Worldline - Registration Document 2016

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Business Regulation

out the activities of a payment institution, or in its role as a subcontractor, the Group acts as a processor on behalf of subcontractor carrying out the activities of credit institutions. As compliance with the regulations applicable to credit institutions. credit institutions and must therefore provide its services in outsource to the Group (for which the Group does not require a For a description of the services that credit institutions license), see Section 6.9.1.2, “Regulations applicable to The regulations applicable to payment services are constantly Directive (PSD2) entered into force. By January 13-, 2018, changing. On January 13, 2016-, the revised Payment Services to comply with this directive -as PSD1 Directive 2007/64/EC is Member States shall adopt and publish the measures necessary European Banking Authority EBA is mandated to develop 6 repealed with effect from that date. For implementation the outsourced credit and payment institution activities”. actively to the consultation of EBA developing RTS and GL in 2016 and 2017. program to analyze and mediate the impacts and to contribute Document. Worldline has set up an internal PSD2 transformation Finally, the Group has indirect access to the interbank payment clearing operations processed in the context of the Group’s systems, in order to carry out payment transactions and certain specific operational regulations developed by the Commercial Acquiring activities. The Group is thus subject to in France and the CORE (Compensation Retail) system in companies that manage these interbank systems, such as STET Belgium. follow legislative and regulatory developments applicable to its The Group has implemented an internal monitoring system to activities. to the iDEAL and MyBank e-payment platforms and Sips card activities carried out by the Group, in particular services related authentication and authorization procedures that would be payment platform, and would require a review of the Group’s payment platforms, as necessary, so as to comply with implemented in the context of PSD2 in order to adjust the Section 6.5, “The Group’s business” of this Registration the applicable regulation. For a description of these services, see services and services for accessing account payment balances. creation of new regulations applicable to payment initiation This directive could have an impact on certain payment the date of entry into force. The directive enlarges the scope of for in the PSD and extending its applicability to “third-party the existing PSD regulation by limiting the exemptions provided payment account services or payment initiation services payment service providers” who provide remote access to by other payment service providers. PSD2 will result in the through online platforms in relation to payment accounts held (GL) within defined deadlines ranging from 12 to 24 months after Regulatory Technical Standards (RTS) and 5 sets of Guidelines

member state or through an agent. services, through a subsidiary or a branch located in the host NV/SA, a subsidiary of the Group located in Belgium, possesses In order to be able to carry out its regulated activities, Worldline out the services described above. In accordance with the a payment institution license in Belgium, which allows it to carry that are licensed in one European Union member state are European Regulations described above, payment institutions allowed to establish themselves or provide payment services in obtain a license from that state, either pursuant to the European any other European Union member state without having to (a system referred to as the “European passport”). Worldline principal of freedom to provide services or through a subsidiary Czech Republic, Germany, Spain, France, the United Kingdom, NV/SA’s license in Belgium has been “passported” to Austria, the Bulgaria, Croatia, Denmark, Estonia, Finland, Iceland, Lithuania, Italy, Luxembourg, the Netherlands, Norway, Poland, Slovakia, Sweden, Cyprus and Hungary. Worldline NV/SA has also a a Malta, Romania, Slovenia, Greece, Ireland, Latvia, Portugal, subsidiary in the Czech Republic and a branch in Slovakia. Also, the payment institution license held by Paysquare, a Austria, Finland, France, Germany, Luxemburg, Poland, Portugal, Worldline BV subsidiary, in the Netherlands, was “passported” in Spain and in the United-Kingdom. Payment institutions are subject to specific regulations resulting controls procedures that they must put in place to comply with from the PSD, in particular in regard to own funds and internal laundering measures, corporate governance rules and the various applicable regulations, such as anti-money prudential regulations. The Group also has vigilance and beneficiaries of payment transactions. The European Union reporting requirements regarding the identity of its clients and stricter prudential regulations in light of the specific activity of member states’ national regulatory authorities may impose Belgian entity Worldline NV/SA has a “hybrid” license as a result the regulated payment institution. For example, the Group’s Group is subject to more extensive prudential constraints, could affect the terminals sold by the Group. Accordingly, the Worldline NV/SA was required to have around € 35 million in especially as pertains to own funds requirements. For example, own funds during the fourth quarter of 2016. to the Belgian regulatory authority, represents a potential risk to of its payment terminal manufacturing business that, according its payment services activities, given security flaws or failures As a provider of these services, the Company is required to ancillary services, such as issuing confirmation receipts for comply with certain administrative obligations and provide services, monitoring and maintaining hardware and software or transactions (in paper or electronic format), providing installation developing client-oriented applications for terminals. The Group is subject to these requirements either as a result of its carrying

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Worldline 2016 Registration Document