The Central Bank of the Republic of San Marino announces that on December 23, 2020, it issued Regulation No. 2020-04 entitled "Regulation on Payment Services and Electronic Money Issuance (Payment Institutions and Electronic Money Institutions)".
This is a new and comprehensive framework that, in implementation of Delegated Decree No. 177/2018, completes the incorporation into the San Marino financial system of Directive (EU) 2015/2366, known as PSD2.
PSD2 fully replaced (and repealed) the 2007/64/EC Payment Services Directive, which San Marino had previously transposed through Regulation BCSM No. 2014-04, now also repealed and replaced by the regulation in question.
The PSD2 aims to continue the harmonization process initiated by the 2007 PSD, with the objective of creating an increasingly integrated, efficient, and competitive single market for payment services. It strengthens the protection of payment service users in terms of fairness and transparency and increases the security level of electronic payment services (commonly referred to as strong customer authentication, or SCA).
An additional goal of PSD2, and therefore of Regulation No. 2020-04, is to regulate digital payments, i.e., electronic payments made through online applications or apps, ensuring greater transparency, protection, and security for such transactions, which are increasingly demanded and used by consumers.
These objectives are pursued through the extension of the rules for Payment Service Providers (PSPs) and their scope. Under this framework, the so-called Third-Party Providers (TPPs) are now included. The new regulation allows users with an online account to make payments or access bank reporting via technological solutions and services provided by these TPPs, which operate independently of the intermediary or bank where the customer’s account is held.
Specifically, the "new" payment services regulated by Regulation 2020-04, thereby extending the "supervisory perimeter," are as follows:
- Payment Order Initiation Service: A service provided by a Payment Initiation Service Provider (PISP), at the request of a payment service user, that initiates a payment order for a payment account held with another payment service provider.
- Account Information Service: A service provided by an Account Information Service Provider (AISP) that consolidates information about one or more payment accounts held by the payment service user with another PSP or multiple PSPs.
The new regulation thus introduces "Open Banking" in San Marino, as banks are now required to share customer data and information – upon the customers' request – with the aforementioned TPPs, via intermediary applications (Application Programming Interfaces, or APIs) that allow TPPs to access customers' payment accounts and provide their services.
Among the newly introduced acronyms is CISP (Card Issuing Service Provider), which refers to payment service providers issuing payment cards linked to an online payment account held at a financial institution other than the one issuing the card, but with the ability to verify the availability of funds for the requested transaction.
The provisions of Regulation No. 2020-04 thus aim to promote digital innovation in the banking sector, particularly in payments, with expected benefits for customers in terms of reduced costs and execution times. This regulation definitively establishes the principle that the information concerning accounts belongs to the customers and is not the property of the banks or payment institutions where the accounts are held.
For banks and financial institutions in San Marino that already provide payment services and electronic money issuance, a phase-in period has been provided for all of 2021. The new regulation will come into effect on January 4, 2021, and these entities will have 10 months to adapt their IT systems, one additional month to update their contractual documentation, and another month, for a total of 12 months, to align their existing contracts with the new documentation.
In line with PSD2, the new regulation also foresees the establishment of a new public register, maintained by the Central Bank of San Marino, dedicated exclusively to Payment Service Providers operating in San Marino. This register will include Poste San Marino S.p.A. for payment services offered and the Excellency Chamber as the issuer of the Smac Card, although they are not among the entities authorized and supervised under the Financial Services Law (LISF).
If registered PSPs use agents, these agents must also be listed in the public register. For agents or affiliates operating for foreign payment service providers, a 60-day period (deadline: March 5, 2021) is provided for notifying the supervisory authority of their agreements to facilitate the regularization of such relationships under the new regulations.
Within the new register, a separate section called the EPSE (Elenco Prestatori Servizi Esclusi) will list those entities providing services in compliance with the qualitative and quantitative exemption thresholds, thus falling outside the scope of the Regulation.
Regulation No. 2020-04 was adopted following a public consultation process held from October 12 to November 13, during which, due to the innovative nature of the provision, meetings were held at the Central Bank to present and discuss the regulation with industry stakeholders.
The incorporation of PSD2 represents an important milestone for San Marino in its ongoing alignment with European standards in banking and financial matters.