Representing the client in “reauthorization” proceedings before the PFSA regarding the exemption of limited network/limited range

We advised a mobile app provider on the following project:

Representing the client in “reauthorization” proceedings before the Polish Financial Supervision Authority regarding the exemption of limited network/limited range

The Payment Services Act of August 19, 2011 provides for several cases in which its provisions generally do not apply, even though the entity in question issues a payment instrument or executes a payment transaction. One of these is the so-called “limited network/limited range exemption,” i.e., an exemption for services based on payment instruments that:

1. allow the holder to purchase goods or services exclusively at the premises of the issuers of such instruments or within a limited network of entities directly linked by a commercial agreement to a professional issuer of such instruments,
2. are used exclusively for the purchase of a very limited range of goods or services.

However, if the total value of payment transactions made over the past 12 months exceeds 1,000,000 euros, the entity carrying out the aforementioned activities must notify the Polish Financial Supervision Authority (KNF) accordingly, in accordance with applicable requirements. In addition, the EBA Guidelines on the limited network exemption under the Second Payment Services Directive (PSD2) of February 24, 2022 (EBA/GL/2022/02) (“Guidelines”) have been published.

Although the Guidelines are not legally binding, they imposed an obligation on national supervisory authorities (including the KNF) to request entities operating under the limited network/limited range exemption to re-notify the authorities of their conduct of such activities. The purpose of these requests was to verify whether the activities in question comply with the requirements of the Guidelines.

For our client, a provider utilizing the limited network/limited range exemption, we reviewed the business model for compliance with the Guidelines’ requirements and drafted a “re-authorization” notification that detailed the business model and demonstrated its compliance with the Guidelines.
As a result, the Polish Financial Supervision Authority (KNF) confirmed the basis for maintaining the provider’s current entry in the register maintained by the KNF.

DLK’s advisory services included:

• analysis of the existing business model for compliance with the Guidelines’ requirements
• preparation and submission of a “reauthorization” notice to the KNF
• representation of the client in proceedings before the KNF