4. Guidelines on the limited network exclusion under Directive (EU) 2015/2366

1.1. Competent authorities should take into account that the specific payment instruments that can be used only in a limited way under Article 3(k) of PSD2 are payment instruments as defined in Article 4(14) of PSD2. Competent authorities should allow all different types of payment instruments under PSD2 to benefit from an exclusion under Article 3(k) of PSD2.

1.2. Competent authorities should take into account that the specific payment instruments can be used for acquiring both physical and digital goods and services.

1.3. Competent authorities should not impose any restrictions on the means of transferring funds to the payment instrument, which can be done through execution of payment transactions and/or through the issuance of electronic money. Competent authorities should take into account that, in the cases where funds are transferred to the payment instrument by using an intermediary other than the issuer, the transfer of funds should be considered as a separate payment service that does not fall within the scope of the service excluded under Article 3(k) of PSD2.

1.4. Competent authorities should check, when assessing the information provided by issuers that provide services based on a payment instrument falling under the scope of Article 3(k) of PSD2 within their jurisdiction, whether these issuers apply technical and contractual restrictions limiting the use of the payment instrument. Competent authorities should not consider the mere presence of a contract between the issuer and the holder of the payment instrument as a technical restriction.

1.5. The specific technical restrictions should at least apply to:

• a) the providers of goods and services where the payment instrument can be used, applicable for the exclusion under Article 3(k)(i) of PSD2; or
• b) the range of goods and services that can be purchased with the payment instrument, applicable for the exclusion under Article 3(k)(ii) of PSD2; or
• c) the geographical location for acquiring goods or services from specific suppliers for specific social or tax purposes, applicable for the exclusion under Article 3(k)(iii) of PSD2. 1.6. Competent authorities should take into account that a single card-based or other means of payment can accommodate simultaneously more than one specific payment instrument within the scope of Article 3(k) of PSD2. Competent authorities should ensure that the technical and contractual restrictions specified in Guidelines 1.4 and 1.5 apply to each specific payment instrument.

1.7. Competent authorities should take into account that a single card-based or other means of payment cannot accommodate simultaneously payment instruments within the scope of PSD2 and specific payment instruments within the scope of Article 3(k) of PSD2.

1.8. Competent authorities should take into account that issuers can issue more than one specific payment instrument under Article 3(k) of PSD2, provided that each payment instrument fulfils the requirements set out in these Guidelines.

1.9. Competent authorities should not take into account the redeemability of the monetary value stored on the payment instrument in the assessment of whether the payment instrument falls under the scope of Article 3(k) of PSD2.

1.10. Competent authorities should take into account that payment instruments falling under the scope of Article 3(k) of PSD2, which store monetary value on the payment instrument, can be either reloadable or for one-off use only.

1.11. Competent authorities should take into account that a single payment instrument excluded under Article 3(k) of PSD2 cannot benefit from more than one exclusion from the scope of application of PSD2, including other exclusions under Article 3(k) of PSD2.

1.12. The issuer of the specific payment instrument can be established in a Member State different from the Member State of the respective competent authority that has received the notification under Article 37(2) of PSD2.

1.13. Competent authorities should take into account that the exclusions under Article 3(k) of PSD2 should include, inter alia, transactions accepted by the issuer itself when the transaction is carried out within a network benefiting from an exclusion under Article 3(k) of PSD2 and the issuer itself is an acceptor in that network.

2.1. When assessing whether the use of a specific payment instrument is limited within a limited network of service providers, competent authorities should take into account all of the following criteria in the assessment of the information provided by the issuer with the notification submitted under Article 37(2) of PSD2:

• a) A direct contractual agreement for acceptance of payment transactions is concluded between the issuer of the payment instrument and each provider of goods and services, and, where applicable, each acceptor, operating within the limited network;
• b) The envisaged maximum number of providers of goods and services operating within the limited network as set out by the issuer in the notification under Article 37(2) of PSD2; and
• c) The provider offers goods and services under a common brand that characterises the limited network and provides visual manifestation to the user of the payment instrument.

2.2. Complementary to the assessment under Guideline 2.1, competent authorities should take into account, based on the size and specificity of their market, all of the following additional indicators:

• a) The specific geographical area for provision of goods and services, as set out by the issuer;
• b) The volume and value of payment transactions to be carried out with the payment instruments on an annual basis, as envisaged by the issuer;
• c) The maximum amount to be credited to the payment instruments, as envisaged by the issuer;
• d) The maximum number of payment instruments to be issued, as envisaged by the issuer; and
• e) The risks faced by the customer when using the specific payment instrument, as identified by the issuer.

2.3. Competent authorities should take into account that a limited network of service providers can consist of physical stores only, online stores only or a combination of physical and online stores.

2.4. When carrying out the assessment set out in Guidelines 2.1 and 2.2, competent authorities should not make a distinction between the type of stores and should not require the type of goods and services offered in online stores to be dependent on the type of goods and services offered in physical stores or vice versa.

2.5. Competent authorities should not allow the use of the same payment instrument excluded under Article 3(k)(i) of PSD2 across different limited networks of service providers.

2.6. Competent authorities should take into account that either the issuer of the payment instrument or the providers of goods and services can delegate the conclusion of the contractual agreement referred to in Guideline 2.1 to a third party acting on their respective behalf. 2.7. Competent authorities should apply Guidelines 2.1 and 2.2. in a restrictive way that does not allow for the possibility for a specific-purpose payment instrument to develop into a general-purpose payment instrument.

3.1. Competent authorities should take into account that payment instruments allowing the holder to acquire goods or services only in the premises of the issuer can only be used in physical premises and cannot be used in online stores.

4.1. Competent authorities should take into account that in order for the use of a specific payment instrument to be considered as limited for acquiring a very limited range of goods or services under Article 3(k)(ii) of PSD2, a functional connection between the goods and/or the services that can be acquired with the payment instrument should exist.

4.2. When assessing the functional connection between the goods and/or services, competent authorities should take into account that a specific category of goods and/or services with a common purpose has been identified by the issuer. Competent authorities should check whether the issuer has identified the goods and/or services falling within the specific category and whether it has described the functional connection between them in the notification under Article 37(2) of PSD2.

4.3. Competent authorities should take into account that a functional connection can exist between physical and digital goods and/or services.

4.4. Complementary to the assessment under Guidelines 4.1 and 4.2, competent authorities should take into account, based on the size and specificity of their market, all of the following additional indicators:

• a) The volume and value of payment transactions to be carried out with the payment instruments on an annual basis, as envisaged by the issuer;
• b) The maximum amount to be credited to the payment instruments, as envisaged by the issuer;
• c) The maximum number of payment instruments to be issued, as envisaged by the issuer; and
• d) The risks faced by the customer when using the specific payment instrument, as identified by the issuer. 4.5. Competent authorities should apply Guidelines 4.1, 4.2 and 4.4 in a restrictive way that does not allow for the possibility for a specific-purpose payment instrument to develop into a general-purpose payment instrument.

5.1. Competent authorities should take into account that payment service providers as referred to in Article 1 of PSD2 and electronic money issuers can provide services based on specific payment instruments that can be used only in a limited way, provided that the requirements under Article 3(k) of PSD2 and these Guidelines are met.

5.2. Competent authorities should ensure that in the cases where payment service providers or electronic money issuers also provide services under Article 3(k) of PSD2, these entities distinguish the regulated payment services/electronic money from the services excluded under Article 3(k) of PSD2 in a clear and easily recognisable way, including through the provision of a specific visual manifestation.

5.3. Competent authorities should ensure that payment service providers and electronic money issuers inform the user of the specific payment instrument in a simple and clear way that the provided services are not regulated and supervised, and that users do not benefit from the protection for payment service users under PSD2.

5.4. Where during the assessment of the notification referred to in Article 37(2) of PSD2, the competent authority arrives at the view that

• a) the distinction between the regulated payment services and/or electronic money and the services excluded under Article 3(k) of PSD2 is not sufficiently clear or appropriate, including the transparency of the communication with the users of the specific payment instrument set out in Guidelines 5.2 and 5.3, and/or
• b) the services excluded under Article 3(k) of PSD2 are likely to impair either the financial soundness of the payment service provider/electronic money issuer or the ability of the competent authority to monitor compliance with the legal requirements in PSD2 and/or EMD2,

the competent authority should take supervisory actions accordingly.

6.1. Competent authorities should take into account that the notification under Article 37(2) of PSD2 should be submitted by the issuer to the competent authority in each Member State where the users of the payment instrument are located and where the threshold set out in Article 37(2) of PSD2 is exceeded in the particular Member State. 6.2. Competent authorities should take into account that the notification under Article 37(2) of PSD2 should be submitted by the issuer for any given period shorter than 12 months when the total value of payment transactions executed exceeds the amount of EUR 1 million for that period.

6.3. Competent authorities should take into account that the notification under Article 37(2) of PSD2 should contain information about the type of exclusion under which the activity is carried out and the description of the activity.

6.4. The description of the activity referred to in Guideline 6.3 should include information:

• a) on whether the goods and/or services that can be acquired are physical and/or digital;
• b) about other Member States where the service under Article 3(k) of PSD2 covered by the notification to the competent authority is provided by the same issuer; and
• c) any other information allowing competent authorities to assess the notification against these Guidelines.

6.5. Competent authorities should take into account that the notification under Article 37(2) of PSD2 is to be submitted by the issuer only once. An additional new notification should be submitted to the competent authority when any information related to the same specific payment instrument(s) as provided with the initial notification has changed substantially.

6.6. Competent authorities should take into account that the substantial changes referred to in Guideline 6.5 can include but are not limited to situations where:

• a) the provision of the excluded services has terminated;
• b) the issuer intends to increase the number of providers of goods and/or services under Guideline 2.1(b);
• c) the issuer intends to expand the specific geographical area for the provision of goods and/or services under Guideline 2.2(a); or
• d) the issuer intends to offer services under Article 3(k)(i) or (ii) of PSD2 based on an instrument not covered in the original notification; or
• e) the previously notified specific category of goods and/or services with a common purpose referred to in Guideline 4.2 is intended to be changed.

6.7. In any case, competent authorities can request issuers to submit a new notification with updated information if they consider this necessary to establish whether or not the information the issuer had provided with the initial notification has changed. 6.8. Competent authorities should take into account that the calculation of the threshold under Article 37(2) of PSD2 is to be carried out at the level of each issuer. Where a single issuer provides services based on more than one specific payment instrument under Article 3(k)(i) and/or (ii) of PSD2, the calculation of the threshold should be carried out by combining all payment transactions executed in the respective Member State with all specific payment instruments offered by the same issuer.

6.9. Competent authorities should include the issuer in their national register under Article 14 of PSD2 and the central register of the EBA under Article 15 of PSD2 only once and reflect in a concise manner the description of the activities carried out with each specific payment instrument under Article 3(k)(i) and/or (ii) of PSD2. Competent authorities should also include in the description of activities in the registers the information about other Member States where the same issuer provides services under Article 3(k)(i) and/or (ii) of PSD2.

6.10. Competent authorities should ensure that the information provided by an issuer with the notification under Article 37(2) of PSD2 allows them to assess whether the activity falls under the scope of Article 3(k)(i) and/or (ii) of PSD2 or whether it will require authorisation as a payment service provider or an issuer of electronic money. In case the information provided with the notification is incomplete, vague or ambiguous, the competent authority should request from the issuer additional information or clarification to the information already provided in order to take the decision.

7.1. Competent authorities should not require the payment instruments falling within the scope of Article 3(k)(iii) of PSD2 to fulfil the requirements applicable to the instruments excluded under Article 3(k)(i) and (ii) of PSD2.