The goal behind the EU PSD2 is to improve the existing level of consumer protection, but mainly to increase competition and facilitate innovation in financial services.
The implementation of the regulation has favoured the growth of payment methods such as Direct Carrier Billing, which allows users to acquire goods and services securely and easily by paying with their monthly mobile bill.
PSD2 offers new opportunities to all players within the Mobile Billing market and clarifies the authorizations needed to operate in this ecosystem.
- According to the Telecommunication exemption available under PSD2, Carriers are exempted to be licensed for processing Digital Goods, Charitable Activity and Ticketing via DCB under thresholds (€50 per transaction; €300 per billing month per person). Since this exemption has multiple interpretations according to the geographical area, anticipating and having right authorizations such as an Electronic Money Institution (EMI) License is key to ensure the development of the DCB activity globally.
- Moreover, the legal obligation PSD2 specifies that “Intermediary” Operators and Aggregators that collect payments on behalf of other parties are required to be an Agent or Payment Institution.
How to be PSD2-ready?
Being a Payment Institution or Agent is key to be prepared for the future of DCB.
In addition to ensuring a PSD2-Compliant business activity, the Electronic Money Institution License allows carriers and merchants to implement DCB in new products and services and to take advantage of all the opportunities offered by PSD2.
The Payment Institution enables the deployment of DCB in new verticals beyond digital goods, including physical products: consumer goods, food delivery, online rentals, vending machines, vouchers, etc. A wide variety of goods and services that represents a strong growth potential for the Telecom Payment market since transactions exceeding the €50 and €300 thresholds are also allowed under this License.
However, obtaining an EMI License:
- Is costly and takes time (around 1 year).
- Requires to comply with strong financial, controlling and auditing requirements.
- Requires also a dedicated team in charge of compliance, financial, auditing, controlling.
- Also, must be adapted depending on local legal framework and local expectation.
Therefore, to benefit from PSD2 opportunities and offer payment services, you need to choose the right Fintech partner which holds these necessary authorizations required by PSD2.
Digital Virgo: a PSD2 compliant Payment Institution
As an international player in Mobile Payment, Digital Virgo Group holds the Electronic Money Institution license, which authorizes the Group to offer payment and electronic money services throughout Europe. These authorizations are essential to support Telecom Operators and Merchants in their core business activities.
The Electronic Money Institution status allows Digital Virgo to guarantee the continuity and growth of its activities but also to widen its range of services. It also allows its partners to benefit from Carrier’s Billing Payment when selling physical goods and a wider and more valuable range of digital goods.
Digital Virgo collects and secures the payments received on behalf of its partners, in accordance with the regulations applicable to payment services.
Want to be compliant and benefit from all opportunities offered by PSD2? Contact us!