Charity Online Giving Platforms

• Published date: 04 October 2021
• Subject Matter: orporate/Commercial Law, Charities & Non-Profits
• Law Firm: Wrigleys Solicitors
• Author: Mr Peter Parker and Alex Elliott

The effects of The Payment Services Directive

In recent years, charities have increasingly made the move to online resources as a way to raise funds for their charitable purposes and projects. One such resource has been online giving platforms.

Given that the COVID-19 pandemic prevented most in-person fundraising events, donors and charities have found other ways to raise money. The use of online giving platforms therefore grew over the course of the pandemic - online donations grew by 115% in volume and 97% in income. Giving platforms have therefore been fundamental in helping charities navigate through the difficulties presented by the pandemic.

However, with the recent decision by Virgin Money to close its own online fundraising platform, Virgin Money Giving, questions have arisen as to how suitable online giving platforms are for charities to use. This comes as a wave of private companies have launched their own online giving platforms. Some charities have even started to use their own platforms to help them with their own fundraising efforts, or the fundraising efforts of others.

This comes at a time when online giving platforms have come under further restrictions and regulations. With the introduction of the (revised) Payment Services Directive (PSD2) in 2017, there are now further regulations as to who can carry out a payment service, such as operating an online giving platform. For those charities who do run, or who are considering running, their own platform, this brings into question the legalities of doing so.

What is PSD2?

PSD2 is an EU derived regulation that regulates payment services.

It was implemented in the UK on 13th January 2018, largely through the Payment Services Regulations 2017.

PSD2 aims to further protect consumers who use online payment services. These changes have meant that those who do not satisfy one of the exemptions or fall under an exclusion, will need to seek FCA authorisation to provide these payment services.

Since then, there have been frequent questions raised as to the scope of the PSD2 regulations, and their effect on charities.

What are payment services?

The activities which constitute payment services are listed in Schedule 1 to the PSD2. Payment services include services:

• that allow money to be paid in or out of a payment account
• that offer payment initiation
• that involve payment transactions
• involving money remittance
• regarding the execution of payment transactions. For example direct debits, credit...