A single Eurosystem oversight framework for electronic payment instruments, schemes and arrangements
On 27 October 2020 the Eurosystem published the oversight framework for electronic payment instruments, schemes and arrangements (“PISA framework”) for public consultation.
PISA framework ‒ what is it?
The Eurosystem establishes oversight requirements in the form of generic principles to assess the safety and efficiency of the entities that fall within the scope of its oversight and to induce change where shortcomings are identified. The PISA framework sets out those oversight principles in a single, future-proof and harmonised manner for electronic payment instruments, schemes and arrangements, which can be defined as follows:
- payment instruments allow the electronic transfer of value between end-users (e.g. credit transfers, direct debits, cards, e-money, digital payment tokens);
- payment schemes are the standardised rules and procedures for using the aforementioned payment instruments, as defined by the scheme’s governance body; and
- payment arrangements provide functionalities supporting the use of electronic payment instruments, e.g. payment initiation services, payment integrators, wallets storing data, or tokenised payment account numbers.
PISA framework ‒ what’s new?
First, the PISA framework will replace the existing harmonised oversight approach and oversight standards for payment instruments, including all the related oversight frameworks for cards, direct debits and credit transfers, as well as the security objectives for e-money. Its scope includes payment instruments that are offered to end-users and denominated in or funded in euro, partly or fully backed by euro, or redeemable in euro.
Second, the retail payments ecosystem is constantly evolving due to innovation, as well as technological and regulatory change. The PISA framework aims to address these developments and builds on the experience gained by the Eurosystem in the oversight of payment schemes and payment instruments over the years. Accordingly, its scope includes digital payment tokens (e.g. stablecoins), alongside “traditional” payment instruments and schemes. Another new feature is the inclusion of payment arrangements in the framework.
Third, the PISA framework follows the principle of proportionality, and aims in particular to set requirements for those entities that play a more significant role in the euro area.
How is the PISA framework applied?
The PISA framework is aimed at the governance bodies of payment schemes/arrangements, which are expected to adhere to the oversight principles.
The Eurosystem has defined criteria to identify the payment schemes/arrangements to be overseen taking into account their relevance for the overall payment system and those which are exempt. These criteria consider the size, market penetration and geographical relevance of a payment scheme/arrangement within the euro area and are summarised in the exemption policy.
The PISA assessment methodology complements the oversight principles of the framework by specifying key considerations and assessment questions. This allows for a consistent and harmonised Eurosystem application of the PISA framework across the overseen entities. The responses to the assessment questions are to be provided by the respective governance body of the overseen payment scheme/arrangement and serve as a key input for the actual oversight assessment. The assessment methodology also indicates which assessment questions may be subject to requirements under other Eurosystem oversight frameworks or might fall within the scope of other authorities. In such cases, the overseer will consider the oversight or supervisory findings of the authorities concerned.
Public consultation and follow-up
The public consultation offers interested parties the opportunity to comment on the PISA framework. Following the expiry of the deadline for submitting responses on 31 December 2020 at 18:00, the ECB will assess all comments received and amend the documents as appropriate. The final version of the PISA framework will then be published, together with a summary of the consultation feedback, and will become applicable one year after publication.