EBA Rules Central-Bank Accounts Cannot Satisfy PSD2 Safeguarding Requirements

The European Union’s revised Payment Services Directive (PSD2) requires payment institutions to segregate or insure customer funds to protect them if a provider becomes insolvent. The European Banking Authority (EBA) has determined that depositing funds in a central-bank account does not fulfill the statutory safeguarding requirement, directly affecting payment service providers’ custody arrangements and compliance costs.

The EBA’s latest ruling explicitly excludes central-bank accounts as a means of satisfying PSD2 safeguarding requirements. Payment institutions must instead use segregated accounts at eligible credit institutions, insurance or other compliant mechanisms. Reports did not disclose the ruling’s publication date or cite any specific amounts. Providers will need to review their existing accounts and risk controls for customer funds.