Can payment services be provided by non-banks, and if so on what conditions?

Fintech (2nd edition)

Belgium Small Flag Belgium

Yes. So-called electronic money institutions (EMIs) and payment institutions (PIs) are also allowed to provide payment services. In order to become a payment institution or an electronic money institution, a company must get licensed by the National Bank of Belgium.

Several requirements laid down in the law must be met. They concern e.g. the quality of the shareholders and management, the governance, the minimum capital requirements, the business model, the IT infrastructure, etc. The candidates must file a licence application containing the different requirements set out by law (as specified in applicable EBA guidelines).

Since the introduction of the PSD2 in Belgium the licence requirements for EMIs and PIs have become very similar. The most important difference lies within the higher minimum capital requirements for EMIs.

The prudential requirements that must be reached during the licensing process must be met during the whole existence of the payment/electronic money institution. Regulated entities must also fulfil reporting obligations.

A licence obtained in Belgium allows a regulated entity to provide payment services in all the other EU Member States. A simple prior notification to the home country national regulator (which is in charge of informing the national regulator of the target country) is required.

Besides banks, PIst and EMIs, certain (semi-) public entities such as Bpost, the National Bank of Belgium and local authorities are also allowed to provide payment services (see above the question on the sources of payment legislation).

Bermuda Small Flag Bermuda

The Money Service Business Act 2016, as amended, allows for money transmission services, cashing cheques, issuing and redeeming drafts, money orders or traveller’s cheques for cash, operating a payment service business, and operating a bureau de change; to be conducted by non-banks. However, money services business can only be carried on by those companies who attain a license from the Bermuda Monetary Authority.

The DABA has further extended this to cryptocurrency exchange platforms and custodial wallet services. As mentioned above, any company looking to operate a cryptocurrency exchange platform or offer custodial wallet services, will be required to attain a licence from the Bermuda Monetary Authority. As of the date of writing, there are banks and financial institutions that are established outside of Bermuda which are willing to provide banking services to Bermuda-based licensed companies, subject to their own internal policies, including a particular well-known full service commercial bank and provider of blockchain-based platform management.

Brazil Small Flag Brazil

Yes. Law 12,865/13 established that payment services can be provided by non-bank entities called payment institutions. Central Bank issued Circular 3,885/18 which classifies payment institutions in accordance with the payment services they provide: (i) issuers of electronic currency (e.g., typically, issuers of pre-paid instruments and e-wallets); (ii) issuers of post-paid instruments (e.g., typically, issuers of credit cards); and (iii) acquiring institutions.

We draw your attention to the fact that there is no prior approval to operate as a payment institution. The entity can freely start operating without a license.

However, if one of the following thresholds are reached: (i) R$ 500 million (five hundred million Brazilian reais) in payment transactions in the previous 12 months of operation; or (ii) R$ 50 million (fifty million Brazilian reais) in funds kept in payment accounts (e-wallets), the payment institution must apply for a license in one of the three categories in which it wishes to operate (i.e., acquiring, issuance of prepaid, or issuance of postpaid payment instruments). Durring the approval process the payment institution continues to operate regularly and once approval is granted, the payment institution must comply with Central Bank Rules. The logic of the regulation is foster competition hence the ability of a payment institution operate without any prior consent or approval from the Central Bank.

Chile Small Flag Chile

As noted above, pursuant to Law N° 20,950 it is possible that non-bank institutions issue and operate payment cards with provisional funds, as long as the non-bank institutions comply with the requirements below:

A) Set up a special corporation with one exclusive purpose (Sociedades anónimas especiales de giro exclusivo),

B) Register in the Financial Market Commission’s Card Issuers Registry (Registro de Emisores de Tarjetas),

C) The Company’s sole purpose, as stated in its bylaws, must be the issuance or operation of payment cards with provisional funds and such activities to achieve this specific purpose;

D) The company satisfies the minimum capital and fund reserve amounts;

E) Establish a liquidity reserve,

F) Establish a risk management and control policy;

G) The company must keep at all times: the account holder application for a card, and maintain a segregated accounting of the funds provided to the Holders;

H) Provide CMF with all material facts and information about the company and the company’s activities as such factual events occur or such information or circumstances become known to the company.

United States Small Flag United States

Yes. Fintech companies and other nonbank entities can and do offer payment services to businesses and consumers. Much of the nonbank payments activity includes entities that operate as Money Services Businesses (MSBs). Typically, at the federal level, MSBs must register with the Financial Crimes Enforcement Network (FinCEN) and implement and comply with a risk-based, anti-money laundering program in addition to adhering to recordkeeping requirements, reporting obligations, transaction monitoring, and several other rules and regulations. Often, an MSB also has state-level obligations to encourage the protection of consumer funds as well as to ensure the MSB’s solvency. In addition to licensure and registration requirements, the varying legal requirements described above will apply to the methods of payment enabled by nonbank payment service providers. Nonbank payment service providers also enter into partnerships with banks, which may subject the nonbanks to supervision by financial regulators.

United Kingdom Small Flag United Kingdom

Under the Payment Service Regulations, non-banks can become authorised to provide payment services. There are a number of ways that they can do this.

The first is to become an authorised payment institution. In order to do so they must go through the authorisation process with the FCA, for which purpose they must meet a number of requirements including the holding of capital, safeguarding funds, record keeping, accounting and audit, conditions around material outsourcings, and provision of information to customers of the payment services.

The second is to become authorised as a small payment institution. The compliance burden is significantly less than for an authorised payment institution, but with restrictions such as that a small payments institution cannot have an average monthly transaction volume over the previous year (or projected volume) of more than €3 million.

In addition, the FCA provides for a simplified application process for entities providing account information services only. The application is shorter and the compliance burden is lower, reflecting the fact that AISPs transact in data only and do not move or hold funds.

The FCA decides when an application is complete, and has up to 3 months from receipt of the completed application to make a decision on whether or not the application is successful.

China Small Flag China

Yes. The third-party (i.e., non-bank) payment service market in China is in many ways a fully developed market. The PBOC serves as the key regulatory body of third-party payment activities in China, and it issues third-party payment licences (Payment Licences) which permit licence holders to offer online, mobile and offline payment services. To receive a Payment Licence, the applying entity must:

  • have paid-in registered capital of at least RMB 100 million to apply for a nationwide Payment Licence, or paid-in registered capital of at least RMB 30 million to apply for a Payment Licence in a particular province;
  • have at least five senior management personnel who are familiar with payments business;
  • have established anti–money laundering systems that meet the applicable requirements;
  • have payment service systems in place that meet the applicable requirements, including a business operations system and a disaster recovery system which can perform the intended payments business safely and independently;
  • store, process and analyse all personal and financial information collected and generated in China within the territory of China;
  • if it is necessary to transfer any data abroad for conducting cross-border payments, obtain consent from relevant data subjects and request that the overseas recipients of the data comply with confidentiality obligations;
  • have a well-established organizational structure, internal control system and risk management measures;
  • have business premises and security measures that meet the applicable requirements; and
  • both the company and its senior management personnel must not have been subject to penalties in the last three years for committing any illegal activity or criminal offence using payment services or for providing payment services for any illegal activity or criminal offence.

The PBOC previously restricted foreign-invested entities from obtaining Payment Licences. However, this was changed with the issuance of the Announcement Regarding Certain Issues on Foreign Investment in Payment Institutions (Announcement) by the PBOC in March 2018. According to the Announcement, a foreign-invested entity (FIE) can qualify to receive a Payment License if it is a PRC-registered limited liability company or a joint stock limited company and if it meets the qualifications listed above (the same qualifications that apply to domestic entities). Parties dealing with foreign currency or Chinese currency cross-border payments may need to obtain one or two additional licences: one, for cross-border payments with onshore and offshore yuan, also from the PBOC and another, for cross-border payments in foreign currency, from the State Administration of Foreign Exchange (SAFE).

DaHui has been involved in several matters relating to the issuance of Payment Licences to foreign-invested entities. For example, one of our clients participated in a recent round of fundraising by Ant Financial, the parent company of Alipay, and part of the funds raised were contributed by foreign investors. Similarly, we have also represented World First, a UK-based global payment service provider, which has submitted its Payment Licence application to the PBOC and is on track to become the first foreign recipient of a Payment Licence in China. Judging by these two cases, it is foreseeable that regulators could gradually be opening up China’s third-party payment service market to foreign investors.

UAE Small Flag UAE

UAE Onshore
PSPs on UAE Onshore can be non-banks. The 2017 Payment Regulations limits the scope of non-bank PSPs to the following, imposing ownership restrictions in many cases:

  1. Retail PSPs: a commercial bank or consortium thereof must hold majority ownership of it;
  2. Micropayment PSPs: it must be (a) a telecommunications service provider or operator licensed by the Telecommunications Regulatory Authority; (b) a UAE licensed money exchange business, or (c) a corporate entity providing transport services and licensed by the National Transport Authority. Additionally, one or a consortium of the following must hold majority ownership of it: commercial bank, telecommunications services provider or operator, transport services entity and monetary or financial intermediary licensed by the UAECB;
  3. Government PSPs: one or a consortium of a federal ministry or authority or local government authority must hold majority ownership of it; and
  4. Non-Issuing PSPs: no ownership restrictions are included under the 2017 Payment Regulations however reference is made to further requirements under a “licensing requirements” which may include such restrictions (more on this below).

The above non-banks would require a license from the UAECB in order to provide payment services. The 2017 Payment Regulations refer to licensing processes and requirements for PSPs set out in a “licensing manual” and Article 67 states that the UAECB shall issue the rules, regulations and standards and determine conditions for granting licenses. The UAECB has confirmed that such licensing manual has not yet been issued and is currently under development. At this stage, licensing processes and requirements for PSPs may be provided by the UAECB upon submission of an application therefor.

DIFC
PSPs in DIFC can be non-banks. However, they must satisfy an extensive range of requirements, many of which differ based on the applicable category. There are five categories of financial services in the DFSA, set out under the Prudential – Investment, Insurance Intermediation and Banking Business Module of the DFSA Rulebook. The provision of money services is not expressly included under a category, therefore the category that best corresponds to the activities of a PSP would apply. The DFSA financial services categories are set out as follows:

  1. Category 1: Accepting deposits or providing credit;
  2. Category 2: Dealing in investments as principal (not including matched principal);
  3. Category 3: Dealing in investments as principal or agent, operating a collective investment fund, managing assets, providing custody, providing trust services, acting as the trustee of a fund;
  4. Category 4: Arranging credit or deals in investments, advising on financial products or credit, arranging custody, insurance intermediation, insurance management, operating an alternative trading system, providing fund administration; and
  5. Category 5: An Islamic financial institution managing a profit-sharing investment account entirely in accordance with Sharia.

The PSP would require a license from the DFSA to provide the relevant financial services.

ADGM
PSPs in ADGM can be non-banks. However, they must satisfy an extensive range of requirements, many of which differ based on the applicable category. There are five categories of financial services in the FSRA, set out under the Prudential – Investment, Insurance Intermediation and Banking Rules of the FSRA Rulebook. The provision of money services is included under Category 3C, and a PSP would fall under this category unless it also meets the criteria of categories 1, 2, 3A, 3B or 5.

It is worth noting that a PSP may, where authorised under its FSRA financial services permission (i.e. FSRA license) to do so, conduct any number of regulated activities specified under a lower category than the one applicable to it.

The conditions specifically applicable to a PSP company under category 3C include, inter alia:

  1. Capital requirements: Higher of Base Capital Requirement or Expenditure Based Capital Minimum:
  2. a) Base Capital Requirement: USD 250,000, and
    b) Expenditure Based Capital Minimum: Where no client assets or insurance money is held by the PSP, 13/52nds of the Annual Audited Expenditure, calculated as all expenses and losses that arise in the license holder’s normal course of business in a 12-month accounting period (excluding exceptional items) which are recorded in its audited profit and loss account, not including the following:

    • discretionary staff bonuses;
    • discretionary incentive shares and share options;
    • other non-automatic appropriations of profits (not including a management charge);
    • shared commissions and fees payable, directly related to commissions and fees receivable (which are included with total revenue);
    • fees, brokerage and other charges paid for purposes of executing, registering or clearing transactions;
    • expenses for which pre-payments or advances have already been made to the respective claimant and deducted from capital resources as illiquid assets;
    • foreign exchange losses; and
    • contributions to charities;
  3. The maintenance at all times of an amount of assets exceeding its Expenditure Based Capital Minimum in the form of liquid assets;
  4. The maintenance at all times of a professional indemnity insurance in accordance with the FSRA’s requirements; and
  5. Supervisory review and evaluation processes requirements.

The PSP would require a financial services permission from the FSRA to provide the relevant financial services.

Colombia Small Flag Colombia

Payment services can be provided by non-banks, either by an electronic money institution or payment institution, see the Danish Payments Act § 9.

An electronic money institution is defined as a legal entity authorized to issue electronic money. A payment institution is defined as a legal entity authorized to offer payment services. Both are hereafter referred to as payment service providers.

A payment service provider must apply for a license at the Danish Financial Supervisory Authority. The payment service provider must fulfil the conditions set out in the Danish Payments Acts chapter 2 in order to be granted such license. When applying, the applicant must provide all information necessary for the Danish Financial Supervisory Authority to assess whether the applicant fulfils the criteria.

For a payment service provider to be granted a license, it will have to comply with the criteria set out in § 10 in the Danish Payments Act:

  1. The applicant must be a limited liability company, and the management must consist of both an executive committee and a board of directors.
  2. The applicant must be situated and have its head office located in Denmark, and at least perform some its activities in Denmark.
  3. The applicant must have an initial capital of at least:
    • 350,000 Euro for electronic money institutes
    • 125,000 Euro for payment institutes, applying in accordance with annex 1, no. 1-5, to the Danish Payments Act.
    • 20,000 Euro for payment institutes, applying in accordance with annex 1, no. 6, to the Danish Payments Act.
    • 50.000 Euro for payment institutes, applying in accordance with annex 1, no. 7, to the Danish Payments Act.
  4. Members of the executive committee, board of directors, the anti-money laundry (AML) responsible person and members of the actual management responsible for compliance and AML, must comply with the fit and proper requirements in § 30 of the Danish Payments Act.
  5. Direct or indirect owners of at least 10 % of the shares, voting rights or other powers with a decisive influence on the applicant, must be approved by the Danish Financial Supervisory Authority in accordance with § 23 in the Danish Payments Act.
  6. The applicant must not have close links between the payment institution and other natural/legal person’s that will prevent the Danish Financial Supervisory Authority in exercising their supervisory functions.
  7. The applicant must have proper and effective organisational structures, procedures and codes of practice.
  8. The applicant must have the resources to comply with the Danish Anti-Money Laundry Act (In Danish: Lov nr. 930 af 6. september 2019, hvidvaskloven) (The Danish Anti-Money Laundry Act).
  9. The applicant must secure the funds related to the user of the payment service by ring fencing the funds, in accordance with § 35 in the Danish Payments Act.
  10. The applicant must ensure proper organization of its activities.
  11. In addition to the criteria set out above, applicants applying in accordance with annex 1, no. 7, to the Danish Payments Act, must have a liability insurance or otherwise provide a guarantee that the applicant will reimburse potential claims against the applicant.

    If the applicant provides other services than payment services (for which the applicant applies), the Danish Financial Supervisory Authority can decide that the payment services must be carried out by a separate legal entity from the applicant under the following criteria:

    1. If the activities effects or are deemed to effect the solidity of the applicant, or
    2. the activities otherwise effect the Danish Financial Supervisory Authority in exercising their supervisory function.

Colombia Small Flag Colombia

As payment systems are considered as a set of organized policies, rules, agreements, instruments and technology that allow for the transfer of funds among participants and allow for membership only for financial or cooperative institutions, regulated payment services may only be provided by a specific-purpose financial institution. However, certain payment services may be provided by non-banks, including payment gateways that either serve as a technology provider that connects merchants to the payment system, payment aggregators or similar technology enabling companies. However, all non-banking providers must have an agreement with a bank to provide payments services.

Taiwan Small Flag Taiwan

Yes; generally speaking, payment services can be provided by the following non-banks:

(1) electronic payment institutions approved by the FSC for operating any of the following businesses: (a) provision of third-party payment and collection services for transactions for which the total amount of payments collected exceeds the threshold prescribed by the FSC (currently, NT$1 billion per day); (b) collection of stored value; (c) transfer of funds between electronic payment accounts; and (d) any other businesses approved by the FSC;

(2) any company which conducts business (a) above only; if the total amount of payments that it collects does not exceed the applicable threshold, and it is not involved in any cross-border transaction, such company is not required to obtain any special permit for acting as a payment and collection agent for online or offline transactions; and

(3) any company that issues an electronic stored value cards for making payments to various merchants and is approved by the FSC pursuant to the Act Governing the Issuance of Electronic Stored Value Cards.

Switzerland Small Flag Switzerland

A payment system requires a banking license if it accepts deposits from the public on a regular basis; if deposits are made only for future purchases of goods or services, no interest is paid and the maximum amount of the customer claims is Swiss francs 3'000 (USD 3'000), they are not deemed deposits that require a banking license; the same applies if a licensed bank guarantees the deposits.

If a payment system is deemed to be of systemic relevance, or if Finma is of the opinion that supervision is required for the protection of the participants of the payment system, Finma can in its discretion require a payment system to obtain a license under the FinfraG. For the time being, Finma does not subject normal payment systems to such license requirement. Payment systems of systemic relevance are furthermore subject to reporting obligations to the Swiss National Bank (SNB). SNB has the competence to subject also foreign payment systems which are of systemic relevance to Switzerland to its supervision.

Hence, most payment systems are not subject to prudential supervision or license requirements. However, all payment systems that enable third parties to transfer values need to comply with anti-money laundering (AML) rules and become either a member of a so-called self-regulatory organisation (SRO) or direct supervision by Finma for AML purposes.

Spain Small Flag Spain

Yes, they can. Payment services can be provided on a professional basis by the following categories of payment service providers in Spain, in accordance to article 5 of the Royal Decree-Law 19/2018, of 23 November:

  • Credit institutions: essentially banks;
  • Payment institutions: there are two new categories of payment service providers with relevant regulatory consequences in the field of access to payment accounts for payment initiation services and for account information services;
  • Electronic money institutions;
  • Post office institutions which are entitled to provide payment services under national law.

Therefore, the new rules will equally apply to traditional banks and to innovative payment services and new providers, such as Fintechs. These players, also called third party payment service providers (“TPPs”), will be able to initiate payments on behalf of customers, give assurance to retailers that the money is on its way or give an overview of available accounts and balances to their customers.

Payment service providers must comply with common minimum requirements in relation to capital, knowledge and competence, corporate governance and anti-money laundering procedures before they can apply for authorization and registration with the Bank of Spain.

Germany Small Flag Germany

Yes, pursuant to German Supervisory law, not only banks, having a license as a deposit-taking credit institution, but also non-banks are allowed to provide payment services in Germany. The latter, however, either need to have a license as a payment institution under the PSD2 or as a e-money institution under the Second EU E-Money-Directive.

Payment institutions are subject to an independent supervisory regime under the ZAG which stipulates that non-bank payment service providers that are planning to provide payment services in Germany, in general must be authorised by or – in case they only provide account information services – registered with the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - ‘BaFin’). Payment institutions must comply with a number of ongoing regulatory requirements, i.a. with regard to their internal governance, shareholder control, specific notification duties, and specific organizational duties relating to IT-risk and fit and proper rules for the senior management.

There are some exceptions to the authorisation requirement based on the waiver provisions laid down in the PSD2, but BaFin tends to apply a narrow interpretation of those waiver provisions and thus, there generally is only little leeway for the provision of ‘non-regulated’ payment services in Germany.

South Korea Small Flag South Korea

Other than the conventional payment method via the bank, there are other payment methods using different types of payment services, such as the payment gateway business, pre-electronic payment issuance and management business, debit electronic payment means issuance and management business, small amounts overseas remittance business and small amounts foreign currency transfer business. To perform such services, the business operator would be required to obtain a license with the relevant authorities such as the FSC/FSS or the Ministry of Strategy and Finance and have an entity in Korea which satisfies certain personnel/equipment requirements as well as minimum capital requirement.

Iceland Small Flag Iceland

Payment services can be provided by non-banks pursuant to the Payment Services Act. To be granted an operating licence as a payment service provider there are various conditions which need to be satisfied, such a minimum capital, capital adequacy requirements and organisational requirements which include requirements on the knowledge and expertise of directors and officers.

Portugal Small Flag Portugal

Yes. Under the PSELF, the provision of payment services may be performed by non-banking entities, notably payment institutions and e-money institutions. In light of the PSD2 transposition, the PSELF also created the necessary regulatory framework for Payment Initiation Service Providers (PISP) and Account Information Service Providers (AISP) to enter the Portuguese payments business. These entities are subject to regulatory requirements which must be met before beginning their activities.

The PSELF sets out the applicable rules and requirements for the incorporation and licensing of payment institutions and e-money issuers, as well as PISPs and AISPs, all being subject to the Bank of Portugal’s supervision.

Although AISPs are exempt of certain specific regulatory requirements, the authorisation and registry of all these entities entails that certain mandatory legal documentation must be filed with the Bank of Portugal, including, inter alia, draft bylaws, business plan, share capital commitment, corporate structure and beneficial ownership, the managers’ identification and fit and proper documentation, as well as corporate governance and internal compliance models and procedures. Current minimum statutory share capital requirements applicable to payment institutions ranges from € 20,000 to € 125,000 (including PISPs, which must have a minimum statutory capital of € 50,000) and a minimum of € 350,000 for e-money institutions. Although AISPs are exempted from the minimum regulatory share capital requirements, they must arrange for an insurance policy deemed sufficient to cover liabilities arising from the unauthorised access to users’ payment accounts information. PISPs are also required to hire insurance covering liabilities arising from or in connection with the services rendered to customers (notably pertaining to unauthorised or fraudulent transactions initiated through them).

India Small Flag India

Under Indian law, recognised non-banking entities such as PPI issuers, money transfer operators registered under the RBI’s money transfer service scheme, and other non-banking financial companies (NBFCs) are permitted to provide payments related services. Set out below is a brief overview of the kinds of products that each such entity can provide and the key eligibility conditions applicable to each such entity:

(a) PPI issuers: Under the PPI Master Directions, companies incorporated in India (including those with foreign investment that are compliant with the extant foreign direct investment policy) are permitted to issue closed and semi-closed PPIs:

(i) Closed system PPIs do not permit cash withdrawal and facilitate the purchase of goods and services from that entity only; issuers of such closed system PPIs do not require prior approval of the RBI.

(ii) Semi-closed system PPIs facilitate purchase of goods and services, including financial services, remittance facilities etc. at a group of clearly identified merchant locations / establishments which have a specific contract with the PPI issuer (or contract through a payment aggregator / payment gateway) to accept the semi-closed system PPI as a payment instrument. No cash withdrawal is permitted against such instruments. Semi-closed system PPIs permit peer-to-peer transfers between holders of PPIs issued by the same issuing entity or between holders of PPIs issued by different entities (subject to compliance with the guidelines prescribed by the RBI allowing such inter-operability). Prior authorisation of the RBI is required by non-bank entities that intend to issue semiclosed PPIs.

(iii) Open system PPIs: Non-bank entities are not permitted to issue open system PPIs i.e. PPIs that permit cash withdrawal and may be used at any merchant location.

(iv) Key regulatory framework: All PPI issuers are required to comply with the minimum positive net worth requirement set out under the PPI Master Directions i.e. entities must have a minimum positive net worth of INR 50,000,000 (Rupees fifty million) to apply to the RBI for issuance of PPIs and must achieve a minimum positive net worth of INR 150,000,000 (Rupees one hundred and fifty million), by the end of the third financial year from the date of receiving final authorisation from the RBI. In addition, non-bank entities that are regulated by other financial services regulators must submit, along with the application for issuance of PPIs to the RBI, a ‘no objection certificate’ from their respective regulators within 45 days from receipt of such clearance. Non-bank entities are also required to communicate any takeover or acquisition of control or change in management to the RBI. In addition to these eligibility conditions, the PPI Master Directions require PPI issuers to maintain adequate balances in an escrow account, which are sufficient to cover all outstanding amounts in relation to all PPIs issued by them, which must be monitored on a daily basis. Further, depending on the kind of PPI issued (i.e., whether a minimum detail PPI or a full KYC compliance PPI), the PPI Master Directions prescribe monthly and annual limits restricting the volume of transactions and top-ups for PPIs.

(b) Money transfer operators: The RBI allows non-bank money transfer operators to facilitate foreign inward remittances to individual beneficiaries in India through authorised ‘Indian agents’. Such cross border inward remittances are primarily governed
by the RBI’s Master Directions on Money Transfer Service Scheme dated February 22, 2017 (as amended from time to time) (MTSS Master Directions).

(i) Permissible products: Under the MTSS Master Directions, eligible non-banking entities are permitted to act (after obtaining permission from the RBI) as Indian agents of their ‘overseas principals’ to facilitate permissible cross-border personal remittances such as remittances towards family maintenance, remittances in favour of foreign tourists visiting India, etc.

(ii) Key eligibility criteria: Applicants intending to obtain authorisation as ‘Indian agents’ under the MTSS Master Directions must have a minimum net owned fund of INR 500,000,000 (Rupees five hundred thousand). Applicants with limited outreach in terms of branch network in the country and localised operations overseas are typically not granted an authorisation under the MTSS Master Directions. In addition, the overseas principals of each Indian agent must obtain prior authorisation from the RBI to operate a payment system under the PSS Act.

(iii) Transaction limits: The MTSS Directions specify a per transaction maximum limit of USD 2500 along with a cap of 30 individual remittances received by a single individual beneficiary in a calendar year.

(c) Other payment services: NBFCs with a minimum net owned fund of INR 100,00,00,000 (Rupees one hundred crores) are permitted by the RBI to issue co-branded credit cards with scheduled commercials banks, without risk sharing, with the prior approval of the RBI. The role of such NBFCs is however limited to marketing and distribution of credit cards. In addition, RBI has permitted certain NBFCs to undertake credit card business (subject to specific prior approval of the RBI). Non-bank entities are also generally permitted to service customers as an intermediary (i.e a payment gateway / payment aggregator) subject to compliance with the PSS Act.

Peru Small Flag Peru

Payment services can be provided by non-banks, as it is done by Electronic Money Issuers for electronic money transactions. Additionally, for the transfer of funds at national and international level, different from wire or bank transfer, it must be done by Funds Transfer Companies, which are regulated entities supervised by the SBS. These companies are specialized in sending and receiving money between customers’ accounts.

Also, e-money businesses (FinTech) provide payment services that do not need a bank as an intermediary, but it is mandatory to operate through an Electronic Money Issuer. Consequently, e-money businesses (FinTech) should have partnership agreements with Electronic Money Issuers to operate properly. One example of it is a Peruvian e-wallet that does not need a bank account to register, the user only needs to access to the app and register phone number, ID number and phone operator. The payment and transfer of funds is done by using e-money, this means that the user must previously charge the e-wallet with fiat money (by the use of several channels offered that may be banking entities or agents affiliated to the e-money business or the Electronic Money Issuer) that will become e-money, and then manage the transactions from the e-wallet.

Besides the mentioned scenario, which is regulated and requires a license, there is the case of FinTech businesses focused on payment and transfers services, involving sending money either locally or internationally, and includes payment facilitators (gateways). It is of our understanding that nowadays payment facilitators are offering new payment services without the necessity of bank accounts. There is a Peruvian FinTech (payment facilitator) that works with affiliated e-commerce businesses in order to give their customers a payment solution which can be only the processing of internet banking payments, or the option of making cash deposits in agencies or agents affiliated to the platform. In Peru, 60% of the population is excluded from the traditional financial system, so having an alternative of payment services provided by non-banks will promote financial inclusion.

Israel Small Flag Israel

Yes, non-banks are allowed to provide payment services.

Until the year 2018, ther was no license requirements of providers of payment services, except where the services provided by such providers required registration pursuant to the AML Law (e.g. in case of cross-border payments, conversion of currencies, conversion between cash and non-cash). From the year 2012, acquiring of transactions made with charge cards requires a license pursuant to the Banking (Licensing) Law, 5741-1981 (the “Banking Licensing Law”) but the license of acquirers is not a banking license (and in fact, according to the “Shtrum Reform” large capacity banks are not not entitled to control licensed acquirers).

From 2018, providers of payment services which are not regulated by other laws (e.g. banks, insurance companies, acquirers, pension funds, etc.)

The license requirement pursuant to the RFS Supervision Law only applies if the service providers actually handles funds (including holding and management of funds, transfer thereof or conversion thereof) and there is no license requirements for PSPs or facilitators which do not actually “touch” the money. Additionally, the RFS Supervision Law imposes a license requirements on issuers of credit cards. As noted above, the license requirements pursuant to the RFS Supervision Law do not apply to regulated entities.

A license for acquirers is granted by the Bank of Israel and is subject to a thorough examination, including a comprehensive “fit&proper” check of both the controlling shareholders and the officers of the acquirer, minimum capital and compliance with the regulations of the Bank of Israel. The are some exemptions for small acquirers (whose acquiring volume is less than ILS 1Bn (approximately USD 285M) per annum.B. a license for other payment services or for issuance of credit cards is granted by the Supervisor of Regulated Financial Services at the Ministry of Finance/ Capital Markets Authority. A “basic” license is limited to a business revenue of ILS 30M (approximately USD 8.5M), and requires equity of ILS 300K (approximately USD 85K). There is a fit&proper check of the controlling shareholders of the service providers and the officers thereof. An “extended” license is not limited to any revenue and also requires corporate governance mechanism and a detailed business plan.

It should be noted that due to the fact that the RFS Supervision Law came into effect recently and about seventeen hundred license applications were filed, there is a material lag in the examination of applications and the time required to obtain a license may be relatively long.

The Netherlands Small Flag The Netherlands

In line with PSD2 and EMD2, payment services can be provided by non-banks such as payment service providers and electronic money institutions.

Both EMD2 and PSD2 were implemented in a harmonised manner in Dutch law. The exemption as well as the licence obligation applicable to a financial undertaking when providing payment services in the Netherlands can largely be derived from these European Directives (in particular PSD2). AISPs however need to obtain a (light) licence in the Netherlands, instead of a mere registration as required pursuant to PSD2.

The Dutch Central Bank (DNB) does, however, maintain a relative narrow reading of the scope of the licence obligation of a payment service provider: DNB considers that a party is pursuing the business of a payment services provider only if ‘it provides a payment service for a payer’s or payee's expense as a separately identifiable activity. This means the activity must be separate and not indissolubly linked to another activity unrelated to payment services’ (www.dnb.nl/en/news/dnb-nieuwsbrieven/nieuwsbrief-betaalinstellingen/NieuwsbriefBetaalinstellingenfebruari2019/dnb382349.jsp).

Another thing to mention is that payment service providers do not (yet) have direct access to the TARGET2 inter bank payment system, resulting in incumbent banks generally maintaining a very important role in scriptural (cashless) payment transactions. From that perspective, non-bank payment service providers are just another intermediary in the payment chain which already involves quite some parties.

Japan Small Flag Japan

As for PPIs, the issuer must register its PPI business and the characteristics of the PPI at the competent Local Finance Bureau. The application for registration will be rejected if any of the disqualification conditions provided under the Payment Services Act exists, such as the net assets of the issuer being less than JPY 100 million, the issuer fails to maintain compliance systems and fails to monitor and control the stores where such PPIs are to be used.

Credit providers for installed payments are required to file for registration with the head of the competent local bureau of the Ministry of Economy, Trade and Industry ("METI"). Disqualification conditions, such as insufficient net assets (e.g. an intermediary of comprehensive credit purchase must maintain net assets equal to 90% or more of its capital amount) depend on the types of goods and/or services the relevant instalment payment is made for. Similar to the PPI regulation, there are also certain compliance requirements.

Jersey Small Flag Jersey

Yes, non-banks can provide payment services.

In Jersey the FSJL classifies this as "money services business". Money services business ("MSB") is defined by Article 2(9) of the FSJL and is where a person carries on the business of:

  • a bureau de change;
  • providing cheque cashing services;
  • transmitting or receiving funds by wire or other electronic means; or
  • engaging in money transmission services.

The above relates to fiat money and payments rather than cryptocurrencies. The MSB Order contains a number of exemptions where certain services will not constitute MSB, including whether a person is registered under the Banking Business (Jersey) Law 1991, or if the person's turnover is less than the specified amount (currently less than £300,000).

Persons carrying out MSB and for which there are no available exemptions are required to apply for registration under the FSJL. Once registered, the persons have a continuing responsibility to adhere to the Jersey Financial Services Commission's (the "JFSC" (the Jersey regulator)) FSJL Code of Practice For Money Service (last revised on 1 June 2019).

Liechtenstein Small Flag Liechtenstein

Pursuant to the PSA, payment services in Liechtenstein can be provided by (i) banks; (ii) electronic money institutions; (iii) postal institutions; (iv) the European Central Bank when not acting in its capacity as monetary authority or other public authorities; (v) the State, the municipalities, municipal associations, and the administration when not acting in their capacity as public authorities; (vi) account information service providers and (vii) payment institutions (as well as their respective EEA counterparts). Therefore, the principal condition to perform payment services in Liechtenstein is to obtain a (respective) licence.

If a company wants to provide payment services pursuant to the PSA, it can apply for a licence as a payment institution with the Liechtenstein Financial Market Authority (FMA). The requirements for the licence are set down in the PSA. Within three months after receipt of the full application the FMA must either grant the licence or provide reasons for refusal of the application in writing. The FMA fees for a payment institution license amount to CHF 30'000.00.

Pursuant to the PSA, account information service providers do not need a licence, they only need to register with the FMA. The registration is then valid for all EEA member states. For the registration, account information service providers have to provide the FMA with documentation evidencing organisational and internal procedures and professional liability insurance. Within three months of receipt of the full application the FMA must either grant the registration or provide reasons for refusal of the application in writing.

Mexico Small Flag Mexico

Yes, payment services may be provided by non-banks. The main restriction concerning payment service providers (“PSPs”) has to do with the fact deposit taking is limited to either commercial or development banks; the enactment ‘Ley de Instituciones de Tecnología Financiera’ or ‘Financial Technology Institutions Law’ (the “Fintech Law”) resulted in the possibility of Fintech institutions (“FTIs”) and users of crowdfunders to receive money from the public. FTIs who receive money from the public must, nevertheless, receive the corresponding authorisation and meet with the restrictions and limits thereunder (and, importantly, under the “Mexican Central Bank Directive 12/2018, to electronic payment funds institutions concerning general provisions applicable to electronic payment funds institutions”). Under this exemption, e-money institutions may, for example, engage in the issuance and of e-money.

Non-deposit-taking PSPs face, in principle, less important restrictions (following a trend that, perhaps, initiated early on in 2006, when financial institutions different from banks were allowed to partake in the Interbank Electronic Payment System,) while in some cases requiring the prior authorisation Mexican Central Bank to operate as such (e.g., clearing and settlement companies); in any event, all PSPs are regulated, supervised and overseen by the Mexican Central Bank which is responsible for the proper functioning of payment systems.

Significantly, mobile operators, as well as other agents that bear relevance with respect to the infrastructure that accommodates payment services, have grown in importance. It is in this field that the Mexican Central Bank has fostered innovation and competition with a view to achieving greater financial inclusion and a much higher adoption of electronic payment systems (vid. Mexican Central Banks Directives 17/2010, 22/2012, 3/2012, 3/2013, concerning mobile payments, and Directive 3/2019, regarding CoDi or “cobro digital” ‘digital collection’ which is meant to enhance the aforementioned Interbank Electronic Payment System). Concerning points of sale infrastructure, we’d like to bring to your attention to payment gateways or payment aggregators PSPs, which are non-banks who have an agreement with an acquiring bank to provide card acceptance services and which are under the supervision of the “Comisión Nacional Bancaria y de Valores” the ‘National Banking and Securities Commission’ (hereinafter, the “CNBV”.)

Luxembourg Small Flag Luxembourg

Under the 2009 Law, non-banking institutions in the form of payment institutions and electronic money institutions may provide payment services.

As per entities incorporated in Luxembourg, the general principle is that no person under Luxembourg law may provide payment services as a payment institution or e-money as an e-money institution without holding a written authorisation by the Minister responsible for the Commission de Surveillance du Secteur Financier ("CSSF"). This means that the prerequisite for companies to provide payment services is to obtain a license from the Ministry of Finance after having been reviewed by the CSSF. The licensing package to be reviewed by the CSSF for that purpose includes, amongst others, the following conditions:

Legal Form

Undertakings applying for a payment institution license shall be a legal person incorporated and governed by the law of 10 August 1915 on commercial companies, as amended (the "1915 Law"). Undertakings applying for an e-money license, however, have to be established in the form of a public-law institution, public limited company, a limited partnership with a share capital or a cooperative society under the 1915 Law.

Initial Capital

According to the 2009 Law, an initial capital of not less than EUR 350,000 is required for undertakings applying for an e-money license. Undertakings applying for a license as a payment institution are, depending upon the regulatory activity for which they seek to obtain an authorization, required to have an initial capital varying between EUR 20,000 and EUR 125,000.

Own Funds

Own funds requirements vary between own funds for obtaining an authorization as a (i) payment institution and (ii) an e-money institution.

Payment institutions shall have own funds calculated according to the three methods as set out under 2009 Law. The final amount of own funds that a payment institution shall hold is, in fact, a higher number of either initial capital or the amount calculated based on the three calculation methods A, B or C for own funds requirements as described hereafter.

Under Method A, a payment institution's own funds shall amount to at least 10% of its fixed overheads of the preceding year. The CSSF may adjust this requirement in the event of a material change in a payment institution's business since the preceding year. Where a PI has not completed a full year's business at the date of the calculation, the requirement shall be that its own funds amount to at least 10% of the corresponding fixed overheads as projected in its business plan, unless an adjustment to that plan is required by the CSSF.

Under Method B, a payment institution's own funds shall amount to at least the sum of the following elements multiplied by the scaling factor k defined below, where payment volume ("PV") represents one twelfth of the total amount of payment transactions executed by the payment institution in the preceding year.

Multiplication factors are then applied to the slices composing this amount:

  • 4,0% of the slice of PV up to EUR 5 million
  • plus
  • 2.5% of the slice of PV above EUR 5 million up to EUR 10 million
  • plus
  • 1% of the slice of PV above EUR 10 million up to EUR 100 million
  • plus
  • 0.5% of the slice above EUR 100 million up to EUR 250 million
  • plus
  • 0.25% of the slice of PV above EUR 250 million.

The result of the preceding calculation is multiplied by the scaling factor k according to the services provided by the payment institution:

  • 0.5 where the payment institution provides only the payment service listed in point 6 of the Annex to the Law (money remittance);
  • 0.8 where the payment institution provides the payment service listed in point 7 of the Annex to the Law (Intermediary Execution of Payment Transactions);
  • 1.0 where the payment institution provides any of the payment services listed in points 1 to 5 of the Annex to the Law (i.e. other than money remittance or Intermediary Execution of Payment Transactions).

In accordance with Method C, the own funds shall amount to at least the relevant indicator defined below, which is affected by the multiplication and scaling factors similarly to method B.

The applicable indicator corresponds to the sum of the following elements (calculation based on the twelve months of the preceding financial year):

  • interest income;
  • interest expenses;
  • commissions and fees received;
  • other operating income.

The multiplication factor shall be:

  • 10% of the slice up to EUR 2.5 million;
  • 8% of the slice above EUR 2.5 million up to EUR 5 million;
  • 6% of the slice above EUR 5 million up to EUR 25 million;
  • 3% of the slice above EUR 25 million up to EUR 50 million;
  • 1.5% of the slice above EUR 50 million.

The result obtained in this manner is multiplied by the same scaling factor as under method B.

In principle, undertakings may freely choose one of the 3 calculation methods referred in the 2009 Law. However, they must justify their choice according to the risks associated with the contemplated activities and prove that they can apply the chosen method. It shall be noted that the CSSF has the right to refuse the choice of a method where its use does not ensure sufficient own funds with regard to the nature, volume or risks of the payment institution's activities.

In accordance with Method D, the own funds of an electronic money institution for the activity of issuing electronic money shall amount to at least 2% of the average outstanding electronic money.

Central administration and infrastructure

Under the 2009 Law, the authorization of an undertaking as a payment or e-money institution is further conditional upon proving of existence of central administration and registered office in Luxembourg. In practice, this implies that undertakings shall have the necessary and sufficient human and technical resources in Luxembourg to carry out the activities that they wish to perform, such as own execution systems, i.e. procedures and technical infrastructure and its own competent and sufficient personnel to enforce the decisions taken. In particular, undertakings shall ensure that transparent and efficient risk management, adequate internal control mechanisms and sound procedures regarding compliance function, remuneration, internal controls and security of the IT systems are in place.

Safeguarding of the users' funds

Both payment as e-money institutions allow two methods to be used for their safeguarding of the users' funds: (i) safeguarding by means of segregation of the received funds (deposits in a separate bank account) and/or (ii) an insurance policy or comparable guarantee from an insurance company or a credit institution covering these funds in the event of the potential financial distress of the payment / e-money institution.

The choice and/or the eventual change of the method of safeguarding the funds shall be communicated to the CSSF. More significant institutions may, subject to the CSSF approval, opt-in for both regimes.

Shareholders

Both undertakings applying for an authorization as a payment institution, as well as, e-money license shall communicate to the CSSF the identity of their direct or indirect shareholders having a qualifying holding stake in the institution (the so-called "fit and proper" requirements).

Professional standing and experience

An authorization of an undertaking as a payment or e-money institution in Luxembourg are both subject to the condition that the members of the administrative, management and supervisory bodies produce evidence of their professional standing (honorabilité professionnelle). Such standing is assessed by the CSSF on the basis of criminal records and of any evidence tending to show that the persons concerned are of good repute and are offering a guarantee of irreproachable conduct.

External review

In order to be authorized as either a payment or e-money institution, the CSSF requires from an undertaking proof that it will have its financial accounts and where applicable consolidated accounts audited by one or more réviseur d'entreprises agréé (approved statutory auditors).

CSSF fees

Finally, the CSSF requires a single lump fee of EUR 15,000 per application of an e-money or a payment institution license, as per the Grand-Ducal Regulation of 1 March 2019 relating to the fees to be levied by the CSSF.

Malta Small Flag Malta

Yes - Payment services may be provided by standalone service providers commonly known as ‘payment institutions’, which are regulated entities under the Second Schedule to the FIA. Payment institutions are defined as companies which have obtained a licence under the FIA or that hold an equivalent authorisation in another country in terms of PSD2, to provide and execute payment services throughout the EU. Once authorised, these entities may engage in activities such as providing services enabling cash to be placed on a payment account, all the operations required for operating a payment account, execution of payment transactions, issuing and/or acquiring of payment instruments as well as money remittance.

Application and ongoing obligations for authorised payment institutions include:

  1. the submission of an application for authorisation and the required documentation;
  2. capital holding requirements, which may range from EUR 25,000 to EUR 125,000 depending on the type of payment services being provided;
  3. at least 2 individuals must effectively direct the licensed entity’s business in Malta;
  4. all qualifying shareholders, controllers and all persons effectively directing the business are to be suitable persons to ensure the sound and prudent management of the business.
    Besides not being allowed to receive deposits or other repayable funds from the public, payment institutions must only use funds to provide payment services.

Payment services may also be provided by electronic money institutions which under the FIA are defined as financial institutions that have been licensed under the FIA and authorised to issue electronic money or that hold an equivalent authorisation to issue electronic money in another country in terms of the Electronic Money Directive.

Malaysia Small Flag Malaysia

In Malaysia, non-banks are allowed to provide payment services, however, the only condition that must be satisfied is that these services must be permitted and regulated by the Central Bank (BNM). Currently, there are very limited payment services offered by non-banks and approved by BNM, but the number of them providing said services are increasing.

Below is the list of Regulated Non-Banks providing specific payment services at present time:

A. Credit Card Issuers

i. AEON Credit Service (M) Berhad

ii. Paydee Sdn. Bhd.

B. Charge Card Issuers

*Limited Purpose Charge Card Issued to Company to Purchase Petrol and Petroleum Products*

i. Boustead Petroleum Marketing Sdn. Berhad

ii. Chevron Malaysia Limited

iii. Petron Fuel International Sdn. Berhad

iv. PETRONAS Dagangan Berhad

v. Radius Fuel Cards Sdn. Bhd.

vi. Shell Malaysia Trading Sdn. Berhad

C. E-money Issuers

i. AEON Credit Services (M) Berhad

ii. Alipay Malaysia Sdn Bhd (formerly known as helloPay Malaysia Sdn Bhd)

iii. Axiata Digital eCode Sdn. Bhd.

iv. Bandar Utama City Centre Sdn. Bhd.

v. BigPay Malaysia Sdn. Bhd.

vi. Celcom eCommerce Sdn. Bhd. (formerly known as Celcom Multimedia (Malaysia) Sdn. Bhd.)

vii. Chevron Malaysia Limited

viii. DIV Services Sdn Bhd (formerly known as ePetrol Services Sdn Bhd)

ix. Fass Payment Solutions Sdn. Bhd.

x. Finexus Cards Sdn. Bhd. (formerly known as MAA Cards Sdn. Bhd.)

xi. Fullrich Malaysia Sdn Bhd

xii. Google Payment Malaysia Sdn. Bhd.

xiii. GPay Network (M) Sdn Bhd

xiv. iPay88 (M) Sdn. Bhd.

xv. I-Serve Payment Gateway Sdn Bhd

xvi. JuruQuest Consulting Sdn. Bhd.

xvii. ManagePay Services Sdn. Bhd.

xviii. Maxis Broadband Sdn. Bhd.

xix. Merchantrade Asia Sdn Bhd

xx. Mobile Money International Sdn. Bhd.

xxi. MobilityOne Sdn Bhd

xxii. MOL AccessPortal Sdn. Bhd.

xxiii. MRuncit Commerce Sdn. Bhd.

xxiv. MyEG Alternative Payment Services Sdn Bhd

xxv. Numoni DFS Sdn. Bhd. (formerly known as Com2U Sdn. Bhd.)

xxvi. PayPal Pte. Ltd.

xxvii. Petron Fuel International Sdn. Bhd.

xxviii. Presto Pay Sdn. Bhd. (formerly known as EPP Solution Sdn. Bhd.)

xxix. Raffcomm Sdn. Bhd.

xxx. Shell Malaysia Trading Sdn. Bhd.

xxxi. SiliconNet Technologies Sdn. Bhd.

xxxii. Silverlake Global Payments Sdn. Bhd.

xxxiii. SMJ Teratai Sdn Bhd

xxxiv. Touch 'n Go Sdn. Bhd.

xxxv. TNG Digital Sdn. Bhd.

xxxvi. Valyou Sdn. Bhd.

xxxvii. Webonline Dot Com Sdn. Bhd.

xxxviii. WeChat Pay Malaysia Sdn. Bhd.

xxxix. XOX Com Sdn. Bhd.

D. Registered Business (Merchant Acquiring Services)

i. 2C2P System (Malaysia) Sdn. Bhd.

ii. AEON Credit Service (M) Berhad

iii. AsiaPay (M) Sdn. Bhd.

iv. Discover Enterprise Sdn. Bhd.

v. Finexus Cards Sdn. Bhd.

vi. First Data Merchant Solutions (Malaysia) Sdn. Bhd.

vii. GHL Cardpay Sdn. Bhd.

viii. GHL ePayments Sdn. Bhd.

ix. Gkash Sdn. Bhd.

x. Global Payments Card Processing Malaysia Sdn. Bhd. (Global Payments)

xi. I-Serve Payment Gateway Sdn. Bhd.

xii. Interbase Resources Sdn. Bhd.

xiii. ManagePay Services Sdn. Bhd.

xiv. iPay88 (M) Sdn. Bhd.

xv. MC Payment (M) Sdn. Bhd.

xvi. Mobiedge E-Commerce Sdn. Bhd.

xvii. MobilityOne Sdn. Bhd.

xviii. Mobiversa Sdn. Bhd.

xix. MOLPay Sdn. Bhd.

xx. Paydee Sdn. Bhd.

xxi. Paydibs Sdn. Bhd.

xxii. Presto Pay Sdn. Bhd. (formerly known as EPP Solution Sdn. Bhd.)

xxiii. Revenue Harvest Sdn. Bhd.

xxiv. Revenue Monster Sdn. Bhd.

xxv. Revenue Solution Sdn. Bhd.

xxvi. Simplepay Gateway Sdn. Bhd.

xxvii. Sinopay (Malaysia) Sdn. Bhd.

xxviii. U Mobile Sdn. Bhd.

xxix. Wirecard Payment Solutions Malaysia Sdn. Bhd.

Singapore Small Flag Singapore

Yes, payment services can be provided by non-banks.

The PSOA applies to all businesses involving SVFs that are not exempted. The MCRBA applies to all businesses offering Money-Changing and Remittance services, but excludes banks and certain financial institutions.

When the PSA comes into force, the PSA will cover the following services:

(a) account issuance;
(b) domestic money transfer;
(c) cross-border money transfer;
(d) merchant acquisition;
(e) e-money issuance;
(f) digital payment token; and
(g) money-changing.

Under the PSA, in order for payment services to be provided by non-banks, a licence must be obtained by the provider of such services.[1] There are a total of 3 types of licences, depending on the type payment services offered and the amount transacted:[2] (a) a money-changing licence; (b) a standard payment institution licence; and (c) a major payment institution licence.

In addition, MAS announced on 28 June 2019 that it will issue up to two digital full bank (“DFB”) licences and three digital wholesale bank (“DWB”) licences, allowing licence holders to conduct digital banking businesses in Singapore. A DFB will be allowed to take deposits from and provide banking services to retail as well as non-retail customer segments, while a DWB will be allowed to take deposits from and provide banking services to non-retail customer segments.

[1] Section 6 of the PSA
[2] Section 6 of the PSA

Denmark Small Flag Denmark

Payment services can be provided by non-banks, either by an electronic money institution or payment institution, see the Danish Payments Act § 9.

An electronic money institution is defined as a legal entity authorized to issue electronic money. A payment institution is defined as a legal entity authorized to offer payment services. Both are hereafter referred to as payment service providers.

A payment service provider must apply for a license at the Danish Financial Supervisory Authority. The payment service provider must fulfil the conditions set out in the Danish Payments Acts chapter 2 in order to be granted such license. When applying, the applicant must provide all information necessary for the Danish Financial Supervisory Authority to assess whether the applicant fulfils the criteria.

For a payment service provider to be granted a license, it will have to comply with the criteria set out in § 10 in the Danish Payments Act:

  1. The applicant must be a limited liability company, and the management must consist of both an executive committee and a board of directors.
  2. The applicant must be situated and have its head office located in Denmark, and at least perform some its activities in Denmark.
  3. The applicant must have an initial capital of at least:
    • 350,000 Euro for electronic money institutes
    • 125,000 Euro for payment institutes, applying in accordance with annex 1, no. 1-5, to the Danish Payments Act.
    • 20,000 Euro for payment institutes, applying in accordance with annex 1, no. 6, to the Danish Payments Act.
    • 50.000 Euro for payment institutes, applying in accordance with annex 1, no. 7, to the Danish Payments Act.
  4. Members of the executive committee, board of directors, the anti-money laundry (AML) responsible person and members of the actual management responsible for compliance and AML, must comply with the fit and proper requirements in § 30 of the Danish Payments Act.
  5. Direct or indirect owners of at least 10 % of the shares, voting rights or other powers with a decisive influence on the applicant, must be approved by the Danish Financial Supervisory Authority in accordance with § 23 in the Danish Payments Act.
  6. The applicant must not have close links between the payment institution and other natural/legal person’s that will prevent the Danish Financial Supervisory Authority in exercising their supervisory functions.
  7. The applicant must have proper and effective organisational structures, procedures and codes of practice.
  8. The applicant must have the resources to comply with the Danish Anti-Money Laundry Act (In Danish: Lov nr. 930 af 6. september 2019, hvidvaskloven) (The Danish Anti-Money Laundry Act).
  9. The applicant must secure the funds related to the user of the payment service by ring fencing the funds, in accordance with § 35 in the Danish Payments Act.
  10. The applicant must ensure proper organization of its activities.

In addition to the criteria set out above, applicants applying in accordance with annex 1, no. 7, to the Danish Payments Act, must have a liability insurance or otherwise provide a guarantee that the applicant will reimburse potential claims against the applicant.

If the applicant provides other services than payment services (for which the applicant applies), the Danish Financial Supervisory Authority can decide that the payment services must be carried out by a separate legal entity from the applicant under the following criteria:

  1. If the activities effects or are deemed to effect the solidity of the applicant, or
  2. the activities otherwise effect the Danish Financial Supervisory Authority in exercising their supervisory function.

Updated: November 11, 2019