On 1 March, the European Banking Authority clarified one of the remaining questions concerning the upcoming RTS on SCA.
As the September 2019 deadline approaches, the European Banking Authority and the European Commission continue to provide additional interpretation to the RTS through the EBA’s online Q&A.
One of the latest expected interpretation delivered concerns the scope of the RTS on SCA and Merchants initiated transactions and more specifically ‘card payments initiated by the payee only’
Merchants–initiated transactions include a variety of use-cases mainly built on recurring transactions, such as utilities bill payments, pay-TV and mobile phone subscriptions, car/bike sharing transactions, digital services subscriptions, insurance premium payments, hotel charges and funding transactions for staged wallets.
Those transactions are characterized by a lack of involvement of the payer in triggering each individual payment. According to the EBA, card-based transactions are considered as payment transactions initiated by the payer through the payee. They are therefore not considered as payee-initiated.
However, in one of its answers, the EBA does consider that “where the payer has given a mandate authorizing the payee to initiate a transaction or a series of transactions through a particular payment instrument that is issued to be used by the payer to initiate the transactions, and where the mandate is based on an agreement between the payer and that payee for the provision of products or services, the transactions initiated thereafter by the payee on the basis of such a mandate can be qualified as payee initiated transactions”.
The European Commission therefore agrees that ‘card payments initiated by the payee only’ are out of scope of the RTS on SCA. It means that only the setting up of the mandate is subject to SCA.
You can consult all the answers provided by the EBA on its Single Rulebook Q&A.