CESOP: Which transactions must be reported?
Payment service providers (PSP) covered by the CESOP legislative package are required to keep detailed records of cross-border payments and the recipients of those payments. However, not all payment service providers must report quarterly.
What are the prerequisites for mandatory reporting?
It is worth distinguishing between record-keeping and reporting issues. A payment service provider will be subject to mandatory reporting if the following conditions are met:
- The notified payment must be a cross-border payment.
- The payment service provider must make at least 25 cross-border payments per quarter to a single payee.
Locating the payer and the payee
The first step a payment service provider must take is to determine whether the payment is cross-border. To determine whether the payer is located in a member state, check:
- IBAN of the payment account or other identifier that uniquely identifies the payer and its location, or in the absence of such identifiers;
- The BIC or other identification code of the institution that uniquely identifies the payment service provider acting on behalf of the payer and its location.
The same rules apply when determining the location of the payee .
All about payment initiation
A key aspect is the location of payment initiation. CESOP only covers transactions that were initiated in a member state. Cross-border payments include the following schemes:
- The payer is located in Member State 1 and the payee is located in Member State 2.
- The payer is in Member State 1 and the payee is in a third country.
In contrast, we do not count the following schemes as cross-border payments:
- The payer and the payee are in the same Member State (domestic payment).
- The payer is in a third country and the recipient is in a Member State.
Check if your transactions exceed the Threshold of 25 payments
The reporting obligation arises when the payee receives more than 25 cross-border payments in a given quarter.
If a payment service provider has not made more than 25 cross-border payments to the same payee, there is no obligation to report data on that payee.
Key findings – when and how to report?
The reporting obligation arises when two conditions are met together:
- The payment must be cross-border.
- The threshold of 25 payments to a single recipient must be exceeded.
It is also important to note that the scope of CESOP covers only transactions initiated in a Member State.