Central Bank fines payment platform over mishandling funds

Bank said BlueSnap breached safeguarding measures as it did not deposit its customers’ funds in designated safeguarding account

The breaches occurred between January 2021 and December 2022 and were contrary to Central Bank safeguarding measures designed to ensure payment platforms do not mix customer funds with company funds.

The Central Bank of Ireland has fined payments platform BlueSnap Payment Services €324,240 for breaching regulations around the mishandling of its customers' money.

The breaches occurred between January 2021 and December 2022 and were contrary to safeguarding measures designed to ensure payment platforms do not mix customer funds with company funds.

BlueSnap is authorised by the Central Bank to provide “merchant acquiring services” to businesses who wish to accept payments online for products and services sold. The authorisation contains specific measures around the safeguarding of funds.

The Central Banks said under the terms of BlueSnap’s authorisation, when an online sale is made by one of the company’s customers, BlueSnap is supposed to collect the money, hold it securely in a segregated bank account and then pay it onwards to the customer’s bank account.

The objective of safeguarding is to “protect customers’ funds pending a payment being made and to ensure that if a firm becomes insolvent, funds are available to be returned fully and promptly to its customers”.

“Safeguarding is particularly important as there is no compensation or deposit protection scheme applicable to the payment and e-money sector,” the Central Bank said.

Under the regulations, when customer funds are held in a segregated bank account, these funds must not be mixed with the firm’s own funds or funds of other group entities and their customers.

The Central Bank said BlueSnap breached safeguarding measures as it did not deposit its customers’ funds in BlueSnap’s designated safeguarding account, it mixed its customers’ funds with other funds, and the company delayed informing the Central Bank once it became aware it was not following the safeguarding procedures.

“These failings arose due to deficiencies in regulatory awareness and understanding of reporting requirements, in addition to inadequate oversight and monitoring by BlueSnap of safeguarding operations which were provided by the BlueSnap group,” the Central Bank said.

“BlueSnap has confirmed to the Central Bank that it has remediated the safeguarding failures which are the subject of the prescribed contraventions.” 

BlueSnap has admitted to these contraventions. As part of the settlement, the company was fined €463,200, but a 30% settlement scheme discount was applied, reducing the overall fine.