ECB expands non-bank PSP rights
The ECB recently announced a key decision to allow non-banking SSPs access to Eurosystem central bank payment systems. This initiative aims to provide new opportunities for payment institutions and electronic money while maintaining strict criteria to ensure the security of payment systems. In addition, the measure also includes cryptoactive service providers (PSSCs), thereby providing similar access. This decision marks a significant step towards greater integration of fintechs and innovative players into the European financial landscape.
FACTS
The ECB introduced its new decision on 27 January. It takes the form of a text on access by non-bank payment service providers (NB-PSP) to Eurosystem central bank payment systems.
In practice, PSPs such as payment institutions or electronic money institutions will be able to apply for access to Eurosystem payment systems.
A list of criteria will be set up to validate access to non-bank PSPs. The organizations will then assess the compliance of these PSPs with the established requirements and the associated level of risk.
Funds deposited by non-bank PSPs in payment systems should not exceed a certain amount. The ECB also states that NB-PSP will be responsible for the implementation of controls and security of connection systems.
In the event of non-compliance with compliance rules or exceeding the funding limits, PSPs will face financial penalties.
A transition period is scheduled until December 31, 2025 to allow NB-PSPs to migrate to new connection models and comply with the new requirements.
ISSUES
Promoting competitiveness and innovation: In line with the major regulations, this decision aims to foster competitiveness and innovation within the European payments ecosystem. The aim would be that this innovation could then shift current payments to faster, more reliable and cheaper payments. The direct connection of NB-PSPs to central bank payment systems could in fact push actors to offer new services or new cases of use in payments. In addition, this could also facilitate the distribution of instant payment.
A decision marked by strong demands: While the ECB has decided to open payment systems to the NB-PSP, it remains aware of the risks involved and wishes to maintain the integrity of systems such as TARGET2. The challenge is therefore to be able to provide suitable access conditions for payment institutions and electronic money institutions while maintaining system security. In line with this, the European Central Bank has nevertheless given an important share of responsibility to the NB-PSPs who will have to guard against risks of settlement, credit, liquidity, as well as all operational risks likely to affect the payment system.
A door for cryptos? : The ECB's decision also involves cryptoactive service providers (PSSCs). As with the NB-PSPs, therefore, CASP will be able to benefit from direct access to Eurosystem payment systems. For the ECB, the objective is to maintain a fair environment between different types of actors.
PERSPECTIVE
This decision illustrates the tendency of European organisations to change traditional actors by opening new doors to fintechs and innovative companies. However, this trend remains gradual to ensure the overall stability of the payments ecosystem. For example, the decision states that NB-PSPs and CASPs will continue to rely on credit institutions to safeguard their clients' funds.
The decision to open payment systems to NB-PSP was already present in the European Parliament's proposal for the next payment services regulation. The sudden exit of the ECB's decision shows the desire of European bodies to change the sector.
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