On 29 November, BaFin published the long-awaited, newly amended guidance note on the German Payment Supervisory Act (PayTechLaw already reported on the BaFin guidance). In its note, BaFin not only addresses the changes that are made due to the transposition of PSD2. It also deals with payment transactions on online platforms and marketplaces that bring together the seller and buyer of goods. Hardly any topic has been more intensely discussed on the relevant payment blogs in the last few years than this one. If that isn’t reason enough that also PayTechLaw takes a closer look at this topic…
Marketplaces and the obligation to obtain a license – but I am not a bank, am I?
Marketplaces? What are we actually talking about here? Let’s look at an example: Let’s assume that Cookie Monster Company operates an internet website where ambitious bakers are able to sell their vegan and organic cookies and cook books. Health-conscious foodies may order via this website directly from the respective seller. Now, Cookie Monster Company wants to process the payments from the buyers to the sellers (e.g. via PayPal, credit card or direct debit). To do this, Cookie Monster collects the payments in its own account and then transfers them to the sellers. From a legal point of view, the consequence is that Cookie Monster Company carries out a payment service and therefore requires a license from BaFin…unless there is an exemption.
And what are the available exemptions?
- For one, there is the commercial agent exemption. BaFin sets out that this exemption applies where the agent acts on behalf of either the buyer or the seller. In addition, it is required that the marketplace operator has a discretion to decide if and on which conditions a sale is concluded. Obviously, this is not the case for Cookie Monster Company because it operates its marketplace for buyers as well as sellers. Then again, Cookie Monster does not influence the conditions of the sales made on its website. This may be different, for instance, for an online platform that only acts for sellers (e.g. a travel booking site). However, even then the issue remains whether the online platform has a discretionary power.
- Maybe Cookie Monster Company can rely on the exemption for payment services for a limited range of products. The law says that payments made via payment instruments that are available only for the purchase of a limited range of products do not require a license. This could work for Cookie Monster Company, if they take the cook books off their website in order to truly limit the range of products on offer. In addition, Cookie Monster would need its own payment method (let’s call it CookiePay), for which each payment transaction would need to be authorized separately. Of course, CookiePay would also need to be “loaded” (just like e.g.PayPal) via other payment methods (e.g. credit card or direct debit).
Phew, that’s all rather complicated. What are the other options?
What helps, when nothing helps anymore?
Apart from praying, Cookie Monster has other options to avoid having to obtain a license:
- Cookie Monster could itself act as the seller and accordingly buy the cookies from the original sellers. Then, Cookie Monster would not be a payment service transferring monies of third parties but would collect money for its own service or pay for supplies just like any other retailer. For this, it would be important that Cookie Monster acts as a typical retailer, which means, for example, that it also bears the sales risk and the warranty risk.
- Oh well, and if Cookie Monster Company does not want this either, it needs to select a payment service provider with a license that carries out the payment processing for the sellers. For this setup to work, the payment service provider needs to conclude a contract with each seller. Isn’t that great? Sorry, but we cannot make the world better than it is. We can only try to explain it better.
What can we learn from this blog post? Regulatory law is almost as easy as baking cookies.
Authors: Christian Walz and Dr. Susanne Grohé
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