April 18, 2019 | Max Atallah

Fintech & Newsroom

ECJ C-295/18 – The Interpretation of the European Court of Justice on the Concepts of ‘Payment Service’ and ‘Payment Service User’

Subject matter

In its preliminary ruling on the Case C-295/18, the Court of Justice of the European Union (ECJ) gave a decision on how the concepts ‘payment service’ and ‘payment service user’ shall be interpreted and understood in the Directive 2007/64 /EC (Directive).


The National Supreme Court of Portugal (TRP) made a reference for a preliminary ruling to the ECJ on how to interpret the Directive’s concepts ‘payment service’ and ‘payment service user’.

The ambiguity on the interpretation arose in a case where direct debits were made from the Mediterranean Shipping Company’s (MSC) sight deposit account at the Swiss BCP bank.

The underlying dispute between MSC and BCP concerned direct debits made from the MSC’s sight deposit account, initiated by a benefiter, who was not a holder of the debited account, and who neither had any debit permission from the account holder, i.e. MSC.

The ECJ’s Preliminary Ruling

In its ruling on the first question raised by the TRP, the ECJ stated that Article 2(1) of the Directive must be interpreted as meaning that direct debits made at the initiative of a benefiter, from an account which the benefitor does not hold, and which the holder of the account so charged did not consent to, are covered by the concept of payment service within the meaning of that provision.

On the second question, the ECJ stated that the scope of the concept of payment service user, as described in Article 58 of the Directive, must be interpreted as including the holder of a sight deposit account, which has been subject to direct debits without the consent of the account holder.


The ECJ justifies its ruling and the interpretation of the concept payment service by stating that in addition to the exact wording of the provision, the purpose of the provision and the context of the concept must be taken into account in accordance with the existing case-law.

According to the ECJ, it follows from the context in which the concept is used that the concept must be interpreted as meaning that the scope of payment service covers such direct debits as were raised in the case.

In addition, the ECJ mentions the fact, that direct debits from a sight deposit account without the consent of the holder of the account in question, are not mentioned among the payment transactions excluded from the Directive’s scope, as laid down by Article 3.

The ECJ’s interpretation of the concept ‘payment service user’ is also anchored in the context and the circumstances of the case, justifying such an interpretation in the light of the aims pursued by the Directive.


The objectives of the Directive support the ECJ’s interpretations, and the Court has given a strong emphasis to the aims pursued.

As the ECJ points out, the exclusion of unauthorized payment transactions from the concept’s scope, such as direct debits, would jeopardize the objectives of the Directive.

In other words and with that said, if the fact that the holder of a direct debited account has not agreed to such a charge would make it possible to exclude such a payment transaction from the scope of the concept payment service, and hence exclude it from the scope of the Directive, the provisions of the Directive would be meaningless and ineffective in so far as they concern unauthorized payment transactions. This would mean that market players would be deprived of the protection that the Directive expressly seeks to create against unauthorized payment transactions.

Thus, it can be said that the ECJ’s teleological concept interpretation strives to ensure that the objectives of the Directive are understood correctly.

Our Trainee Jere Lehtimäki took part in writing of this commentary.

18.04.2019 MAX

Nordic LawPioneer in Web3 and Fintech law