The PSD2 perimeter and the risk of over-qualification of ancillary fund-handling activities
The Opinion of Advocate General Campos Sánchez-Bordona in Case C-51/25 (Betaal Garant Nederland v. De Nederlandsche Bank) raises an important issue regarding the regulatory perimeter of payment services under PSD2.
A recurring problem in practice is the tendency to qualify an activity as a payment service solely because an intermediary temporarily receives, holds or transfers funds.
However, in many commercial arrangements this fund-handling function is merely ancillary to a different primary service, such as guarantee mechanisms, escrow arrangements, management and transaction-facilitation platforms, deposit or reservation mechanisms, and professional services temporarily holding clients' funds.
In such structures, the intermediary may temporarily receive or hold funds as part of the operational mechanics of the service, while the core economic purpose of the activity lies elsewhere. The economic purpose of the activity is not always the execution of payment transactions as a payment service.
The Advocate General's reasoning is therefore particularly relevant: the legal qualification should be based on the substance and economic function of the activity, not solely on the fact that funds temporarily pass through an intermediary.
This does not mean that customer protection concerns should be ignored. Where intermediaries handle client funds outside the PSD2 framework, appropriate safeguards should exist. However, such safeguards do not necessarily require full PSP licensing, especially where payment execution is not the core business.
Why this matters for smaller payment actors
The practical consequences of a broad interpretation of the PSD2 perimeter are particularly visible in jurisdictions where no proportional licensing regime exists for smaller payment actors.
In practice, this regulatory uncertainty can discourage innovation before it even reaches the market.
The Court's future judgment in this case could therefore play an important role in clarifying the boundary between genuine payment services and ancillary fund-handling mechanisms, which remains one of the most delicate questions in the interpretation of PSD2.
Key takeaways from the Opinion
1. Execution of payment transactions requires technical involvement with payment accounts
The AG notes that the execution of payment transactions under PSD2 implies direct technical involvement with the payment accounts. In the case examined, the intermediary does not technically execute the transfers — the actual payment transactions are carried out by the banks where the accounts are held. The intermediary merely coordinates or triggers payment instructions, which is different from providing payment services itself.
2. The main activity vs. ancillary activity distinction
A defining feature of a payment institution is that payment services are provided as a regular occupation or main business activity. The AG stresses that where the handling of funds is merely ancillary or instrumental to another commercial service, PSD2 should not automatically apply. In this case, the entity's main activity concerns real estate guarantee deposits, while the movement of funds is simply a supporting mechanism within that structure.
3. Conditional transfers differ from classic payment services
The AG also distinguishes the model from money remittance, which is typically characterized by the simple and unconditional transfer of funds. Here, the transfer is conditional, linked to contractual performance. The client effectively retains the ability to block or revoke the transfer if the underlying obligations (e.g. construction works) are not fulfilled. This conditional structure differs significantly from a typical payment service.
4. Proportionality in financial regulation
Another important element of the Opinion is the emphasis on proportionality. Applying the full prudential regime of PSD2 — including licensing, capital requirements and supervision — to entities whose primary activity is not financial intermediation could be disproportionate. The AG even notes that similar reasoning applies in practice to professionals such as notaries or lawyers, who may temporarily hold client funds without being considered payment service providers.