PSD3 – Council Stance

In June 2023, the European Commission (“EC“) published proposals for the amendment of the revised Payment Services Directive (Directive (EU) 2015/2366 – “PSD2”). As part of the proposals, PSD2 will be updated to PSD3, and PSD3 is supplemented with a Payment Service Regulation (“PSR“). The European Parliament (“EP“) adopted the proposals from the EC in April 2024, with certain proposed amendments (“Parliament Draft Amendment“). On 18 June 2025, the Council of the European Union (“Council“) has published its stance (“Council Stance” or “PSR-D“) on the Parliament Draft Amendment to the PSR (see our summary here) and PSD3 (see our summary here).

In this article, we take a look at the changes resulting from the Council Stance to the PSD3. We have already commented on the changes resulting from the Council Stance to the PSR.

What is new in the Council Stance?

E-money token / application
The PSD3-D introduces comprehensive provisions for e-money tokens, aligning with Regulation (EU) 2023/1114 (“MiCAR”). The Council Stance introduces a new shorter deadline for the authorisation or rejection of license applications, by crypto-asset service providers that have already been authorised as such under Art. 63 MiCAR, and which intends to provide payment services exclusively with e-money tokens (Art. 13 para. 2 subpara. 2 PSD3-D). This provision appears surprising at first glance, as Art. 110b of the Council Stance regarding PSR releases a payment service provider from additional license requirements under MiCAR if such services are “equivalent to those payment services for which the payment institution has been authorized” (see details here). Given this structure, applicants are in future likely only to apply for a payment license and would then benefit from the exemption from license requirements under MiCAR. Art. 13 para. 2 PSD3-D seems to address entities that already have a MiCAR license and will extend their business activities to the issuance and / or transfer of e-money token.

In Art. 3 PSD3-D, the Council Stance has added detailed requirements with respect to applicants that already have been authorised as crypto-asset service provider in accordance with Art. 63 MiCAR. Basically, PSD3-D allows crypto-asset providers to use certain documents from their previous MiCAR license application which may need to be adjusted and updated.

For all other applications, the deadline has been increased from two to three months (Art. 14 PSD3-D).

Initial capital
The Council Stance amends the initial capital requirements for certain payment services. As Annex I is not included in the Council Stance, it is not clear to which specific payment services the new provisions regarding initial capital refer to. However, it seems that the Council Stance intends to harmonize the initial capital requirements for all payment services which might result in a reduction of the initial capital for e-money services from EUR 350,000 to EUR 150,000. In contrast, the initial capital requirements for other payment services might be raised to EUR 150,000 (Art. 5 lit. c) PSD3-D).

Safeguarding
The Council Stance expands the safeguarding requirements for payment institutions which provide certain payment services, especially in insolvency scenarios. While Art. 9 para. 1 subpara. 1 lit .a) PSD3-D clarifies that all funds shall be safeguarded as soon as possible, the provision expressly excludes e-money tokens from the requirements of the PSD3 and states that funds received in exchange for e-money tokens shall be safeguarded in accordance with the methods set out in Art. 54 MiCAR (Art. 9 para. 1 subpara. 6 PSD3-D). This approach confirms the approach which is already set out in MiCAR.

While it appeared necessary in the Parliament Draft Amendment in any case for the payment institution to insulate the funds it has received and not yet delivered or transferred, the Council Stance now leaves it up to the Member States to allow payment institutions to deposit those funds in a post office giro institution under certain provisions (Art. 9 para. 1 subpara. 2 PSD3-D).

Furthermore, the Council Stance provides for funds held in settlement accounts with payment systems designated under the Directive 98/26/EC to be considered as compliant with the safeguarding requirements if those funds are not mixed with others and are ultimately held in credit institutions or central banks (Art. 9 para. 1a PSD3-D). This provision intends to avoid putting payment institutions in a competitive disadvantage with other PSPs, such as credit institutions that are not subject to safeguarding requirements under PSD3, in particular to comply with the requirements of the Regulation (EU) 2024/886 (Instant Payment Regulation). Otherwise, the payment institutions would incur additional costs stemming either from the need for additional capital to ensure sufficient liquidity in the settlement accounts to facilitate uninterrupted processing of outgoing and incoming payments.

With regard to e-money, the Council Stance clarifies that a payer to whom electronic money has been issued, as well as the accepting payee, are always entitled to redemption at par value and on request, through the issuing payment institution (Art. 9 para. 4 subpara. 2 PSD3-D).

E-money distribution
The Council Stance clarifies the regulatory perimeter with regard to persons distributing or redeeming e-money on behalf of the e-money issuer. That role is mentioned but not defined in Directive 2009/110/EC. The interpretation in certain Member States is that the distribution of e-money and the receipt of funds does not constitute a regulated payment service by the distributor. Now, the Council Stance clarifies that the mere selling or distribution of e-money on behalf of the issuer of e-money shall not by itself constitute the activity of an agent (Art. 20 para. 4 PSD3-D). In contrast, the redemption of e-money through an agent shall constitute the activity of an agent (Art. 20 para. 2 PSD3-D) (although Rec. 45 PSD3-D indicates the opposite in contrast to the wording of Art. 20 para. 2 PSD3-D).

Exemptions
The exemptions have been refined by the Council Stance compared to the Parliament Draft Amendment to address specific scenarios.

For example, the amount of cash provided in retail stores without a purchaser is raised from EUR 100 to EUR 150 (Art. 37 para. 1 lit. b) PSD3-D). However, Member States are free to lower the limit, but not lower than EUR 50 (Art. 37 para. 1 subpara. 2 PSD3-D). Regarding ATM deployers, the Council Stance clarifies that a registration can be withdrawn by the competent authority in case of non-compliance (Art. 38 para. 2a PSD3-D). Further, ATM deployers must be registered in each Member State without the possibility of passporting (Art. 38 para. 2b PSD3-D).

In addition, in Art. 34 PSD3-D the optional exemption for Member States to exclude payment transactions used for the execution of trading and settlement services using e-money tokens by licensed crypto-asset service providers in the Parliament Draft Amendment has been removed in the Council Stance. However, the Council Stance has added a new Art. 110b PSR which provides for a comparable exemption from the license requirement for crypto-asset service providers under MiCAR. In short, whereas the Parliament Draft Amendment required service providers of trading and settlement services with e-money token to have at least a license under MiCAR, the Council Stance considers that the service provider should have a license under PSD3 in the first instance. This approach appears convincing as the use of e-money token may predominantly have payment purposes and, in consequence, the payment regulation appears being the more appropriate supervisory law.

Supervisory measures
Art. 25 PSD3-D empowers supervisory authorities with enhanced investigatory and enforcement powers which set out very detailed measures, such as the restriction of interest payments to shareholders or to have own funds in excess of the funds calculated in accordance with Art. 7, 8 PSD3-D. Most of such measures should, however, already be applicable and available to national competent authorities.

Passporting
With regard to the possibility to passport a license from the home Member State to another Member State, the deadline for the transmission of the necessary information from the competent authority of the home Member State to the competent authority of the host Member State has been increased from 10 business days to one month and the deadline for the decision of the host Member State has been increased from 15 business days to two months (Art. 30 para. 2 and 3 PSD3-D).

AIS guarantee
For AIS, the Council Stance keeps the option that an AIS may provide for a certain initial capital instead of a professional indemnity insurance, but instructs the EBA to develop RTS to specify what a comparable guarantee is. (Art. 36 para. 4 subpara. 2, para. 4a PSD3-D).

Next steps in the legislative process

The Member States’ representatives have approved the Council Stance for the PSD3-D (and PSR-D) on 18 June 2025. Next, the presidency and the European Parliament will start negotiations on a final text. Given the extensive changes between the Council Stance and the Parliament Draft Amendment a significant negotiation term should be expected.