Fleet cards under the Payment Service Directive and the Polish Payment Service Act
December 2013 | EXPERT BRIEFING | BANKING & FINANCE
The market for the retail sale of fuels has experienced dynamic change in recent years. The tension between the needs of consumers and business counterparties has driven the biggest petrol companies to introduce a variety of new services – ‘fleet cards’ being one of them.
The fleet card is a tool offered to entrepreneurs interested in reducing their fuel expenses. Their main purpose is to provide entrepreneurs with an instrument enabling the cashless payment of fuel costs at petrol stations operated by the company, or by third parties under agency or franchise agreements. The fleet card is pre-paid bearer card, rechargeable via a funds transfer to a dedicated bank account. It is usually a plastic card equipped with a magnetic strip, which stores information identifying the bank account details. As far as method of payment is concerned, they resemble ‘ordinary’ payment cards as they require from the acceptor (payee) uses a terminal equipped with special software enabling it to read information stored on the card.
Issuance of fleet cards as payment service
The issuance of fleet cards needs to be evaluated from the legal point of view. One has to answer a question, whether there are rules which govern the process of issuing and making payments by using fleet cards or impose any requirements on entities conducting such an activity. The further remarks will refer to the applicable EU and Polish law.
The use of cashless payment via fleet cards raises issues on the grounds of legal regulations on payment services. Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market (OJ of the European Union of 05.12.2007 L 319, p. 1) (the PSD), plays a crucial role in this sector. In Poland, the PSD has been transposed by The Act of 19 August 2011 on Payment Services (Journal of Laws of the Republic of Poland of 2011, No. 199, item 1175, with amendments) (The PSA).
Article 4 point 23 of the PSD (and respectively – article 2 point 10 of the PSA) contains a definition of payment instruments. According to this regulation, payment instrument means: ‘any personalised device and/or set of procedures agreed by a user and a provider which is used by the user to place a payment order’. The fleet card falls within the scope of that definition as it enables the holder to initiate the transfer of funds from the dedicated bank account to the bank account of the acceptor (the seller of fuel).
The classification of fleet cards as payment instruments is connected with significant legal consequences. The activity of issuance and acceptance of such payments (made using fleet cards) constitutes payment services as referred to in article 3(1).2(b) of the PSA (‘execution of payment transactions, including transfer of funds to a payment account with the user’s provider or with another provider (…)through a payment card or similar payment instrument’) and article 3(1).4 PSA (‘issuing of payment instruments’). The same conclusion is made in the light of the provisions of the PSD, because article 3 of the PSA implements the definition of the payment services set forth in the Annex to the PSD.
Scope of application
The classification of the issuance and acceptance of payments made by using fleet cards as provision of payment services may have had a significant consequences for the petrol companies. First, it creates an obligation to observe rules related to the provision of payment services set forth in the legislative acts implementing the PSD (in Poland in the PSA). Furthermore, article 1 of the PSD (and respectively – article 4 of the PSA) restricts the scope of payment service providers. In order to be able to issue fleet cards, petrol companies would have to obtain an authorisationto operate as payment institutions, which is connected with fulfillment of certain (capital) requirements. Petrol companies would also have to bear some costs (for example, contributions on costs of supervision). The necessity of bearing those public duties may have forced petrol companies to retreat from offering fleet cards.
Fortunately for petrol companies, both the EU and Polish legislative acts contain some exemptions. According to article 3(k) of the PSD and, similarly, article 6.11 of the PSA, the act ‘does not apply’ to payment services provided the use of instruments with limited scope of application described in detail in the act. As mentioned above, the scope of application of fleet cards is restricted in two ways. First, they are accepted only in the limited business premises within the network of the issuer (petrol stations operated by the company itself or its franchisees or agents), and second – they can be used to make payments for a limited range of goods and services (fuel or other goods and services offered on petrol stations). This leads to a conclusion that fleet cards fall within the exemption set forth in article 3(k)of the PSD. This point of view is also expressed by representatives of legal doctrine (for example, M. Grabowski,The Act on payment services. Commentary, Warsaw 2012, who explicitly indicates fuel cards in general as instruments are exempted from the application of the PSA). Moreover, this standpoint has been also supported by the Polish public authorities, instance, the Polish Financial Supervision Authority and the National Bank of Poland.
The last question remains unanswered is the scope of the aforementioned exemptions. The literal interpretation of the provisions indicates that the issuance of fleet cards and acceptance of payments made by using fleet cards are completely exempted from the rules governing the provision of payment services set forth in the PSD and the PSA. It means that petrol companies which offer such services do not have to adjust their activity according to the requirements of payment institutions. This interpretation is also supported by the Polish legislator. In the last project of amendments to the PSA, there has been a proposal to introduce an ‘exemption from exemption’. According to the proposed article 6a, a few provisions of the PSA would have applied to the services exempted on the grounds of the article 6.11 PSA. The final version of the Act Amending the PSA, which entered into force on 7 October 2013, does not introduce the article 6a which indicates that under the current legislation none of the provision of the PSA applies to the issuance of fleet cards.
Fleet cards, used for cashless payments for petrol or other goods and services purchased on the petrol stations, should be classified as payment instruments. As a consequence, the issuance of fleet cards constitutes a payment service within the meaning of provisions of the Payment Service Directive and the Polish Payment Service Act. However, the article 3(k) of the PSD (and corresponding article 6.11 of the PSA) contains an exemption from application of rules set forth in the abovementioned acts for services based on instrumentswhich are accepted in a limited group of premises. This article goes some way to answering the question of whether the issuance of fleet cards falls within the scope of exemption, or not. The solution to this problem will allow the authors to make some remarks on the rules and requirements (on the basis other EU and Polish legislation) which must be observed by companies issuing fleet cards.
Jan Byrski is a partner, and Agnieszka Wachowska and Maciej Toroń are lawyers, at Traple Konarski Podrecki & Wspólnicy Law Office. Mr Byrski can be contacted by email: firstname.lastname@example.org. Ms Wachowska can be contacted by email: email@example.com. Mr Toroń can be contacted by email: firstname.lastname@example.org.
© Financier Worldwide
Jan Byrski, Agnieszka Wachowska and Maciej Toroń
Traple Konarski Podrecki & Wspólnicy Law Office