Regulator (KNF) scrutinizes limited network payment instruments
A process is underway to “reauthorize” entries in the Polish Financial Supervision Authority (KNF) register of payment instrument issuers on the basis of the limited network exclusion. This process follows adoption of European Banking Authority (EBA) Guidelines on the limited network exclusion under PSD2. Under these Guidelines, issuers of payment instruments of this kind are required to submit the relevant notifications to regulators in each member state in which payment instruments are issued and in which the value of transactions executed over the preceding twelve months exceeds EUR 1 million.
As a rule, issuance of payment instruments (such as payment cards or mobile payment applications) is a regulated activity, and requires payment service provider status. One exception to this rule is issuing of payment instruments under the limited network exclusion specified in article 3(k) PSD2. The EBA Guidelines are intended to provide clarifications concerning the practice of applying this exclusion and ensure that it is applied consistently in all EU member states.
The limited network exclusion applies to services based on payment instruments of limited use and which fulfill a minimum of one of the additional conditions referred to in article 3(k) PSD2, such as:
- they enable the holder to acquire goods or services only on the premises of the issuer or within a limited network of service providers under a direct commercial agreement with a professional issuer,
- they can be used only to acquire a very limited range of goods or services.
Applying the exclusion means that a service can be provided without obtaining payment service provider status (for example a payment institution, e-money institution). At the same time, the relevant notification must be submitted to the competent regulator (in Poland the KNF) once the value of transactions executed by the issuer over the preceding twelve months exceeds EUR 1 million. Under the EBA Guidelines, the value of transactions exceeding the threshold must be calculated independently for transactions executed using limited network payment instruments issued at member state level, and notification must be submitted in every member state in which the threshold is exceeded, as required under article 37 (2) PSD2.
 EBA Guidelines of 24 February 2022 on the limited network exclusion under the Second Payment Services Directive (PSD2), reference code EBA/GL/2022/02
 Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC, and 2013/36/EU and Regulation (EU) No. 1093/2010, and repealing Directive 2007/64/EC, OJ L 337, 2015.