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08 August 2016 Supervision

Section 1:5a(2) of the Financial Supervision Act (Wet op het financieel toezicht – Wft) lists the services that do not qualify as payment services. This means they do not require a licence.

Services without a non-cash component 

Services involving only cash or paper payment instruments or paper cheques, bills and comparable payment instruments are excepted from the provisions of the Wft. Such services do not involve a payment account and lack a non-cash component.

Similarly, services relating to the transport and handling of cash are excepted from the Wft, but the exception does not apply if they involve a non-cash component. This can be the case, for example, if the cash transported and handled is temporarily deposited in an account held by the cash transport company.

Cash-back transactions are also excepted. These transactions are a service for retail customers whereby an amount is added to the total purchase price of a transaction paid by debit card and the customer receives that amount in cash along with the goods purchased. 

Services not involving end users and intra-group services

Payment services not involving any direct end users and intragroup payment services are also excepted under the Wft. Examples include payment transactions over a central payment system, within the payment service provider organisation or between various payment service providers. Likewise, payment services provided between a parent company and subsidiaries are excepted.

Commercial agents

Payment transactions arranged through a commercial agent acting on behalf of either the payer or payee do not qualify as payment services. A commercial agent that acts on behalf of both the payer and the payee does qualify as a payment services provider.

The exemption for commercial agents applies in the following situations:

“payment transactions from the payer to the payee through a commercial agent authorised via an agreement to negotiate or conclude the sale or purchase of goods or services on behalf of only the payer or only the payee”.

We can distil the following three elements from the definition and its elaboration in PSD2 that must apply simultaneously. The exemption only applies

  • if the commercial agent acts on behalf of only the payer or only the payee
  • if there is an agreement proving that the commercial agent is authorised by the payer or payee and that they are acting on behalf of only the payer or only the payee, and
  • if the commercial agent negotiates or concludes the sale or purchase of goods or services between the payer and the payee.

See also our Q&A “Has anything changed to the exemption for commercial agents under PSD2?", which was published in the period before the entry into force of PSD2.

A commercial agent always has a lasting commercial collaborative relationship with the payer or payee that goes beyond incidental transactions. In addition, the collaboration entails more than the mere facilitation of payments.

Services related to securities

Services related to the distribution of dividends and the redemption or sale of securities do not qualify as payment services. 

Technical support service providers

An enterprise only providing services in support of payment services does not qualify as a payment service provider. The criterion here is that the funds may never come into the possession of the technical support service provider. 

Telecom and information technology

If an enterprise provides services enabling payment transactions using a telecommunications, digital or IT device, it does not provide a payment service if:

  • it does more than merely act as intermediary for the payment transaction, for example adding value to the services or goods, for instance by providing access to the products or making them easy to find; and
  • the product paid for is supplied to and used through a telecommunications, digital or IT device.

This exception applies if the product paid for is used on a smartphone, tablet or computer and only if payment is for digital data.

It does not apply, therefore, to the digital provision of a password or code that can be used to obtain tangible goods or services, whereas it does apply if the password or code can be used to obtain digital goods or services, provided that the other requirements are met.

The exception does not cover a provider of telecommunications, IT or network services that acts solely as an intermediary for payments. This is, for instance, the case if such a provider uses the instrument solely as a channel to offer goods or services to third parties, while payment is effected through the provider of the telecommunications, IT or network services.

Reporting duty
If you are a provider of an electronic telecommunications network and you facilitate payment transactions for the purchase of digital or voice-based services which are billed on the same invoice to customers (such as a subscription to a music streaming service on a smartphone that is also charged to the telephone bill), you must notify us, irrespective of the transaction volume. The payment transactions under this service must remain within the above transaction limits. You can submit your notification through the Digital Supervision Portal (DLT).

If your business makes use of the exemption for certain telecommunications or information technology services, then the online notification form you submit to us through the Digital Supervision Portal must also include an audit opinion stating that your activities are within the set transaction limits.

If your notification is complete, we will either contact you or add your business to the DNB and EBA public register. If the transaction threshold is exceeded, then providers must in principle apply for a licence. If your business conducts activities without the required licence, we may impose enforcement measures.

Payment instruments with limited options for use

Such payment instruments can for instance only be used on the premises of the issuing institution, or only in a restricted network of service providers, or for a limited range of goods or services.

Please note that this exception will be restricted under PSD2, and most small, limited networks will fall outside the scope of the Directive as a result. Under PSD2, a network qualifies as a limited network if the payment services can only be used in the following circumstances:

  • for the purchase of goods and services in a specific retailer or specific retail chain which e.g. provides for the use of a single payment brand, which is used at the points of sale and appears, where feasible, on the payment instrument that can be used there; or
  • for the purchase of a very limited range of goods or services, such as where the scope of use is effectively limited to a closed number of functionally connected goods or services regardless of the geographical location of the point of sale; or
  • where the payment instrument is regulated by a national or regional public authority for specific social or tax purposes to acquire specific goods or services.

Payment instruments covered by the limited network exception could include store cards, fuel cards, membership cards, public transport cards, parking ticketing and meal vouchers. This exception is subject to a notification duty.

Reporting duty
If your business offers a payment instrument allowing the acquisition of goods or services within a limited network of providers (such as gift vouchers from a certain retailer) or a limited range of goods or services (such as a fuel card), you must notify DNB. The notification solely applies to larger networks if the volume of transactions over the past twelve months meets or exceeds €1 million. You can submit your notification through the Digital Supervision Portal (DLT).

You must also include a description of your activities and a substantiation of why your business qualifies for the exemption. If your notification is complete, we will either contact you or add your business to the DNB and EBA public register. If we establish that your activities do not fall within the scope of the exemption, we will not add your business to the public register. If your business conducts activities without the required licence, we may impose enforcement measures.

Exploitation of ATMs

An enterprise that independently operates ATMs and does not provide any other payment services is excepted from supervision of payment service providers.

These excepted payment services are listed in Section 1:5a(2) of the Wft