Implementation of PSD2 in Germany - Centralised Cash Management Systems Continue to Exist

The rapid development of digitalisation, including in payments, required the definition of a framework within the European Union to establish a common basis for electronic payments.

Strengthening competition, increasing the security of payment services and protecting consumers are just a few objectives.

These new circumstances were included in the Payment Service Directive 2 (PSD2) at EU level with the revision of the Payment Service Directive (Directive (EU) 2015/2366). Derived from this was the need to transpose the Directive into national legislation. As a result, the amended Payment Services Supervision Act (ZAG) came into force on 13 January 2018 in Germany.

For centrally organised cash management systems, such as those found in the context of payment factories or shared services centres, the so-called group privilege resulted in a situation that had already been defined in the previous version of the ZAG but was commented on by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) at the end of November 2017. Accordingly, payment transactions within a group of companies (so-called intercompany payments) are subject to special treatment and do not require any special approval and therefore fall under the group privilege. However, all payment transactions that do not take place within the group of companies, both incoming and outgoing payments, require special consideration or authorisation if they are carried out centrally.

Thus, companies first faced a big question: applying for a license for these payments or a restructuring of their own processes, with the resulting reversal of the previously built centralisation with all the benefits that have resulted in particular from the creation of the Single Euro Payments Area. Companies of all sizes were affected by the BaFin interpretation.

The Association of German Treasurers e.V. then initiated an exchange with the BaFin on the interpretation of the ZAG and was asked in January 2018 to take over the coordination of the representative organisations. As part of this coordination, a total of eight associations have joined forces in order to achieve a common understanding of the legal concept of intra-group exemption.

For example, the results of a survey of companies, in which all associations participated, showed that both the application for a license (with all the resulting obligations) and a restructuring of the central processes had far-reaching organisational effects on the business operations of companies, and would be costly.

In the course of the discussions, the VDT e.V. has established contacts in other European countries through its membership in the European Association of Corporate Treasurers (EACT) in order to gain experience on the interpretation of PSD2 in other countries. At the same time, contacts were established with the European Commission, the German Ministry of Finance and the Bundesbank.

Finally, the collected findings were documented in a joint understanding letter of the associations. It has been demonstrated that the application of PSD 2 / ZAG 2018 differentiates between the different market participants in order to provide a regulatory framework for those who are "at particular risk from money laundering and terrorist financing". During the discussions it became clear that the main purpose of the ZAG interpretation is to prevent criminal financial transfers and to impede non-business-related cash flows. In several constructive discussions it was explained to BaFin why centralised cash management systems are widely used and established in the real economy. The VDT e.V. called on the members to outline their business models. The presentations were summarised and presented to BaFin anonymously.

The central processing of payment transactions by usually a group-affiliated company not only has organisational advantages, but in particular facilitates the implementation of the different legal requirements in payment transactions and thus contributes significantly to the prevention of fraud or other misuse and the creation of transparency and the centralised control of the payment transactions of a group of companies.

As a result, the associations defined requirements to be fulfilled for the operation of centralised cash management systems in order to ensure lawful conduct in payment transactions. If the companies comply with the principles laid down therein, it was agreed with BaFin that the authorisation requirement does not apply. However, companies that do not follow these principles cannot rely on the legal interpretation formulated.

In formulating the requirements, it has been ensured that both the very large and the smaller companies can meet these requirements.

The associations have also asked the Institute of Public Auditors to consider this legal interpretation in their audit implementation.

The talks with BaFin have now led to a solution and a common understanding of central cash management systems. This also illustrates the importance of association work for the representation of the interests of the members.The VDT e.V. is convinced that it was only through the bundling of interests and the inter-association cooperation with other associations that a beneficial solution for all could be achieved.

Regina Deisemann
Cornelia Hesse
VDT

Articles


Photo from News from the VDT

News from the VDT

The VDT launched the working group in June to deals with the adaptation of internal and external processes to the digital treasury world. They share some of their findings so far.

Read
Photo from Communicating in a Virtual World

Communicating in a Virtual World

COVID-19 has certainly impacted the way we communicate from a technical or logistical perspective – I think we’d all agree with that! It has also perhaps raised our awareness around the importance of communications, on a number of different levels.

Read
Photo from Central Bank Digital Currencies - What is all the fuss?

Central Bank Digital Currencies - What is all the fuss?

12 months ago, Central Bank Digital Currencies (CBDCs) were the topic of think tanks and obscure magazines. These days, not a month goes by without a new headline in the more popular press.

Read
Photo from Payment Factories - More Up-to-Date Than Ever!

Payment Factories - More Up-to-Date Than Ever!

From March to May 2020 the VDT conducted a survey on Payment Factories. The trigger for the survey were the numerous regulatory changes that have had a strong impact on the processing and optimization opportunities in payment processes.

Read
Photo from Tax Issues Related to Financing and Cash in Times of Crisis

Tax Issues Related to Financing and Cash in Times of Crisis

The health crisis linked to the coronavirus epidemic has plunged all countries worldwide into the unknown. Paralyzing a large portion of the population and of companies, the health crisis subsequently gives way to a major economic crisis. Against this backdrop, companies first focused on liquidity. Indeed, with a sudden drop in sales, the cash flow generation slows down or even stops as companies are unable to slow down their cash outflows.

Read