Eurosystem Approves Framework for Overseeing Electronic Payments
The European Central Bank’s Governing Council approved a new oversight framework for electronic payment instruments, schemes and arrangements, which aims to make the operation of payment systems safer and more efficient. The Eurosystem will use this new framework to oversee companies that enable the use of payment cards, direct debits, credit transfers, and e-money. The new framework will also cover crypto-related services.
The oversight requirements are set out in the form of principles, which each company subject to oversight must observe. Such principles include that a payment scheme or arrangement have governance that is transparent and promotes the safety of the payment and a comprehensive risk management framework.
The new oversight framework also includes an assessment methodology and exemption policy. The assessment methodology provides a self-assessment for the company to complete and submit to an overseer, who will then prepare an oversight report based on an evaluation of the company’s responses. The oversight report will indicate whether, and to what extent, the company is observing each principle. With respect to the exemption policy, the Euroystem will also use a points system to assess the particular payment scheme or arrangement against the following criteria (i) the size of the end user or payment service provider base; (ii) the degree of market penetration in terms of volume; (iii) the degree of market penetration in terms of value; and (iv) geographic relevance. If the payment scheme or arrangement’s score is low enough, it will be exempt from oversight requirements.
Companies are expected to adhere to the new framework by November 15, 2022, or within one year following initial notification they will be subject to oversight under the new framework.