Article 10 of PSD2 requires payment institutions (PIs) to safeguard funds which have been received from the payment service users or through another payment service provider for the execution of payment transactions, using one or several of the safeguarding methods set out in that Article. Article 10(1)(a) of PSD2 refers to funds deposited in a separate account with a credit institution or invested in secure, liquid low-risk assets, as defined by the competent authorities of the home Member State.

The term ‘Credit Institution’ as defined in Article 1(a) of PSD2 refers to Article 4(1)(1) of Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms (the CRR) “including branches thereof […] where such branches are located in the Union, whether the head offices of those branches are located within the Union or, in accordance with Article 47 of Directive 2013/36/EU and with national law, outside the Union”.

Article 4(1)(1) of CRR defines a credit institution “as an undertaking the business of which is to: (a) take deposits or other repayable funds from the public and to grant credits for its own account […]”.

This definition applies to institutions authorised to operate within the EEA. As highlighted in Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms (CRD), in conjunction with Article 14 of Regulation (EU) No 1024/2013, the granting of licences to credit institutions remains in the remit of the competent national authorities under the ECB’s control and final responsibility.

It follows from the above that the reference to a ‘credit institution’ in Article 10(1)(a) of PSD2 refers only to credit institutions authorised in the EU/EEA. and branches that are authorised to operate in the EU/EEA of undertakings established in a third country as referred to in Article 47 Directive 2013/36/EU.

Disclaimer: The answer clarifies provisions already contained in the applicable legislation. They do not extend in any way the rights and obligations deriving from such legislation nor do they introduce any additional requirements for the concerned operators and competent authorities. The answers are merely intended to assist natural or legal persons, including competent authorities and Union institutions and bodies in clarifying the application or implementation of the relevant legal provisions. Only the Court of Justice of the European Union is competent to authoritatively interpret Union law. The views expressed in the internal Commission Decision cannot prejudge the position that the European Commission might take before the Union and national courts.