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~ Spotlight on ~

Th e new SCA requirements, fi rst set forth by Article 97 of the came into force in June 2015, the PSD2 now prohibits online
PSD2 and then spelt out in detail by the subsequent Regulatory merchants from applying additional fees to consumers on certain
Technical Standards (RTS) adopted by the EC in November consumer card transactions. By example, merchants, including
2017, will certainly apply to online transactions where both the ticket, travel and food delivery sites, are no longer allowed to
payor’s PSP (issuer) and the payee’s PSP (acquirer) are located charge consumers additional fees for the mere fact that the latter
within the European Economic Area (EEA). are paying by debit/credit card.

In other cases, albeit the SCA is not expressly limited in its ter- Th e surcharge ban applies if:
ritorial scope, geographical limits are likely to apply: for instance, • the consumer’s bank or card issuer and the payment provider
according to an opinion by the European Banking Authority, of the merchant are both located in the EEA; and
“SCA applies to all payment transactions initiated by a payer, • the consumer carries out a payment using a debit/credit card,
including to card payment transactions that are initiated through or an EUR payment using direct debit or credit transfer (e.g.
the payee within the EEA and apply only on a best-eff ort basis SEPA).
for cross-border transactions with one leg out of the EEA”
(EBA-Op-2018-04). Even in those cases where the surcharge ban is not applicable,
the amount of any surcharge imposed may not exceed the cost
Th e tightening of EU security rules for online transactions is incurred by the online merchant in accepting such particular
aimed at reducing the number of online card frauds: according payment method.
to the “Fifth Report on Card Fraud” by the European Central
Bank, published in September 2018, during 2016 the total value Tighter PSD2 regulations for marketplaces
of card-not-present (CND) fraud increased by 2.1% compared As we all surely know already, marketplaces are e-commerce sites
with the previous year, reaching €1.32 billion. Furthermore, where third-party companies, usually defi ned as “business users”,
CNP fraud, nowadays covering mainly “online fraud”, has be- can sell their products or services to consumers.
come the most prominent type of card fraud, amounting to 73%
of total card fraud losses in 2016. Many online marketplaces collect funds on behalf of their business
users. In such cases, marketplaces are off ering payment services
Nonetheless, payment service providers will still be able to (they off er to their customers various payment methods and they
decide not to apply SCA in some statutory cases: by example, receive funds on behalf of the associated business user). Nowadays,
for (online and mobile) remote payments worth up to 30 euros, most payment services are strictly regulated under the PSD2 and
except when a cumulative value of 100 euros is reached or when payment system providers need to be authorised/licensed.
fi ve payments of up to 30 euros have been carried out without
strong customer authentication. Under the previous PSD, in some cases marketplaces did benefi t
from the ‘commercial agent exclusion’ applicable where an online
Likewise, SCA will not be mandatory where the payer initiates marketplace negotiates or concludes the sale and purchase of
a contactless electronic payment transaction provided that the goods and services on behalf of the payer or the payee. In such a
individual amount of the contactless payment does not exceed case, no license is required.
50 euros and, also, that the cumulative amount of previous con-
tactless electronic payment transactions from the date of the last Yet, diff erent interpretations of the ‘commercial agent exclusion’
application of strong customer authentication does not exceed by national EU regulators made it quite diffi cult for online mar-
150 euros or the number of consecutive contactless electronic ketplaces to apply the commercial agent exclusion consistently
payment since the last application of strong customer authenti- throughout Europe.
cation does not exceed fi ve.
Th e scenario, however, has now changed with the PSD2.
“Ban” on payment card surcharges Th e PSD2 explicitly clarifi es that the commercial agent exclu-
As the recitals to the PSD2 acknowledge: “Diff erent national prac- sion only applies when the commercial agent acts only on behalf
tices concerning charging for the use of a given payment instrument of either the payer or the payee, not both, in spite of whether or
(‘surcharging’) have led to extreme heterogeneity of the Union’s not they are in possession or control of funds.
payments market and have become a source of confusion for con-
sumers, in particular in the e-commerce and cross-border context. It seems that, under the newly-interpreted regulatory frame-
Merchants located in Member States where surcharging is allowed work, the only available solutions for those marketplaces without
off er products and services in Member States where surcharging is a license in order is to make changes to their contractual terms
prohibited and surcharges the consumer”. and/or business model. Some payment software providers have
devised solutions, already available in the market, which may
Adding to the existing IFR (Interchange Fee Regulation) that help for this purpose. ••

Alan Rhode is a co-founder at Taxmen, the one-stop-shop for legal and tax services to the e-Commerce industry.

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