Effective as per 1 January 2014, companies which offer so-called payment processing services (afwikkeldiensten) in the Netherlands will be regulated. Operating the business of a payment processor (afwikkelonderneming) may require a license from the Dutch Central Bank (De Nederlandsche Bank) (DCB).
In this newsletter, we will highlight key points of the new regulatory framework.
This newsletter is relevant for businesses active (or becoming active) in the Dutch payment market, such as payment services providers, (third party) payment processors and payment aggregators. It may also be of relevance to operators of payment wallets and clearing institutions.
The new regulatory framework not only applies to companies with a seat in the Netherlands, but also to companies located outside of the Netherlands, if payment processing services are offered in the Netherlands.
Scope of new supervision
The new regulatory framework will be implemented in the Dutch Financial Supervision Act (Wet op het financieel toezicht) and will apply to payment processing services, which include:
- transmission of requests relating to the approval of payment orders, by anyone other than a provider of communication networks;
- approval of aforementioned requests on behalf of payment service providers; and/or
- netting payments between payment service providers.
We note that the payment processing services are not the same as payment services within the meaning of the Payment Services Directive (Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007) (PSD). The new regulatory framework will supplement the (current) regulatory framework established by the PSD.
Notification of payments processed
Any payment processor which is active in the Netherlands must report to the DCB the number of payment transactions it has processed in the past year in the Netherlands. This reporting requirement will apply to all payment processors active on the Dutch payment market, regardless of whether these payment processors are located in or outside the Netherlands and regardless of whether or not a license to operate as a payment processor is required.
Payment processors active in the Netherlands require a license from the DCB when the number of payments processed by these payment processors exceeds a certain threshold. At this moment the threshold is set at 120 million payments processed in 2013, but this threshold may change in the future. No license is needed when the number of payments processed falls below the threshold.
In addition, no license to operate as a payment processor is required if the payment processor has a seat in a designated state (aangewezen staat). A list of designated states has not been published yet.
If a license from the DCB is required, it will only be granted if the payment processor demonstrates that the requirements with regard to (inter alia) the following will be complied with:
- competence and trustworthiness of certain persons;
- policy regarding integrity in the conduct of business;
- minimum number of persons that determine the day-to-day policy;
- control structure and manner in which the conduct of business is organised.
Irrespective of whether or not a license is required, all payment processors will have to comply with certain Dutch rules and regulations which are based on international standards, such as those adopted by the Committee on Payment and Settlements Systems of the Bank for International Settlements (BIS) and the Board of the International Organization of Securities Commissions (IOSCO). The majority of the provisions are based on the Principles for Financial Market Infrastructures (PFMI).
The DCB is responsible for prudential supervision of payment processors and the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten) (AFM) for supervision on the conduct of payment processors. Both the DCB and the AFM have various means to enforce compliance, such as imposing a fine (of maximally 4 million euro per offence) or the withdrawal of the licence.