On the 13th January 2018, the Second Payment Services Directive ("PSD2") came into effect across the European Union. Furthermore, and in line with its existing obligation to transpose applicable EU Directives, Gibraltar has implemented PSD2 by enacting the Financial Services (Payment Services) Regulations 2018 (the "Payment Services Regulations") into force.
PSD2 replaces the original 2007 Payment Services Directive which, given the pace of technological advances in recent times, had become significantly outdated. The rapid emergence of mobile and online payments, as well as developments within emerging industries (such as the FinTech sector), have required an updated framework to be put in place. Indeed, various types of mainstream payment products and services did not fall under the framework of the old PSD regime.
The new Directive introduces substantial changes, primarily focused at offering increased protection to consumers, reducing costs and hidden charges, and also at promoting industry innovation within a safe and transparent environment. Most notably, the PSD2 has increased scope and application, now capturing certain transactions in any currency and 'one leg out' transactions. In addition, PSD2 covers new services and providers, such as those offered by newly defined "payment initiation services providers" and "account information services providers".
From a Gibraltar legislative perspective, the Payment Services Regulations revoke and replace the Financial Services (EEA) (Payment Services) Regulations 2010. In addition, a number of consequential amendments to existing Gibraltar laws have been implemented under the new Regulations. These include minor changes to the Financial Services (Distance Marketing) Act 2006 and Financial Services (Capital Requirements Directive IV) Regulations 2013. The Financial Services (Electronic Money) Regulations 2011 have also been subject to amendments, including in respect of transitional arrangements for electronic money institutions until 13th July 2018.
Firms already licensed by the Gibraltar Financial Services Commission (GFSC) to provide payment services will need to ensure that they are in compliance with the new Regulations, including in terms of any passporting arrangements. In this respect, a review of standard terms & conditions, compliance manuals, service contracts and other contractual documentation would be recommended. This exercise should focus on the updating of existing references and definitions, as well as consider whether there is any impact arising from changes in scope under Payment Services Regulations, including any exemptions/exclusions previously relied upon. In addition, companies operating within the payment services industry which may have not been previously subject to regulation should certainly satisfy themselves that an application to the GFSC will not in fact now be required.
For any queries in this respect, please contact Christian Caetano (christian.caetano@isolas.gi), who has advised the Gibraltar Financial Services Commission in the implementation and transposition of PSD2 into Gibraltar law.
The new Payment Services Regulations can be viewed here http://www.gibraltarlaws.gov.gi/articles/2018s010.pdf.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.