Title II ‘Payment Service Providers’, Chapter 1 ‘Payment Institutions’, Section 1 ‘General Rules’ (Arts 5–18), Section 2 ‘Other Requirements’ (Arts 19–21)

This Commentary chapter examines Articles 5–21 of Payment Service Directive 2 (PSD2), laid down in Chapter I of Title II of PSD2. This PSD2 Chapter establishes licensing requirements and prudential rules for payment institutions (hereinafter PIs), that is, financial institutions other than credit institutions authorized to professionally operate as payment service providers, according to Article 1 PSD2. In detailing the PSD2 licensing rules, the EBA has issued guidelines (EBA/GL/2017/09) on the information to be provided for authorization/registration of any type of PIs. This Commentary chapter includes a further ten sections: Section B) focuses on the rationale for the authorization process and what appears new, drawing a comparison between PSD1 and PSD2; Sections C) and D) examine prudential requirements, namely, rules concerning ownership structure, initial capital, own funds and general risk management, which are largely the same as under PSD1; Section E) looks at PI corporate governance; Sections F) and G) deal with the authorization procedure and registration; Section H), concerning the scope of PIs, addresses business activities other than payment services which may be covered by the licence; Section I) deals with PI structural organization; and Section J) turns to accounting, statutory audit and record-keeping duties. The concluding Section K) draws a comparison between prudential requirements for PIs and those for credit institutions traditionally performing the monetary function.