Online marketplaces and sales platforms have shifted commerce, shortening the distance between merchants and shoppers to just a few clicks. Thus, it is no coincidence that this business model is continuously growing and infiltrating an increasing number of niches.
However, as the prominence of this business model expands, the question of accountability arises. After all, which party has the legal responsibility for the transactions between the buyers and sellers? This matter is effectively tackled by the Revised Payment Services Directive. Learn how exactly the PSD2 navigates the current market situation below.
Online platforms perform as centralized portals that facilitate transactions between the consumers and merchants, while marketplaces play a direct role in the transaction itself.
Platforms and marketplaces are extremely popular these days due to their convenience and level of services provided. But what does it take to maintain such complex systems that deal with enormous transaction volumes from the legal side?
The first Payment Services Directive (PSD) was introduced in 2007 in the EU. While it was in force, the platforms were left as a gray area, allowing different countries to interpret the regulations as they saw as more fitting. In many cases, this meant that the platforms could be relieved of the responsibility for the transactions between the buyers and sellers by being exempt from the regulation and considered facilitators or commercial agents.
Things have changed with the introduction of PSD2 in 2015. The revised directive’s goal was to provide the consumers with more security and better service. This eliminated the gray area for platforms. Payments licenses became mandatory for platforms that were acting on behalf of both the shoppers and the merchants.
So what are the main PSD2 requirements that eCommerce platforms must follow nowadays?
The fact that marketplace businesses are more regulated under PSD2 comes with plenty of benefits alongside additional aspects to be kept in mind.
It can be in the form of an e-money, PSP, or banking license and needs to be issued by an EU central bank. However, there are certain exemptions to the regulations:
A business platform can be relieved from the need to present a financial license in some cases. One of such instances is when a business is structured around a commercial agent exemption. This is when marketplaces or platforms only act on behalf of the buyer or the seller.
Regular Occupation or Business Activity Test
According to PSD2, licensing applies to service providers who facilitate payment services as a regular occupation or business activity in their own right and not merely as auxiliary to another business activity.
Thus, another way of avoiding the process of receiving a financial license for your business is to opt for an existing platform solution of a licensed entity that would separate your funds from those of your sellers.
The Limited Network Exemption
This exemption is only applicable to a limited range of commercial activities, like “closed-loop” payments. Yet, platforms still have to notify a relevant regulator if their transactions within a year exceed €1 million. Then, the regulator may instruct them to get a financial license.
All in all, there are three ways for platforms and marketplaces to comply with PSD2:
If you are looking for an ideal solution for your online marketplace, search no more. Payneteasy is here to provide you with a custom payment solution that follows all the current regulations and relieves you from the hassle of going through lengthy bureaucratic processes. Reach out to us now to get started!