Banks and other payment service providers will not be able to rely exclusively on an e-banking mailbox to provide information to customers under the Payment Services Directive 2007/64 ("PSD"). This follows a recent judgment of the EU's Court of Justice ("CJEU") in which it examined the question of whether a notice of change under PSD sent to a secure online banking mailbox was "provided" to the customer in a "durable medium".
PSD lays down requirements concerning the transparency of conditions and information requirements for payment services. Among other things, in the case of a framework contract, a payment service provider ("PSP") must provide the payment service user with certain information in a durable medium including both:
- prior general information in good time before the payment service user is bound by the framework contract; and
- information regarding any changes in the framework contract this information must be given no later than two months prior to the application of the changes.
PSD defines a `framework contract' as a payment service contract which governs the future execution of individual and successive payment transactions and may lay down the obligations and conditions connected with the opening of a payment account. It defines "durable medium" as any instrument which enables the payment service user to store information addressed personally to him or her in a way accessible for future reference for a period of time adequate to the purpose of the information and allows the unchanged reproduction of the information stored.
An Austrian Bank (BAWAG) sought to provide its customers with information regarding a change in the framework contract through the internal mailbox of its internet e-banking system and included a contractual term to this effect as part of the general terms of its e-banking contracts. Under the e-banking system, BAWAG created a mailbox for each customer, which the customer could access by logging in with his or her own personal password through BAWAG's e-banking website. The bank transmitted e-messages to that mailbox, including notices of changes in the framework contract without any supplementary communication to the customer informing him or her that a message had been sent to the e-banking mailbox (eg in the form of a personal private email or text).
A consumer association challenged the BAWAG notification system, seeking to prevent BAWAG from including the relevant contractual term in customer contracts and from applying it to customers. In the course of the proceedings, the Austrian Supreme Court referred a number of questions to the CJEU seeking to establish whether: a) the information in the e-banking mailbox constitutes information in a "durable medium"; and b) BAWAG had "provided" its customer with that information. The CJEU handed down its judgment in Case C-375/15 BAWAG on 25 January 2017.
What is a Durable Medium?
According to the CJEU, a website will be classified as a "durable medium" within the meaning of PSD, once the website:
- allows the payment service user to store information addressed to him or her personally in a way accessible for future reference for a period of time adequate to the information's purpose;
- allows the unchanged reproduction of the information stored; and
- excludes any possibility that the PSP or another professional to whom the management of the website has been entrusted could change the content unilaterally.
When is Information "Provided" to a Payment Service User?
In its judgment the CJEU held that, in order for information to be provided to a payment service user, the PSP must actively communicate the information concerned, without further prompting by the payment service user. Consequently, where a bank or other PSP transmits information via an online banking website, it must take some additional active steps to draw the customer's attention to the existence and availability of that information, eg, by sending an email to the customer's private email address.
In reaching this conclusion, the CJEU observed that the PSD distinguishes between two methods of transmitting information, namely, situations where a payment service user must be provided with information, and situations where information must be made available to him or her. According to the CJEU, in the latter case, the payment service user should take some active steps to obtain the information, such as requesting it explicitly from the PSP, logging into an online bank account, or inserting a bank card into a printer for account statements.
The CJEU's judgment provides welcome clarity for banks and other PSPs regarding the communication of information to customers under PSD. This will be important in a number of circumstances, perhaps especially when notifying changes to account terms and conditions. Banks and other PSPs can no longer rely exclusively on communications via their website or app but must use supplemental means to alert the customer to the relevant notification. Examples could include sending an email to the customer's private email address, or an SMS message to his or her mobile telephone. Moreover, although the opinion is focused on the PSD, it is clearly of wider interest due to the number of pieces of EU financial services legislation that incorporate the durable medium concept.