Qualification of a payment solution

We advised the leading payment institution on the following project:

CLASSIFICATION OF A PAYMENT SOLUTION AS A PAYMENT INSTRUMENT, A LIMITED NETWORK INSTRUMENT AND A PAYMENT SCHEME

• A modern payment solution with extended functionalities should be evaluated not only in terms of its classification as a payment instrument regulated by the Payment Services Act. The functionalities (all or some) of such a solution may be classified as the so-called Limited Network instrument. In addition, the solution may be considered at times a payment scheme.
• The issuance of the Limited Network instrument involves numerous facilitations in comparison with the issuance of the “legitimate” payment instruments (lack of application of the vast majority of provisions of the Payment Services Act, lack of AML obligations). The above may have tangible results in terms of competitive advantage (especially in terms of “user experience”). We determined whether the functionalities of the offered payment solution should be classified as the “legitimate” payment instrument or as the Limited Network instrument.
• In the event when the payment solution provider develops rules for the execution of payment transactions, the issuance of payment instruments, the acceptance of payment instruments and the processing of payment transactions executed with payment instruments, the solution may constitute a payment scheme. The operation of the payment scheme is subject to supervision by the National Bank of Poland and, in certain cases, requires a permission. As part of the project, we determined whether the offered solution is the payment scheme, including an indication whether it is a three-party or four-party scheme (requiring NBP permission).

The advisory services of DLK Legal with respect to such projects mostly include:

• classification of the payment solution as the payment instrument regulated by the Payment Services Act or as the Limited Network instrument
• evaluation of the possibility of combining the functionality of the “legitimate” payment instrument and the Limited Network instrument in a single payment solution
• evaluation whether the solution is the payment scheme, including an indication whether it is a three-party or four-party scheme (requiring NBP permission)