The European Banking Authority (EBA) has recently published final guidelines on the application of the limited network exclusion (LNE) under the revised Payment Services Directive ((EU) 2015/2366) (PSD2).  The guidelines apply to national competent authorities (NCA), which post-Brexit does not include the UK FCA.  The UK FCA published its updated guidance on the application of the LNE under the Payment Services Regulations 2017 (PSRs) in November 2021, through PS21/19, PERG 15 of its Perimeter Guidance manual, and the latest version of its Payment Services and Electronic Money - Our Approach document.

This article will be of interest to:

  • Businesses that currently issue payment instruments – e.g. store cards, membership cards, or account-based payment instruments – and who rely on the LNE to avoid the need to be regulated in the EU under PSD2 or in the UK under PSRs, including those that operate cross-border and online marketplaces
  • Businesses planning to issue such payment instruments in reliance on the LNE

The latest guidance illustrates the boundaries of application of the LNE.  While there remains some uncertainty in application of the LNE, many of the grey areas have now been clarified.  Businesses should check that they can still rely on the LNE.  Failure to have a licence can lead to fines and is a criminal offence.

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