Provisional text
OPINION OF ADVOCATE GENERAL
CAMPOS SÁNCHEZ-BORDONA
delivered on 30 April 2026 (1)
Case C‑274/25
Alternative Payments UAB
v
Lietuvos Bankas
(Request for a preliminary ruling from the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania))
( Reference for a preliminary ruling – Payment services in the internal market – Directive (EU) 2015/2366 – Regulation (EU) No 260/2012 – Types of payment services – Direct debit service – Involvement of the payer’s and payee’s payment service providers in a direct debit transaction – Service of acquiring of payment transactions – Payment initiation service )
1.        This request for a preliminary ruling is asking the Court of Justice to interpret various provisions of Regulation (EU) No 260/2012 (2) and Directive (EU) 2015/2366, (3) in order to decide when a certain payment service qualifies as a ‘direct debit service’.
2.        In the original dispute, the question to be resolved is whether a payment service provider (‘PSP’) is providing a direct debit service for which, in principle, it is not licensed by the supervisory authority, or, conversely, it is providing a ‘service of acquiring of payment transactions’ or a ‘payment initiation service’.
I.      Legal framework
A.      European Union law
1.      The PSD2
3.        Article 4 contains the following definitions:
‘…
(3)      “payment service” means any business activity set out in Annex I;
(4)      “payment institution” means a legal person that has been granted authorisation in accordance with Article 11 to provide and execute payment services throughout the Union;
(5)      “payment transaction” means an act, initiated by the payer or on his behalf or by the payee, of placing, transferring or withdrawing funds, irrespective of any underlying obligations between the payer and the payee;
…
(9)      “payee” means a natural or legal person who is the intended recipient of funds which have been the subject of a payment transaction;
…
(11)      “payment service provider” means a body referred to in Article 1(1) or a natural or legal person benefiting from an exemption pursuant to Article 32 or 33;
(12)      “payment account” means an account held in the name of one or more payment service users which is used for the execution of payment transactions;
…
(15)      “payment initiation service” means a service to initiate a payment order at the request of the payment service user with respect to a payment account held at another payment service provider;
…
(23)      “direct debit” means a payment service for debiting a payer’s payment account, where a payment transaction is initiated by the payee on the basis of the consent given by the payer to the payee, to the payee’s payment service provider or to the payer’s own payment service provider;
…
(44)      “acquiring of payment transactions’ means a payment service provided by a payment service provider contracting with a payee to accept and process payment transactions, which results in a transfer of funds to the payee;
…’
4.        Annex I includes the following, inter alia, as activities covered by the payment services referred to in Article 4(3):
‘…
3.      Execution of payment transactions, including transfers of funds on a payment account with the user’s payment service provider or with another payment service provider:
(a)      execution of direct debits, including one-off direct debits;
(b)      execution of payment transactions through a payment card or a similar device;
(c)      execution of credit transfers, including standing orders.
4.      Execution of payment transactions where the funds are covered by a credit line for a payment service user:
(a)      execution of direct debits, including one-off direct debits;
(b)      execution of payment transactions through a payment card or a similar device;
(c)      execution of credit transfers, including standing orders.
5.      Issuing of payment instruments and/or acquiring of payment transactions.
…
7.      Payment initiation services.
…’
5.        Article 81(3) stipulates:
‘… Where the payment transaction is initiated by or through the payee, the payment service provider of the payer shall ensure that the full amount of the payment transaction is received by the payee.’
6.        Article 83(3) states:
‘Member States shall require the payee’s payment service provider to transmit a payment order initiated by or through the payee to the payer’s payment service provider within the time limits agreed between the payee and the payment service provider, enabling settlement, as far as direct debit is concerned, on the agreed due date.’
2.      Regulation No 260/2012
7.        According to Article 1(1), this regulation ‘lays down rules for credit transfer and direct debit transactions denominated in euro within the Union where both the payer’s payment service provider and the payee’s payment service provider are located in the Union, or where the sole payment service provider (PSP) involved in the payment transaction is located in the Union’.
8.        Article 2 states:
‘…
(2)      “direct debit”
means a national or cross-border payment service for debiting a payer’s payment account, where a payment transaction is initiated by the payee on the basis of the payer’s consent;
(3)      “payer” means a natural or legal person who holds a payment account and allows a payment order from that payment account or, where there is no payer’s payment account, a natural or legal person who makes a payment order to a payee’s payment account;
(4)      “payee” means a natural or legal person who holds a payment account and who is the intended recipient of funds which have been the subject of a payment transaction;
…
(11)      “payment order” means an instruction by a payer or payee to his PSP requesting the execution of a payment transaction;
…
(20)      “collection” means a part of a direct debit transaction starting from its initiation by the payee until its end through the normal debiting of the payer’s payment account;
(21)      “mandate” means the expression of consent and authorisation given by the payer to the payee and (directly or indirectly via the payee) to the payer’s PSP to allow the payee to initiate a collection for debiting the payer’s specified payment account and to allow the payer’s PSP to comply with such instructions.
…’
9.        Article 5(3) provides:
‘3.      PSPs shall carry out direct debits in accordance with the following requirements, subject to any obligation laid down in national law implementing Directive 95/46/EC:
(a)      the payee’s PSP must ensure that:
(i)      the payee provides the data elements specified in point (3)(a) of the Annex with the first direct debit and one-off direct debit and with each subsequent payment transaction,
(ii)      the payer gives consent both to the payee and to the payer’s PSP (directly or indirectly via the payee), the mandates, together with later modifications or cancellation, are stored by the payee or by a third party on behalf of the payee and the payee is informed of this obligation by the PSP in accordance with Articles 41 and 42 of Directive 2007/64/EC;
…’
B.      Lithuanian law
10.      The PSD2 was transposed into Lithuanian law by, inter alia, the Law on Payments (4) and the Law on Payment Institutions. (5)
1.      The Law on Payments
11.      Article 2 contains definitions similar to those in the PSD2.
12.      Article 5 states that payment services consist of payment transactions such as, inter alia, the execution of direct debits, including one- off direct debits.
13.      According to Article 6(3), payment institutions are classified as PSPs.
2.      The Law on Payment Institutions
14.      Article 2(5) of this law provides that a payment institution is a legal person which has been issued with a payment institution licence or a licence of a payment institution providing only an account information service or a payment institution licence for restricted activities.
15.      Article 4(1) states that a payment institution may provide solely the payment services indicated in the licence issued to it by the supervisory authority.
II.    Facts, dispute and questions referred for a preliminary ruling
16.      Alternative Payments UAB is a company that was granted a licence on 16 September 2014 by the Board of Lietuvos Bankas (Bank of Lithuania) to provide two types of payment services: the service of acquiring of payment transactions and the money remittance service.
17.      In 2017, Alternative Payments joined the CENTROlink payment system of the Single Euro Payments Area (SEPA) (6) for direct debits.
18.      On 26 August 2022, the Bank of Lithuania revoked (7) Alternative Payments’ licence, finding that the company had committed a total of ten infringements. The request for a preliminary ruling relates only to the fifth infringement, namely the provision by Alternative Payments of direct debit services without the required authorisation.
19.      Paragraph 5 of the contested decision states that:
–        Alternative Payments is the holder of a licence to act as a payment institution for the provision of payment services such as issuing of payment instruments or acquiring of payment transactions (Article 5(5) of the Law on Payments).
–        However, Alternative Payments also provided execution of direct debits (Article 5(3) of the Law on Payments), because it created payment accounts for all customers in IBAN format (8) and issued an identification code for every customer.
–        Alternative Payments debited funds from the payer’s payment account when the payment transaction was initiated by the payee (the merchant, who is Alternative Payments’ customer) who had obtained the payer’s consent for such a debit.
–        The funds debited from the payer’s payment account were transferred by Alternative Payments to the payee’s account opened with that company in IBAN format in the CENTROlink payment system. Subsequently, funds were transferred at various intervals to payment accounts specified by the customers of Alternative Payments opened with other PSPs.
20.      Alternative Payments brought an action before the Vilniaus apygardos administracinis teismas (Vilnius Regional Administrative Court, Lithuania; from 1 January 2024, Regional Administrative Court) requesting that the contested decision be set aside.
21.      By judgment of 14 September 2023, the court of first instance dismissed the action. The court held, in particular, that the infringements referred to in the contested decision had taken place and that Alternative Payments, as the holder of a licence for the provision of other payment services, had
wrongly provided direct debit services.
22.      Alternative Payments brought an appeal before the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania) requesting that the judgment at first instance and the contested decision be set aside. According to the order for reference, (9) in its appeal Alternative Payments argued that:
–        The court of first instance erred in finding that Alternative Payments provided a direct debit service and in finding that the key criterion for assessing whether the service provided constitutes a direct debit is not the opening of payment accounts for that company’s business customers, but rather who initiates the payment transaction.
–        Alternative Payments does not open and monitor payment accounts for merchants, which is the qualifying characteristic of a direct debit service, nor does it carry out direct debit transactions like those executed by the payer’s PSP.
–        In 2017, the European Payments Council (10) approved Alternative Payment’s application to join the SEPA Direct Debit and SEPA Credit Transfer system. This fact confirms that SEPA Direct Debit is merely a technical solution necessary for Alternative Payments to provide a payment processing service (acquiring of payment transactions).
–        The fact that the services provided by Alternative Payments were consistent with its licence is demonstrated by the Addressable BIC Holder Agreement, by which Lietuvos Bankas authorised Alternative Payments to submit payment orders and receive payments from the SEPA-MMS retail payment system.
23.      In its response to the appeal, Lietuvos Bankas sought the dismissal of the appeal and confirmation of the judgment at first instance.
24.      In those circumstances, the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania) referred the following questions to the Court of Justice for a preliminary ruling:
‘1.      Are point 2 of Article 2 of Regulation [No 260/2012] and point 23 of Article 4, paragraphs 3(a) and 4(a) of Annex I to [the PSD2] to be interpreted as meaning that only the [PSP] of the payer is to be regarded as the provider of the direct debit service, or is the service provided by the [PSPs] of both the payer and the payee?
2.      Are point 2 of Article 2 of Regulation [No 260/2012] and point 23 of Article 4 of [the PSD2] and paragraphs 3(a) and 4(a) of Annex I to that directive, in circumstances such as those in the case in the main proceedings, to be interpreted as meaning that a payment institution, as the [PSP] of the payee, which transmits direct debit instructions, but does not itself carry out debit transactions directly and collects funds on the basis of the prior consents of the payers given to customers (payees) and places them into accounts with restricted functionality, is providing a direct debit service?
3.      If the answer to the first question is that the [PSP] of the payee is not considered to be a direct debit service provider, and the answer to the second question is in the negative, are point 44 of Article 4 of [the PSD2] and paragraph 5 of Annex I to that directive to be interpreted, in circumstances such as those in the case in the main proceedings, as meaning that a payment institution, as the [PSP] of the payee, which transmits direct debit instructions, but does not itself carry out debit transactions directly and collects funds on the basis of the prior consents of the payers given to customers (payees), and subsequently transfers those funds into customers’ accounts held with other [PSPs], is providing a payment transaction processing service?
4.      If the answer to the third question is in the negative, are point 15 of Article 4 of [the PSD2] and paragraph 7 of Annex I to that directive to be interpreted, in circumstances such as those in the case in the main proceedings, as meaning that a payment institution, as the [PSP] of the payee, which initiates a direct debit service on the basis of the payee’s instruction, but which does not carry out direct debit transactions itself and collects funds on the basis of the prior consents of the payers given to customers (payees), is to be regarded as providing a payment initiation service?’
III. Procedure before the Court
25.      The request for a preliminary ruling was received at the Court on 10 April 2025.
26.      Written observations were lodged by Alternative Payments, the Czech, Italian and Lithuanian Governments, and the European Commission.
27.      The Court did not consider it necessary to hold a hearing.
IV.    Assessment
A.      Preliminary observations
28.      In order to determine the type of payment services provided by Alternative Payments, the facts that the referring court considers to be established – which it has set out in paragraphs 13.1 to 13.6 of the order for reference – are relevant, in the following terms:
–        ‘In [Alternative Payments], each customer (merchant) has an account opened in IBAN format and is assigned an identification code, but the functionality of those accounts is limited and customers (merchants) do not have access to those accounts, cannot initiate payments, etc.’
–        ‘The payer (buyer) has given consent to [Alternative Payments’] customer (merchant, payee) to debit funds from his/her account.’
–        ‘[Alternative Payments’] customer (merchant), who is the ultimate payee of the funds, initiates the debiting from the account of the payer (buyer).’
–        ‘[Alternative Payments] provides the direct debit instructions of its customers (merchants, payees) to the SEPA Direct Debit scheme using the services of the CENTROlink payment system and, on that basis, funds are collected based on the prior consents of the payers of funds which are given to customers (merchants, payees) to debit funds periodically from their payment accounts. The debiting of funds from the payer’s account is carried out by the payer’s [PSP] which opens and manages the account.’
–        ‘The collected funds are transferred to the restricted accounts opened for customers (merchants, payees) in the [Alternative Payments] system. Those funds are subsequently transferred by [Alternative Payments] to payment accounts specified by the customers (merchants, payees) with other [PSPs].’
–        ‘[Alternative Payments’] General Terms and Conditions of Contract state that the company provides a SEPA Direct Debit collection service to its customers and facilitates … the receipt and processing of payment transactions from consumers paying for goods and services by other means… The [Alternative Payments’] customer is obliged to obtain a SEPA Direct Debit mandate from its user (debtor). The user may request his/her [PSP] to return funds collected by SEPA Direct Debit within eight weeks after the collection of the funds and [Alternative Payments] may not refuse to accept that return …’
B.      The first question referred
29.      The referring court wishes to know whether Article 2(2) of Regulation No 260/2012 and Article 4(23) of the PSD2, along with paragraphs 3(a) and 4(a) of Annex I to that directive, should ‘be interpreted as meaning that only the [PSP] of the payer is to be regarded as the provider of the direct debit service, or [whether this definition covers] the service provided by the [PSPs] of both the payer and the payee’.
30.      Annex I to the PSD2 lists the payment services referred to in Article 4(3) of that directive. Paragraph 3(a) of that annex refers to the ‘execution of payment transactions, including transfers of funds on a payment account with the user’s [PSP] or with another [PSP]’ and, in particular, the ‘execution of direct debits, including one-off direct debits’. (11)
31.      The Court of Justice has broadly defined the concept of direct debit in Directive 2007/64/EC, (12) analogous to the correlative term in the PSD2. In particular, it has held that:
–        the concept of ‘payment services’ applies to the execution of direct debits initiated by the payee on an account of which it is not the holder, even in the absence of any underlying obligations between the payer and the payee, where the payer, as holder of the payment account thus debited, consented to those direct debits; (13)
–        the execution of direct debits, initiated by the payee, on a payment account of which he or she is not the holder, where the holder of the account thus debited does not consent to those direct debits, also constitutes a payment service. (14)
32.      For a better understanding of the issue, it is appropriate to describe the essential features of this service, in order to decide whether only one or both of the two PSPs concerned are involved in its implementation.
1.      Direct debits
33.      The catalogue of payment services covered by the PSD2 includes the transactions traditionally associated with the management of a payment account, such as the execution of credit transfers and direct debits. These are the core payment services operating in the SEPA, as referred to in Regulation No 260/2012.
34.      In a direct debit, the payer of the payment and account holder (payer) authorises another person (the payee, creditor of the payer) to debit a payment account of the payer.
35.      Direct debit transactions are very common payment services. The classic example is the direct debiting of a bank account to cover water, energy, telephone or internet bills, which are usually recurring direct debits. There are also one-off or occasional direct debit services (such as direct debit of payments due to the tax authorities).
36.      In a direct debit: (a) the transaction is initiated by the payee, without the payer being directly involved, although the payer, by means of a mandate, (15) must have given prior consent; and (b) the service is based on a bank account.
37.      SEPA direct debits come in two variants: a basic direct debit (CORE) and a direct debit for exclusive use between companies, the self-employed or professionals (B2B). PSPs offering a direct debit service are required to join the CORE scheme, while the B2B option is voluntary.
38.      The characteristics of direct debits include the following: (16)
–        The holder of the debit account must give prior consent for payments to be debited from that account. This consent must be reflected in a mandate containing the information necessary for the creditor to submit a direct debit request.
–        The mandate is the means by which the debtor: (a) allows the creditor to initiate collections by debiting the debtor’s
account; and (b) authorises the debtor’s payment institution to debit from that account the debts submitted for collection by the creditor’s PSP.
–        The creditor must keep the mandate stored safely with later modifications or cancellation.
–        Direct debit requests must be submitted in advance of their collection date, which is when the debtor’s payment obligation falls due. The deadline will vary depending on whether it is a one-off transaction, the first transaction in a series of recurring debits or a debit in a series of recurring debits.
–        The unique identifier of the creditor and the mandate reference must be provided. Both identify the creditor and the debts issued under that mandate. For recurrent collections, they should remain unchanged.
–        The IBAN code is used as the identifier of the debtor’s account.
–        The BIC code identifies the debtor’s financial institution.
–        Maximum return periods are applied, at the debtor’s request, which are extended for unauthorised payments.
2.      Participants in the direct debit service
39.      Both the PSD2 (Article 4(23)) and Regulation No 260/2012 (Article 2(2)) define direct debit in the terms transcribed above. (17)
40.      Both definitions, which basically coincide, state that in a direct debit: (a) a payment account of the payer is debited; (b) the payment transaction is initiated by the payee (creditor of the payment); and (c) the payer has given prior consent to the payee, the payee’s PSP or the payer’s own PSP.
41.      However, these definitions do not explicitly identify the PSP to be understood as a direct debit payment service provider. (18)
42.      Alternative Payments has inferred from these definitions that only the payer’s PSP provides the direct debit payment service. (19) In its view:
–        A direct debit requires the collection of funds from the payer’s account, which can only be done by the payer’s PSP, which manages the payment account. The payee’s PSP cannot operate on the payer’s payment account and is limited to purely technical steps to ensure that the funds are collected.
–        The payee’s PSP will only provide the direct debit payment service if the same institution is the PSP of both the payee and the payer.
43.      In my view, however, both the PSP of the payer (debtor) and the PSP of the payee (creditor) are involved in the provision of a direct debit. There are four reasons why I hold this view.
44.      First, the notion of ‘mandate’ in Article 2(21) of Regulation No 260/2012, as an expression of consent and authorisation given by the payer to the payee and (directly or indirectly via the payee) to the payer’s PSP, envisages two PSPs acting in the legal relationship that is the subject of the direct debit.
45.      This transaction allows the payee, through its PSP, to send a payment instruction to the payer’s PSP, which executes the payment by debiting the funds from the payer’s account. From this perspective, the PSPs of the payer and the payee jointly provide a direct debit service.
46.      Second, Articles 81(3) and 83(3) of the PSD2, which I have already transcribed, (20) impose specific obligations:
–        on the payer’s PSP, which must ensure ‘‘that the full amount of the payment transaction is received by the payee’ (Article 81(3));
–        on the payee’s PSP which ‘[w]here the payment transaction is initiated by or through the payee … must ‘ensure that the full amount of the payment transaction is received by the payee’ (Article 81(3);
–        on the payee’s PSP which must transmit a payment order initiated by or through the payee to the payer’s PSP within the time limits agreed (Article 83(3)).
47.      I must reiterate that these two provisions impose specific obligations on the payee’s PSP in terms of the correct execution of the direct debit. The PSD2 therefore assumes that, in addition to the payer’s PSP, the payee’s PSP must also be involved in the direct debit service. The involvement of the payee’s PSP is not simply a technical step to get the funds into the payee’s payment account.
48.      Third, the involvement of the payer, the payer’s PSP, the payee and the payee’s PSP in the direct debit is also based on Chapter
7 of the SEPA Direct Debit Core Scheme Rulebook (21) (‘the Rulebook’), (22) as adopted by the European Payments Council.
49.      The Rulebook defines a ‘direct debit transaction’ as the ‘process of the execution of a payment made by the use of direct debit, starting from the collection initiated by the creditor up to its finality, being either the normal execution [the funds are credited to the payee’s payment account], or the reject, or the return or the refund of the collection [upon receipt of a payer’s instruction to repay the funds due to him ’. (23)
50.      From the description of the nature of SEPA direct debits provided in the Rulebook, (24) we can infer that:
–        A SEPA direct debit is a payment instrument governed by the Rulebook for carrying out SEPA-wide collections in euro from accounts designated to accept collections.
–        Transactions for the collection of funds from a debtor with an account with its PSP are initiated by a creditor through its PSP, in accordance with the agreement between the debtor and the creditor. This agreement is based on an authorisation for the creditor and debtor PSPs, provided to the creditor by the debtor for the debiting of that party’s account, which is called a mandate.
–        Both the debtor and the creditor must hold accounts with a PSP located in the SEPA.
–        Collections executed under the Rulebook are separate transactions from the underlying contract on which they are based. (25)
51.      For the SEPA scheme, a direct debit is a complex payment transaction involving the PSPs of both the payer and the payee.
52.      Essentially, Article 2(2) of Regulation No 260/2012 and Article 4(23) of the PSD2 should be interpreted as meaning that the direct debit service is provided by both the payer’s PSP and the payee’s PSP.
C.      The second question referred
53.      Through its second question, which is closely linked to the first, the referring court wishes to know whether, in circumstances such as those in the present case, the payee’s PSP provides the direct debit service.
54.      In relation to these circumstances, the referring court emphasises, in the wording of the question, that the payee’s PSP ‘transmits direct debit instructions, but does not itself carry out debit transactions directly and collects funds on the basis of the prior consents of the payers given to customers (payees) and places them into accounts with restricted functionality’.
55.      The provisions of EU law for which an interpretation is sought are the same as in the previous question referred for a preliminary ruling.
56.      The answer to this question requires an examination of the dynamics of Alternative Payments’ operations as described in the order for reference:
–        The payer (consumer, purchaser) gives consent by means of a mandate to the merchant (payee) to collect funds from the payment account of the former.
–        Alternative Payments’ customer (merchant) is the ultimate payee of the funds and initiates the direct debit from the account of the payer (purchaser).
–        Alternative Payments transmits the instructions of its customers (merchants, payees) to the SEPA direct debit scheme, using the services of the CENTROlink payment system operated by the Bank of Lithuania . Direct debits are based on the prior consents (mandates) that payers give to merchants to periodically debit funds from their payment accounts.
–        The debiting of funds from the payer’s account is carried out by the payer’s PSP, which opens and manages the account.
–        The collected funds are transferred to the restricted payment accounts opened for customers (merchants, payees) with Alternative Payments. Each customer (merchant) has an account opened in IBAN format and is assigned an identification code, but the functionality of those accounts is limited and customers (merchants) do not have access to those accounts and cannot initiate payments.
–        The funds collected by Alternative Payments are subsequently transferred by that party to the payment accounts specified by the customers (merchants, payees) held with other PSPs.
57.      On the basis of these data, the Court of Justice is asked to give an answer that takes into account the specific circumstances of the contracts entered into by Alternative Payments and its relationship with the supervisory authorities. (26) It is, however, for the referring court to assess these circumstances and relationships.
58.      The Court of Justice may provide the referring court with some guidance in order to facilitate its interpretation of European Union law, without taking the place of that court in its specific role.
59.      First of all, we should recall that, according to the order for reference, Alternative Payments ‘provides a SEPA Direct Debit collection service to its customers’. (27) I find it difficult to accept that a PSP that has signed up to the SEPA direct debit scheme can, at the same time, consider itself outside the direct debit service.
60.      If I have understood correctly, Alternative Payments is involved in the collection of direct debits through which consumers pay merchants. This company provides a service to merchants that enter into contracts with it, aimed at facilitating the collection of their direct debits. It centralises the management of these collections, but without merchants having access to their Alternative Payments accounts, because they will receive the money in the payment accounts they hold with their regular PSPs.
61.      Such an intervention falls within the handling of direct debit payment services, and the limited functionality of its customers’ (merchants’) accounts does not preclude such a classification, as will be explained below.
62.      First, merchants (Alternative Payments’ customers) have IBAN-format payment accounts with Alternative Payments, with an identification code and operations in the CENTROlink payment system similar to those of any other PSP providing the ‘ordinary’ direct debit service.
63.      Second, Alternative Payments is required to comply with Article 81(3) of the PSD2 as the PSP of the payee (merchant). It must guarantee that the payee receives the full amount of the payment transaction and collects the corresponding funds. As the payee’s PSP, it must transmit the payment order to the PSP of the payer (consumer) ‘… within the time limits agreed between the payee and the [PSP], enabling settlement, as far as direct debit is concerned, on the agreed due date’ (Article 83(3) of the PSD2).
64.      Third, Alternative Payments must effect – and cannot oppose – the return of funds collected by SEPA direct debit, if requested by the payer’s PSP within eight weeks of the funds being collected.
65.      The fact that payees cannot access the accounts held with Alternative Payments, which have limited functionality, does not prevent Alternative Payments from allowing payees to receive payments by SEPA direct debit and facilitates the transfer of these funds from the payer to the payee in execution of a direct debit mandate, which may be one-off or recurring.
66.      The actions of Alternative Payments as described above show that it is acting as a provider of a direct debit service, for which it must have the required administrative authorisation.
67.      Alternative Payments argues in its defence that it simply ‘submits the debit orders to the banking systems that will execute them’. (28) However, as the Commission (29) and the Czech, Italian and Lithuanian Governments (30) unanimously assert, the functions performed by the two PSPs (of the payee and of the payer) in the context of direct debit services may be different, but they are not unrelated to the payment method at issue.
68.      I agree with the Lithuanian Government that, when the PSP issues direct debit mandates, it performs functions necessary for the implementation of the entire direct debit payment procedure under the SEPA scheme, regardless of the fact that the PSP does not itself directly debit the funds. (31)
69.      In short, Article 2(2) of Regulation No 260/2012 and Article 4(23) of the PSD2, along with paragraphs 3(a) and 4(a) of Annex I to that directive should be interpreted as meaning that the PSP of the payee, which transmits direct debit instructions, but does not itself carry out debit transactions directly and collects funds on the basis of the prior consents of the payers given to customers (payees) and places them into accounts with restricted functionality, is providing a direct debit service.
D.      Third and fourth questions referred
70.      The third and fourth questions are asked in the event that the answer to the first two questions is in the negative. As I have suggested to the Court of Justice that this answer should be in the affirmative, it is not necessary to examine these questions. I will do so, however, in the alternative.
71.      Through these two questions, the referring court wishes to know whether, in circumstances such as these, the payee’s PSP (Alternative Payments):
–        is providing a ‘service of acquiring of payment transactions’ (third question referred); or
–        otherwise, is providing a ‘payment initiation service’ (fourth question referred).
1.      Service of acquiring of payment transactions
72.      Article 4(44) of the PSD2 defines the service of ‘acquiring of payment transactions’ in the terms transcribed above. (32) This service is also mentioned among the payment services covered by paragraph 5 of Annex I to the PSD2.
73.      Through the service of acquiring of payment transactions, the PSP provides the necessary tools for a merchant to offer acceptance of payment by card (credit and debit) or other virtual payment methods. (33)
74.      At the core of the service of acquiring of payment transactions is a pre-existing contract between the service provider (the PSP) and its customer (merchant, payee). Both parties agree that the PSP will accept and process payment transactions in favour of the payee, ‘which results in a transfer of funds to the payee’. This is therefore a service provided at the receiving end of the payment transaction, because the user of this payment service acts in all cases as the payee. (34)
75.      It is not disputed that Alternative Payments is authorised to provide services of acquiring of payment transactions. If the services at issue in the dispute could be classified under that heading, they would be covered by the licence held by that company.
76.      According to the order for reference, the problem is ‘whether direct debit can be used as a technical solution for providing a payment transaction [acquiring] service and whether, in circumstances such as those in the case in the main proceedings, where a payment institution transmits direct debit instructions and collects funds, subsequently transferring those funds to customers’ accounts held with other [PSP], the company (payment institution) can be regarded as providing a payment transaction [acquiring] service’. (35)
77.      In my view, the activity described in the order for reference does not fall within the concept of a service of acquiring of payment transactions under the PSD2, although it might appear otherwise at first sight.
78.      First, a direct debit is a different payment service from the acquiring of payment transactions and it is not feasible to provide the latter using SEPA direct debits as an instrument. Direct debits are not a ‘technical solution’ for providing services of acquiring of payment transactions. If that were the case, PSPs could conduct direct debits disguised under the umbrella of acquiring payment transactions. They could thus circumvent the obligation under Articles 76 and 77 of the PSD2 for the pan-European direct debit scheme, which is equivalent to an unconditional right to a refund (36) for a period of eight weeks from the date the funds are debited, thus ensuring a high level of consumer protection within the SEPA.
79.      Second, the direct debit service is based on the existence of a mandate given by the debtor in favour of the creditor, which extends to the execution of recurring payments. In contrast, the service of acquiring of payment transactions requires a specific authorisation to validate each payment transaction by the customer, even if the customer has an existing contract with the acquiring PSP.
80.      According to its definition, the service of acquiring of payment transactions has been ‘contractually agreed’ between the merchant (payee) and its service provider for acquiring of payment transactions, such that, for the latter, the relationship with the payer-debtors is not based on a mandate such as the one on which a direct debit is based.
81.      Third, Alternative Payments has used the SEPA direct debit instrument to provide its service to merchants, which means that it has had to comply with the obligations and technical requirements laid down in Article 5(1) and (3) of Regulation No 260/2012 and in paragraphs 1 and 3 of the Annex to that regulation. These obligations and technical requirements differ from those applicable to the service of acquiring of payment transactions.
82.      Ultimately, Article 4(44) of the PSD2 and paragraph 5 of Annex I to that directive should be interpreted as meaning that the PSP of the payee (merchant), which transmits direct debit instructions, but does not itself carry out debit transactions directly and collects funds on the basis of the prior consents of the payers (consumers) given to customers (merchants, payees) and, subsequently, transmits those funds to the accounts of its customers held with other PSPs, is not providing a service of acquiring of payment transactions.
2.      Payment initiation service
83.      Through its fourth question, the referring court has raised the issue of whether Alternative Payments can be regarded as providing a payment initiation service.
84.      Article 4(15) of the PSD2 defines the ‘payment initiation service’ in the terms transcribed above. (37) Payment initiation is also identified as a payment service in paragraph 7 of Annex I to the PSD2.
85.      In the procedure for payment initiation services:
–        A consumer wishing to purchase goods or a service from a merchant makes available to a payment initiation service provider, which uses its own interface, the security credentials of the consumer’s specific payment account held with its regular PSP (usually a bank). (38)
–        The payment initiation service provider informs the merchant’s PSP that the consumer is ready to make the payment and confirms to the merchant, virtually instantaneously, that the payment transaction has been initiated.
–        After the buyer has validated the transaction, the merchant delivers the goods or provides the service.
86.      The payment initiation service is particularly relevant in the field of e-commerce, as it provides a bridge between the company’s website and the online platform of the user’s PSP, in order to initiate payments over the internet and streamline the traffic of goods and services.
87.      The payment initiation service allows those who do not have payment cards to make online purchases by simply having an online payment account, which was not feasible before the introduction of this new payment method. (39)
88.      Recital 31 of the PSD2 clarifies that, when exclusively providing this service, the payment initiation service provider does not at any stage of the payment chain hold the user’s funds. (40) It adds that if the payment initiation service provider intends to provide payment services in relation to which it needs to hold user funds, it should obtain full authorisation for those services.
89.      For its part, Article 66(3)(a) of the PSD2 states that the provider of such a service shall ‘not hold at any time the payer’s funds in connection with the provision of the payment initiation service’.
90.      It is clear from the information in the file that Alternative Payments holds the funds for the life of the transaction. This circumstance is not compatible with the features of the payment initiation service referred to in Article 4(15) of the PSD2, interpreted in the light of its recitals, or with the prohibition contained in Article 66(3)(a) of the PSD2.
91.      Alternative Payments acknowledges that its activity does not qualify as a payment initiation service. (41)
92.      Ultimately, the PSP of a payee (merchant), which transmits direct debit instructions, but does not itself carry out debit transactions directly and collects funds on the basis of the prior consents of the payers (consumers) given to customers (merchants, payees) and, subsequently, transmits those funds to the accounts of its customers held with other PSPs, is not providing a payment initiation service, as defined by Article 4(15) of the PSD2 and paragraph 7 of Annex I to that directive.
V.      Conclusion
93.      In the light of the foregoing, I propose that the Court of Justice should reply to the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania) as follows:
‘1.      Article 4(23) of Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC, along with paragraphs 3(a) and 4(a) of Annex I to that directive, and Article 2(2) of Regulation (EU) No 260/2012 of the European Parliament and of the Council of 14 March 2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009
must be interpreted as meaning that:
–        the execution of a direct debit service involves both the payer’s payment service provider and the payee’s payment service provider.
–        The payee’s payment service provider, which transmits direct debit instructions, but does not itself carry out debit transactions directly and collects funds on the basis of the prior consents of the payers given to customers (payees) and places them into accounts with restricted functionality, is providing a direct debit service.
2.      Article 4(44) of Directive 2015/2366 and paragraph 5 of Annex I to that directive
must be interpreted as meaning that the payment service provider of the payee, which transmits direct debit instructions, but does not itself carry out debit transactions directly and collects funds on the basis of the prior consents of the payers given to customers (payees) and places them into accounts with restricted functionality, is not providing a service of acquiring of payment transactions.
3.      Article 4(15) of Directive 2015/2366 and paragraph 7 of Annex I to that directive
must be interpreted as meaning that the payment service provider of the payee, which transmits direct debit instructions, but does not itself carry out debit transactions directly and collects funds on the basis of the prior consents of the payers given to customers (payees) and places them into accounts with restricted functionality, is not providing a payment initiation service’.
1      Original language: Spanish.
2      Regulation of the European Parliament and of the Council of 14 March 2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009 (OJ 2012 L 94, p. 22). It has been amended by Regulation (EU) 2024/886 of the European Parliament and of the Council of 13 March 2024 amending Regulations (EU) No 260/2012 and (EU) 2021/1230 and Directives 98/26/EC and (EU) 2015/2366 as regards instant credit transfers in euro (OJ L, 2024/886). Regulation (EU) 2024/886 is not applicable to this dispute ratione temporis.
3      Directive of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ 2015 L 337, p. 35), ‘the PSD2’.
4      Lietuvos Respublikos mokėjimų įstatymas Nr. VIII-1370 (Law No
VIII-1370 of the Republic of Lithuania on payments) of 28 October 1999 (‘the Law on Payments’).
5      Lietuvos Respublikos mokėjimo įstaigų įstatymas Nr.
XI-549 (Law No
XI-549 of the Republic of Lithuania on payment institutions), of 10 December 2009 (‘the Law on Payment Institutions’).
6      SEPA is the English acronym of the Single Euro Payments Area. SEPA is the area in which citizens, companies and other economic agents can make and receive payments in euro in Europe, both within and across national borders, under the same conditions and with the same rights and obligations, regardless of their location. It is an essential element of the internal payments market.
7      This was Resolution No 03-126 of the Board of the Bank of Lithuania of 26 August 2022 on the application of an enforcement measure to Alternative Payments (‘the contested decision’).
8      The IBAN is the international payment account identifier number that uniquely identifies an individual payment account in a Member State.
9      Paragraph 11 of the order for reference.
10      The European Payments Council (EPC) is the European banking industry’s decision-making and coordinating body for payments, and has the stated objective of supporting and promoting the creation of the SEPA.
11      Paragraph 4(a) of Annex I refers to the execution of payment transactions where the funds are covered by a credit line for a payment service user. These transactions also include the execution of direct debits, including one-off direct debits.
12      Directive of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC (OJ 2007 L 319, p. 1).
13      Judgment of 11 April 2019, Mediterranean Shipping Company (Portugal) – Agentes de Navegação (C‑295/18, EU:C:2019:320, paragraph 38): ‘… the execution of direct debits initiated by the payee on an account of which it is not the holder comes within the notion of “payment services” in Article 2(1) of Directive 2007/64, even in the absence of any underlying obligations between the payer and the payee, where the payer, as holder of the payment account thus debited, consented to those direct debits. …’
14      Judgment of 11 April 2019, Mediterranean Shipping Company (Portugal) – Agentes de Navegação (C‑295/18, EU:C:2019:320, paragraph 48): ‘… Article 2(1) of Directive 2007/64 must be interpreted to the effect that the notion of “payment services”, for the purposes of that provision, includes the execution of direct debits, initiated by the payee, on a payment account of which it is not the holder, where the holder of the account thus debited does not consent to those direct debits.’
15      The mandate (which can also be referred to as a direct debit instruction) contains the authorisation given by the payer for the debiting of that party’s account to be initiated as of a certain date.
16      The requirements for SEPA direct debits are mainly described in Article 5(1) and (3) of Regulation No 260/2012 and in paragraphs 1 and 3 of the Annex to that regulation. Its characteristics are detailed in the SEPA document, Frequently Asked Questions – SEPA Direct Debits, available at https://www.sepaesp.es/sepa/es/faqs/sdd/. Note that this document uses the term ‘adeudo directo’ to refer to direct debits.
17      Points 3 and 4 of the present Opinion.
18      See also, to this effect, the Commission’s written observations, paragraph 24, and those of the Lithuanian Government, paragraph 15.
19      The company cites in support of its argument, albeit without foundation in my view, the judgment of 22 February 2024, ABC Projektai (C‑661/22, EU:C:2024:148, paragraph 39).
This paragraph merely states that ‘… Article 4(23) of that directive expressly envisages the execution of direct debits from a payment account, initiated by the payee on the basis of the consent given to that payee by the payer. The proper execution of such a payment transaction presupposes that the funds necessary for that transaction are available, in advance, on the payer’s payment account.’
20      Points 5 and 6 of the present Opinion.
21      A SEPA scheme is a set of rules, practices and standards aimed at achieving interoperability in the provision and operation of a SEPA payment instrument agreed at interbank level.
22      European Payments Council: SEPA Direct Debit Core Scheme Rulebook, EPC016-06/ 2025, version 1.0, date of publication: 28 November 2024, date of application: 5 October 2025, https://www.europeanpaymentscouncil.eu/sites/default/files/kb/file/2024-11/EPC016-06%202025%20SDD%20Core%20Rulebook%20version%201.0.pdf. The Rulebook includes a set of interbank rules, practices and standards for the execution of direct debit payments in euro within the SEPA by scheme participants. The aim is to provide straight-through, end-to-end, fully electronic transaction processing. This objective will also apply to the various processes for exception handling such as rejects, returns, reversals, refunds, refusals and revocations. Only electronic handling of mandate information is permitted between participants. Between debtor and creditor, a mandate can be exchanged in either paper or electronic form.
23      Rulebook, p. 115.
24      Rulebook, p. 20.
25      The underlying contract is agreed between the debtor and the creditor. This contract does not affect the creditor PSP or the debtor PSP, nor is it binding on them, as they are concerned only with the agreements with their respective customers on the conditions for the provision of the services related to the direct debit.
26      In its written observations, Alternative Payments alleges that the Bank of Lithuania had authorised it to perform the disputed services, until it revoked its licence in 2022.
27      Paragraph 33, in fine, of the order for reference. A similar statement is made in paragraph 13.6 of that order, transcribed in point 28 of the present Opinion.
28      Paragraph 4 of Alternative Payments’ written observations. The same statement is repeated, in these or other terms, in other parts of its observations.
29      Paragraphs 35 to 38 of the Commission’s written observations.
30      Paragraph 13 of the Czech Government’s written observations, paragraphs 24 to 26 of the Italian Government’s written observations and paragraphs 22, 23 and 26 to 34 of the Lithuanian Government’s written observations.
31      Paragraph 26 of the Lithuanian Government’s written observations.
32      Point 3 of the present Opinion. The term ‘acquiring’ is ambiguous in this context: properly speaking, the payment transaction is not acquired (ownership is not obtained or received). The terminology of the German version – ‘Annahme und Abrechnung von Zahlungsvorgängen (Acquiring)’ – which could be translated as acceptance and settlement of payment transactions, seems to me to be more accurate.
33      The typical example of a service of acquiring of payment transactions is credit card payments, as follows from recital 10 of the PSD2: ‘this Directive introduces a neutral definition of acquiring of payment transactions in order to capture not only the traditional acquiring models structured around the use of payment cards, but also different business models, including those where more than one acquirer is involved. This should ensure that merchants receive the same protection, regardless of the payment instrument used, where the activity is the same as the acquiring of card transactions …’
34      At the issuing end of the payment transaction (for example, by card), we will usually find a different payment service, which is the ‘issuing of payment instruments’ service, defined by Article 4(45) of the PSD2 as a ‘payment service by a payment service provider contracting to provide a payer with a payment instrument to initiate and process the payer’s payment transactions’.
35      Paragraph 40 of the order for reference. Emphasis added.
36      This is what it is referred to in recital 76 of the PSD2.
37      Point 3 of the present Opinion.
38      The consumer consents to the (external) payment initiation service provider accessing his or her bank account to initiate a payment on his or her behalf.
39      Recital 29 of the PSD2: ‘Payment initiation services enable the payment initiation service provider to provide comfort to a payee that the payment has been initiated in order to provide an incentive to the payee to release the goods or to deliver the service without undue delay. Such services offer a low-cost solution for both merchants and consumers and provide consumers with a possibility to shop online even if they do not possess payment cards …’
40      Precisely because of this circumstance and because they do not hold their customers’ funds, payment initiation service providers are not subject to the (more stringent) requirements applicable to economic agents who do hold such funds.
41      Paragraphs 82 and 83 of Alternative Payments’ written observations.