generally expect a payment services provider incorporated and located outside the EEA to be within the scope of the regulations, if all it does is to provide internet-based and other services to UK customers from that location. A non-EEA payment institution for these purposes would include firms incorporated in the Isle of Man or Channel Islands, both of which are outside the scope of the Payment Services Directive.