B.
Analysis of the question referred for a preliminary ruling
41.
The referring court sets out clearly the situation before it. It describes the activities of a payment institution which:
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accepts funds without a specific payment order to transfer those funds on the same or the next business day; and
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holds those funds in its own account for longer than the time limit for the provision of payment services laid down by Lithuanian legislation.
42.
Based on those facts, the referring court asks whether the activities thus described should fall within the scope of Directive 2015/2366 or, rather, should be classified as the issuance of electronic money(26) pursuant to Directive 2009/110.(27)
43.
Directive 2015/2366 lays down provisions on the execution of payment transactions where funds are in the form of electronic money. However, that directive does not govern the issuance of electronic money covered by Directive 2009/110. PSPs are not, as such, authorised to issue electronic money, an activity which requires a specific licence.
44.
Article 18 of Directive 2015/2366 states that:
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payment institutions which engage in the provision of one or more payment services(28) may hold only payment accounts(29) which are used exclusively for payment transactions (paragraph 2);
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‘any funds received by payment institutions from payment service users with a view to the provision of payment services shall not constitute a deposit or other repayable funds … or electronic money …’ (paragraph 3).
45.
In the considerations below, I shall argue that the holding, by a payment institution, of funds received from a user is, in principle, an activity which entails the operation of a payment account. In my view, that characteristic is not lost where those funds are kept for longer than the statutory period for execution of payment orders against them.(30)
46.
Accordingly, the activity described by the referring court constitutes, at first sight, a payment service within the meaning of Article 4(3) of and Annex I to Directive 2015/2366.
47.
Is there a (theoretical) possibility that that activity could entail the issuance of electronic money, covered by Directive 2009/110?
48.
To answer that question, it is necessary to examine, first, the effect of the fact that there is a specific time limit for a PSP to execute payment orders received from a user and, secondly, whether the activity described in the order for reference can be included among those subject to Directive 2009/110.
1. Time limit for execution of payment orders
49.
Article 83(1) of Directive 2015/2366 lays down a short period within which a payer’s PSP is to credit the amount of the payment transaction to the payee’s account (more specifically, to the account of the payee’s PSP).(31)
50.
That period starts to run from the time of receipt of the payment order. Pursuant to Article 78(2), the PSP and the payer may agree another date as ‘the time of receipt for the purposes of Article 83’ of Directive 2015/2366.(32)
51.
As the Czech Government states,(33) the provision in Article 78(2) of Directive 2015/2366 would be rendered meaningless if PSPs were under an obligation to comply with the time limit in Article 83(1) with effect from the receipt of funds and not from the receipt of the payer’s payment order.
52.
The time limit for execution in Article 83 of Directive 2015/2366 starts to run as soon as the payment order is received, and not when the payment account holder transfers funds to that account. In other words, the period does not start at the time of receipt of funds if the payer has not issued a payment order from those funds.
53.
The link between the period for execution of the payment transaction and receipt of the payment order ensures that a PSP acts in accordance with an act initiated by the payer (Article 4(5) of Directive 2015/2366) or with an instruction by the payer (Article 4(13) of Directive 2015/2366).
54.
That link means that the holder may (as frequently occurs) transfer funds to its payment account without, as yet, an accompanying payment order. The holder is authorised to keep funds in the account which will be used to execute future payment orders. Logically, a PSP will not be able to execute a payment order received if there are no funds in the payer’s payment account.
55.
On the same lines, Directive 2015/2366 refers to instances of payment services which, for their proper execution, require the ‘continuous’ availability of funds in the payment account. For example, the execution of direct debits(34) necessitates, to a certain extent, the continuous availability of funds in the payment account: it would be highly impractical for a user to transfer funds a very short time in advance for each debit, with the added risk that the amount of the debit might change.
56.
The requirement of the continuous availability of funds in a payment account is also clear in cases such as that in Article 78(2) of Directive 2015/2366, which provides for the execution of payment orders a posteriori and within an agreed period.
57.
The Lithuanian Government and the referring court appear to suggest, by contrast, that there is an issuance of electronic money where a PSP receives funds in a payment account without the holder transmitting payment orders for execution, in which case the PSP should proceed to repay those funds rather than hold them (in readiness) in the payment account. That was the Bank of Lithuania’s complaint to ABC Projektai.
58.
I believe that that argument, as regards the conversion of funds into electronic money, is not supported by Directive 2015/2263.
59.
In my opinion, a PSP will infringe that directive,(35) but will remain within its scope, if it receives payment orders and does not execute those orders in accordance with Articles 78 and 83 of the directive. By infringing the contractual provisions applicable to the operation of a payment account, a PSP may also incur the liability provided for in Article 89 of Directive 2015/2366, but that is not the reason why funds would be converted into electronic money. Such a conversion does not occur merely because funds have been transferred to a payment account and are kept in that account for the execution of future payment orders.
60.
With the exception of expressly defined cases, Directive 2015/2366 provides for complete harmonisation (Article 107(1)). Accordingly, any national provisions which are contrary to the directive must be disapplied, such as where a Member State sets a compulsory period within which PSPs must execute payment orders following the receipt of funds in a payer’s account.
61.
Article 10 of Directive 2015/2366 requires that the funds of payment service users which are held by a PSP must be safeguarded, by ensuring: (a) either that those funds are not commingled with the funds of any natural or legal person other than payment service users on whose behalf the funds are held, (b) or that the funds are covered by an insurance policy or some other comparable guarantee from an insurance company or a credit institution, which does not belong to the same group as the PSP itself.
62.
Accordingly, there is no risk to the user where that user transfers to or keeps funds in a payment account for a period of time and later issues a payment order against those funds. It will be upon receipt of that payment order that the PSP will have to proceed to execute the order with the speed required by Article 83 of Directive 2015/2366.
63.
Funds received by PSPs from users who have a payment account may be used only for payment transactions (Article 18(2) of Directive 2015/2366). Therefore, those funds must always be available and under the control of the account holder, which will not receive interest if it keeps the funds in the account to carry out future payment transactions. Those funds, as I observed when transcribing Article 18(3) of Directive 2015/2366, do not constitute deposits or other repayable funds for the purposes of Article 9 of Directive 2013/36, or electronic money.
2. Decisive criteria for the issuance of electronic money
64.
It may be inferred from the definition contained in Directive 2009/110 and from other provisions of that directive that the issuance of electronic money involves the following criteria:(36)
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the user makes funds available to the EMI and the EMI creates a supplementary asset in an amount no lower than that monetary value. Prepayment is the starting point for the issuance of electronic money;
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the user and the EMI conclude a contract pursuant to which the latter issues electronic money with a view to carrying out payment transactions. The purpose of the electronic money is to serve as a payment instrument that the user will issue to a person who accepts that type of money;
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electronic money is stored electronically or magnetically;
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monetary value represents a claim on the issuer by the user. The issuer is required to repay that value,(37) upon request by the holder;(38)
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electronic money is accepted as a means of payment by a natural or legal person other than the issuer.
65.
In my view, which is largely the same as that of ABC Projektai, the German, Czech and Polish Governments and the Commission, in the circumstances described by the referring court a number of the essential criteria for treating ABC Projektai’s activity as constituting the issuance of electronic money are not met.
66.
First, as I explained above, the issuance of electronic money requires specific agreement, set out in a contract. The user must agree with the EMI to provide it, in that format, with the corresponding funds for the purposes of carrying out payment transactions. The EMI issues electronic money because the user expresses its wish to avail itself of that model and transfers those funds to the EMI to be used for its subsequent payments.
67.
Subject to the referring court’s final assessment, nothing in the case file suggests that such a contract existed or that the user expressed its wish that ABC Projektai should issue electronic money for the monetary value of the funds transferred. The transfer of funds to a payment account and the holding of those funds in that account without immediately mandating any payment operations to the value of those funds does not entail a (tacit) expression of the user’s wish for the issuance of electronic money.
68.
It is true that the subjective component, that is to say the purpose(39) pursued by the user would not be decisive in itself if it were not set out in a contract with the EMI; that contract is a structural (and, by the same token, objective) element of the issuance of electronic money.
69.
The wishes of both parties must be made clear in that contract, such that the user and the EMI expressly agree that the latter is to issue electronic money for the monetary value of the funds received from the former. Otherwise, there would be a transfer of funds to a payment account so that the PSP or the EMI itself(40) could carry out payment services on behalf of the user.
70.
Secondly, the prepayment requirement, which is another distinguishing feature of electronic money, is not fulfilled in the circumstances described by the referring court either. As a result of prepayment, the EMI has control of the funds transferred to it by the user in order to make subsequent payments once those funds have been converted into electronic money.
71.
When electronic money is issued, control of the funds rests with the EMI(41) and not with the user who uses the monetary value as a payment instrument. The EMI controls, until the end of the contract, any funds received from the user(42) in the form of electronically stored monetary value. Electronic money is a supplementary asset which the EMI creates on the basis of those funds.
72.
However, where payment services are provided on the basis of a payment account, it is the user and not the PSP which controls the funds transferred to that account at all times.
73.
In this case, subject to the referring court’s assessment, it does not appear that ABC Projektai had control of the funds in the payment accounts but rather the holders of those accounts, who were able at any time to send ABC Projektai payment orders for execution.
74.
Thirdly, since electronic money is a supplementary asset controlled by an EMI, that institution must have a specific accounting system which enables the application of the particular method of calculating its own funds provided for in Article 5(3) of Directive 2009/110.
75.
It is for the referring court to verify whether ABC Projektai had that specific accounting system for electronic money and for calculation of the own funds requirements, a matter which it is not possible to deduce from the information supplied to the Court.
76.
Fourthly, with payment accounts, the holder has control of the funds, as I indicated above, and may withdraw those funds as it wishes. In the case of electronic money, there is also the possibility that the payer may ask the EMI for ‘redemption’ of what it has not used to make payments to third parties. However, the reconversion of electronic money to its par value and the subsequent payment of funds on the instructions of the electronic money holder will be dependent on the conditions laid down in the contract between the user and the EMI, which may provide, for example, for the payment of fees by the customer in the case of early redemption.(43)
77.
That is what Article 11(3) and (4) of Directive 2009/110 states when it provides that:
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the contract between the electronic money issuer and the electronic money holder shall clearly and prominently state the conditions of redemption, including any fees relating thereto, and the electronic money holder shall be informed of those conditions before being bound by any contract or offer; and
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redemption may be subject to a fee only if stated in the contract in accordance with paragraph 3 and only in any of the following cases: (a) where redemption is requested before the termination of the contract; (b) where the contract provides for a termination date and the electronic money holder terminates the contract before that date; or (c) where redemption is requested more than one year after(44) the date of termination of the contract. Any such fee shall be proportionate and commensurate with the actual costs incurred by the electronic money issuer.
78.
It is, once again, the responsibility of the referring court to establish whether there was a contract between the user and the EMI in which those clear and prominent conditions of redemption were stated, as a prerequisite for the issuance of electronic money.
79.
Fifthly, electronic money is stored electronically or magnetically and may only be used in relation to users who accept it voluntarily(45) and have instruments for its use. By contrast, payment orders executed from a payment account must be accepted by the PSPs of all economic operators.
80.
The information available in the case file does not suggest that ABC Projektai held electronically or magnetically money which could be used with a network of customers who accepted it voluntarily. On the contrary, all the indications are that funds were deposited in payment accounts and could be used only to execute payment orders from users.
81.
In short, subject to the referring court’s findings, the activity at issue falls within the scope of Directive 2015/2366 and cannot be classified as the issuance of electronic money within the meaning of Directive 2009/110.