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PSD2 Regulations for Online Marketplaces and Platforms

Boaz Gam

Boaz Gam


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4 min
Article content
  1. What Are Platform Businesses and Marketplaces?
  2. The Differences Between PSD and PSD2 for Platforms
  3. Financial License for Multi-Sided Platforms According to PSD2
  4. How Can Marketplaces and Platforms Comply with PSD2?

How PSD2 Is Regulating Platforms and Marketplaces

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.

What Are Platform Businesses and Marketplaces?

How PSD2 Is Regulating Platforms and Marketplaces

Online platforms perform as centralized portals that facilitate transactions between the consumers and merchants, while marketplaces play a direct role in the transaction itself.

Some examples of pioneering marketplaces include the globally renowned eBay and Amazon. However, shoppers are also familiar with fairly new marketplaces, such as Etsy, Shopify, and Kickstarter. Besides, Europe has become the birthplace of many prominent online platforms like Deliveroo, Catawiki, and ManoMano.

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 Differences Between PSD and PSD2 for Platforms

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?

Financial License for Multi-Sided Platforms According to PSD2

How PSD2 Is Regulating Platforms and Marketplaces

The fact that marketplace businesses are more regulated under PSD2 comes with plenty of benefits alongside additional aspects to be kept in mind.

Is your business located in the EU? Does it act as an intermediary between the payers and payees by facilitating transactions and the transferring of funds? If so, you are highly likely to need a financial license, according to PSD2.

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:

Commercial Agent

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.

How Can Marketplaces and Platforms Comply with PSD2?

How PSD2 Is Regulating Platforms and Marketplaces

All in all, there are three ways for platforms and marketplaces to comply with PSD2:

  • Get accredited by the Central Bank. If you decide to manage your transactions yourself, you will need to get a financial license from a European Central Bank. It is a lengthy and complex procedure that is suitable only for companies that have enough resources to conduct all the necessary compliance work required.
  • Apply for an exemption. In rare cases listed above, it’s possible to be exempted from the need to receive a license. However, this option is suitable only for marketplaces that deal with a limited range of products and services or a limited number of people.
  • Collaborate with a Payment Service Provider (PSP). Due to its simplicity, this is the go-to solution for many marketplaces. Outsourcing a PSP has plenty of benefits, including quick integration, simpler cross-border transactions, and the absence of the need to go through the financial licensing for the platforms.

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!

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