New market for payment transaction processors faces strengthened regulation
A new act, subjecting systemically important payment transaction processors to certain conduct of business rules, aims to strengthen the continuity and stability of the Belgian payment transactions market by providing the National Bank of Belgium with hard law supervisory authority.
Payment transaction processors facilitate the operational execution of payment services, without providing payment services as such and therefore not to be assimilated with the EU regulated payment service providers.
The conduct of business rules imposed by the new Act apply to payment transaction processors that are of systemic importance in Belgium (SIPTPs). The threshold is set at providing processing services for an annual minimum of 125,000,000 payment transactions using one specific payment scheme (e.g. VISA, MasterCard). Importantly, the new regime will be applicable if the SIPTP and the payment service providers operate in Belgium, regardless of their country of origin. Some activities are excluded from the scope of the new Act, such as the processing of direct debit or credit transfer schemes or the processing of payment transactions within a payment or securities settlement system.
In summary, the new Act imposes conditions on SIPTPs in the following areas:
- outsourcing of important operational tasks;
- sound risk-management frameworks;
- continuity of services (e.g. 30 minutes maximum interruption of services during the day and 1 hour at night); and
- certain M&A activities involving SIPTPs’ require the NBB’s prior authorization.
The new Belgian Act of 24 March 2017 on the supervision of payment transaction processors entered into force on 24 April. This new legislation fits in the recent European trend to strengthen the supervision on payment processors and to create transparency in this increasingly complex and intertwined market. It supplements the existing European legal framework as relates to payment service providers, payment transactions carried out within a payment or securities settlement system and the ECB’s and NCB’s supervisory frameworks on payment schemes.