Under Art. 62 (4) PSD2 Member States must ensure that the payee does not apply charges for the use of:
Germany has transposed this Art. 62 (4) PSD2 into German Law in section 270a of the German civil code (Bürgerliches Gesetzbuch – “BGB”). Under this provision, an agreement is invalid if it obliges the debtor to pay a fee for the use of a SEPA direct debit transaction, a SEPA credit transfer transaction or a payment card. With respect to payment cards this only applies to payment transactions with consumers if the provisions of chapter 2 of the MIF-Regulation applies (which means that such fees are capped under the MIF-Regulation).
Discussion amongst German commentators
There are ongoing discussion amongst German legal commentators about the applicability of section 270a BGB to PayPal and SOFORT transactions. The position with respect to SOFORT transactions is quite clear, as the vast majority of commentators consider a SOFORT transaction being ultimately a SEPA credit transfer transaction, and therefore subject to the prohibition to apply surcharges.
However, with respect to PayPal transactions, both alternative positions have support from legal commentators. Those who take the position that surcharges for PayPal transactions are prohibited argue as follows:
Although the wording of section 270a BGB refers to SEPA direct debit, SEPA credit transfer or card transactions, such section should also cover PayPal transactions as PayPal normally debits the payer’s payment account with a direct debit transaction or their card where the payer has offered to accept PayPal as a payment method. In addition, the argument runs, the wording of Art. 62 (4) PSD2 explicitly refers to those payment services to which the SEPA-Regulation applies. Pursuant to Art. 1 (2) (f) of the SEPA- Regulation, the Regulation shall not apply to payment transactions transferring electronic money, unless such transactions result in a credit transfer a direct debit to and from a payment account identified by BBAN or IBAN.
German commentators argue that although PayPal technically issues e-money to the payer, transfers such e-money to the payee and receives the remuneration for the issuance of such e money from the payer by debiting their payment account or card, the PayPal transaction is not excluded from the SEPA-Regulation. This is because the e-money transaction results in a direct debit transaction or card transaction subject to the MIF-Regulation under normal circumstances. In contrast, the possibility that the payer provides another payment instrument for the remuneration of PayPal is considered to be only theoretical.
The contrary view argues that PayPal transactions are e-money transactions and therefore not covered by section 270a BGB. In addition, the documentation of the legislative process to transpose PSD2 into German law makes clear that the German legislator was choosing this specific wording of section 270a BGB as it did not want to cover PayPal transactions. Finally, such legal commentators argue that the e-money transactions by PayPal do not fall within the scope of the SEPA-Regulation, and, in consequence, are not within the scope of Art. 62 (4) PSD2.
According to this argument, the payment transactions transferring electronic money, covered by the SEPA- Regulation, do not result in a credit transfer or direct debit to and from a payment account. This would only apply to transactions in consideration for issuance or redemption of an e-money amount, but not to a transaction transferring the issued electronic money from a payer to a payee.
Recent decisions by regional court (Landgericht – “LG”) of Munich and OLG Munich
The German bus travel platform Flixbus was applying surcharges for PayPal and SOFORT transactions. Flixbus was sued by a German association of commercial entities to stop applying the surcharge.
In December 2018, LG Munich ruled that both PayPal and SOFORT transactions are subject to the prohibition of surcharges according to section 270a BGB. However, on 10 October 2019, OLG Munich, which is the appeal court of LG Munich found that surcharges for both PayPal and SOFORT transactions are not subject to the prohibition under section 270a BGB. As consequence, merchants may, according to OLG Munich, apply surcharges for PayPal and SOFORT transactions. Although the full wording of the decision of OLG Munich is not yet available, it appears that OLG Munich found that neither PayPal nor SOFORT transactions are covered by the wording of section 270a BGB. In addition, OLG Munich seems to refer to the German legislator, which stated that it did not want to cover PayPal transactions by section 270a BGB. With respect to SOFORT transactions OLG Munich reasoned that the payer receives the advantage of a solvency check by SOFORT and thereby an additional service, which the payer can pay for, if they choose this payment method.
The judgement of OLG Munich is a little surprising with respect to SOFORT transactions, as it is contrary to the position that almost all German legal commentators have taken. In contrast to PayPal transactions, SOFORT transactions have a very close connection to a SEPA credit transfer transaction.
With respect to PayPal transactions, OLG Munich has now taken the position which is supported by a significant part of German legal commentators, that such transactions are not covered by the wording of section 270a BGB. The judgment by OLG Munich may have a limited impact in the future, as PayPal has in the meantime implemented a provision in its terms and conditions that prohibits merchants from applying surcharges for the use of PayPal as a payment method. However, terms and conditions are subject to change and the question might therefore arise again in the future if PayPal changes its terms and conditions.
From our perspective, the position of OLG Munich seems a little more persuasive with respect to PayPal transactions, as the wording of section 270a BGB, as well as the documentation of the legislative process, quite clearly indicate that the prohibition for surcharges for PayPal transactions is not covered and should not be covered by section 270a BGB. However, the ratio of Art. 62 (4) PSD2 was to avoid surcharge fees for established payment methods. As both SOFORT transactions as well as PayPal transactions are established payment methods, the law as currently in force does not appear to fulfil that intention of the legislator. Therefore, if the EU legislators wishes to cover all established payment methods by Art. 62 (4) PSD2, they should consider amending the clause or should have drafted it differently in PSD2. Given the wording chosen by PSD2 and sections 270a BGB, market participants should for the time being be able to rely on such wording and the scope of application. However, the association which has sued Flixbus is currently considering continuing court proceedings in that respect. Therefore, the German Federal High Court of Justice or the European Court of Justice may overrule or confirm the judgement of OLG Munich shortly.