PSD: AG opinion tackles the meaning of 'payment account'

Is an online savings account that can only be used to make payments to and from a linked current account a payment account for PSD purposes? That is the question posed to the CJEU by the Austrian courts (Case C-191/17 – ING-DiBa Direktbank Austria).

The initial Advocate General's Opinion has now been published and concludes that it is not.

While this has long been a point of debate in the UK and beyond, the introduction of PSD2 has made the point more important as only payment accounts need to be accessible to third party providers. Non-payment accounts would also benefit from less frequent statement requirements so this decision could have an impact on systems and processes that are currently being put into place.

However, the arguments appear finely balanced, the Advocate General has not uncovered any points that obviously point one way or the other and the reliance on the definition in the Payment Accounts Directive (PAD) does not seem directly on point. As a result, only time will tell whether the CJEU will follow the Opinion's lines of reasoning.

What's the background?

The Austrian Supreme Court sought to clarify whether an online direct savings account would fall within the notion of a "payment account" under Article 4(14) of PSD1, meaning that the Directive would apply. The account permitted unlimited access to funds, but required third party transfers to go through a reference (current) account.

The Advocate General (AG) opined that the account fell outside the scope of the definition of a 'payment account' under PSD1.

Payments to third parties: a 'decisive criterion'?

In the AG's Opinion, the issue turns on the inability to make payments to third parties.

The applicants and the Commission contended that the ability to make payments to third parties was not a defining feature of a payment account. Instead, they focused on the ability of the account holder to freely make payments on his own initiative (rather than there being restrictions on the use of the account).

The defendant bank and the German Government argued that the definition of a payment account depended on its functionality and this included the ability to pay third parties. The AG agreed, describing this as a 'decisive criterion' in establishing whether or not an account is a payment account. The restricted nature of an account which excluded payments to third parties would be too limited in its functions to be a payment account.

Although the account did not fall under one of the fifteen "negative scope" categories which would be exempt from the application of the Directive, these are non-exhaustive. Relying on the list of payment services in the Annex to PSD1, the AG suggested that the Directive implicitly required the possibility of third party payments in order to be a payment account.

PAD – a 'key measure'?

However, the AG considered the definition of a "payment account" and related provisions in PSD1 to be inconclusive as to its characteristics. Therefore, he drew on other measures in the EU payment services legislative framework, in particular PAD.

The AG considered that the PAD payment account definition is 'virtually identical' to the PSD1 definition. PAD explicitly applies to payment accounts where payment transactions can be made to (and from) a third party. The PAD recitals also set out that accounts with 'more limited functions' (such as a savings account) should be excluded.

This aspect of the Opinion is surprising as PAD clearly has a more narrow application than PSD. In particular, if this approach was followed through, not only would savings accounts be excluded from the scope of PSD but also other accounts that are obviously intended to be within scope, including credit card and e-money accounts. We would therefore be surprised if the CJEU in due course adopts similar reasoning.

Impact for consumers

Finally, the AG recognises that one of the aims of PSD is to protect consumers as payment service users. However, the AG concludes that there is no need for protection in such cases. As the linked account will itself be within scope, he sees the imposition of PSD requirements on the savings account as leading to "double protection" for consumers. There seems to us to be some merit in this argument as issues such as unauthorised transactions become less important when the money can only go to another account of the customer.

Continuing uncertainty

This Opinion illustrates the current uncertainty surrounding the scope of the payment account definition. It attempts to provide some clarification, but is at odds with the broad interpretation of the term that the FCA has adopted in the past and so leaves room for continuing uncertainty.

An AG opinion is persuasive but not binding on the CJEU. What is clear is that the definition is ambiguous and the AG has been unable to find any obvious points to confirm the interpretation one way or another. The Court's approach is therefore likely to be driven by policy considerations and in particular whether it agrees that making such an account a payment account would lead to "double protection" for consumers. The Court's final judgment is awaited.

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