CJEU Deliberates On The Distinction Between The Issuance Of E-Money And Payment Services

• Published date: 04 April 2024
• Law Firm: Ganado Advocates
• Author: Mr James Debono and Neil Zahra

Introduction

Following AG S'nchez-Bordona's opinion last October, the European Court of Justice ("ECJ") delivered on 22 February 2024, a preliminary ruling in the case 'ABC Projektai UAB v Lietuvos bankas' outlining the distinction of what qualifies as a payment service under Directive (EU) 2015/2366 ("PSD2") and what constitutes the issuance of electronic money under Directive 2009/110/EC ("EMD2"). The request for a preliminary ruling concerned the withdrawal of the payment institution licence previously granted to ABC Projektai ("ABC").

Background

ABC had obtained a licence from the Bank of Lithuania on 13 October 2016, to provide payment services under PSD2 as transposed under Lithuanian law. The Bank of Lithuania revoked the licence on 16 April 2020 due to, inter alia, ABC having issued electronic money despite not having the status of an e-money issuer, thereby violating EMD2 as transposed under Lithuanian law. The authority's rationale was based on the fact that ABC had retained customer funds for longer than required to execute payment transactions, keeping funds received from customers in accounts for payments received without a specific payment purpose and retaining them without transferring the funds to the accounts of the recipients of those payments. The Bank of Lithuania relied on its previously adopted position regarding funds held in payment accounts, which stated that a payment institution may receive funds on a payment account opened with it only if such funds are accompanied...