E-commerce Marketplaces, Commercial Agents and PSD2

E-commerce marketplaces are now common in most sectors, enabling suppliers and consumers of all types of goods and services to find each other, contract directly, pay or be paid, arrange delivery and download their transaction data. But action being taken by some payment service providers (PSPs) suggests that many marketplace operators who offer this service in the European Economic Area may not have realised that the payment step needs to be structured in a way that avoids the need for the operator to be authorised by an EEA financial regulator as a payment institution or e-money institution under the Payment Services Directive or E-money Directive (depending on whether the supplier or customer is able to hold a balance in their 'account').

Some financial regulators, like the UK's Financial Conduct Authority, take the view that offering a payment service or e-money service has to be the operator's regular occupation or business in itself to fall within the scope of the PSD or EMD in the first place (the "business test"), although the payment step would need to be a small, ancillary part of the service offered and this is open to interpretation. But less pragmatic or experienced regulators around the EEA might apply the Directives simply because the operator is running a business of any kind. 

This means operators should err on the side of structuring their activities to avoid holding balances and to take advantage of an exclusion under the Payment Services Directive (e.g. for commercial agents authorised to negotiate or conclude contracts on behalf of either the payer or payee); or involve a PSP to handle the receipt and distribution of funds (or become the registered agent of a PSP). 

Other exclusions under the PSD or EMD may also be helpful. But even relying on an exclusion can be somewhat tricky because the interpretation of exclusions can vary from regulator to regulator across the EEA; and there is no 'passport' for one regulator's interpretation as there is for regulated PSPs who can offer their service across the EEA from under authorisation in their home member state. 

That means an operator should seek legal advice on how to structure its activities appropriately under the law of its home EEA member state; and if that involves relying on the local regulator's interpretation of the business test or an exclusion, the operator should check that analysis works under the law of each member state where the operator has a presence or significant numbers of participants (whether suppliers or their customers).  Acting on formal legal advice should also make it less likely that a regulator will take action for acts or omissions consistent with that advice, although it will not necessarily stop a regulator requiring a different structure going forward.