Payment Institution and E-Money License for all Europe
E-banks and payment gateways are increasing in popularity over the last years. In Cyprus, Payment Institutions and E-money Institutions are legal persons, licensed and supervised by the Central Bank of Cyprus under the Payment Services Directive and the E-Money Directive which were incorporated into Cyprus Law. They can provide their clients with the following services:
- IBAN accounts
- SWIFT and SEPA wires
- Internet banking
- Prepaid cards
- Currency exchange.
Also, if you mean to establish your payment gateway or e-money solution, this is the kind of license that is required.
Services provided by a Payment Institution (PI)
1. Execution of direct debits, including one-off direct debits.
2. Services enabling cash to be placed on a payments account as well as all the operations required for operating a payment account.
3. Services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account.
a) 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:
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 and/or acquiring of payment instruments.
6. Money remittance.
7.Payment initiation services
8. Account information services
Services provided by an Electronic Money Institution (EMI)
A company that wishes to issue electronic money will require to apply for an EMI license to the Central Bank of Cyprus. Therefore, with an EMI license, a company shall be able to provide the services provided by licensed PI plus issuing electronic money. Electronic money is defined as a digital equivalent of cash stored on an electronic device or remotely at a server. The scope of the e-money definition excludes prepaid goods/services and a limited network of goods/services subject to an agreement with the issuer. An EMI license is granted only if the applicant company has its incorporated in Cyprus and provides at least part of its e-money services and/or payment services which are not related to the issuing of e-money in Cyprus.
Form Requirements
A company applying for a PI or EMI license to provide any of the above services must be incorporated in Cyprus and its head office must be in Cyprus. According to Central Bank’s policy, a PI/EMI must have two executive directors who reside in Cyprus and have appropriate education and experience (four-eyes principle).
Initial Capital Requirements
A company applying for a license to provide the payment service number 6, must have an initial capital of at least €20.000. A company applying for a license to provide payment service number 7, must have an initial capital of at least €50.000. A company applying for a license to provide the payment services numbers 1 to 5, must have an initial capital of at least €125.000. A company applying for a license to provide e-money services must have an initial capital of at least €350.000.
Fees and Duration
The Central Bank of Cyprus does not currently impose any fees on the submission of the application for a license, however, it has the power to impose fees retrospectively or issue directive determining the fees of future applications. It takes three months from the submission of application for the Central Bank to respond whether the license is given.
PI & EMI Passporting
The term passporting describes the ability of an institution licensed under Cyprus Central Bank to provide cross-border investment services to clients in the EU Member- States with a simple notification procedure.
Simon Zenios & Co. LLC assists you in obtaining the license from A to Z
Our lawyers keep up with the latest Fintech trends in the payment and financial services sector and understand the complexities involved with international networks. At Simon Zenios & Co LLC our lawyers have been closely following the regulatory and licensing developments in this area and have acquired the specialized legal knowledge in order to be able to advise and assist their clients on the applicable compliance requirements.
Our team of lawyers will be able to advise and assist you throughout the process which will begin with an introductory call with our team of experts, the point of which is for our team to understand your requirements and objectives. Following this, we can then provide you with a quote for our legal services. If the quote is accepted and you decide to engage our legal services, the next step will be for us to collaborate with your team and come up with a detailed legal services plan.
Payment Institutions and E-Money institutions are under prudent supervision by the Cyprus Central Bank. Therefore, companies applying for the relevant license must comply with certain rules and requirements.
We offer all the required Legal Services for licensing including: Corporate & Accounting Services (Part A)
- Company name search & application.
- Appropriate Memorandum & Articles of Association for preliminary submission for approval by CBC.
- Company incorporation in compliance with the licensing requirements.
- Introduction to Cyprus resident qualified nominee directors (individuals).
- Nominee Shareholder (corporate or individual shareholder).
- Registered office and arrangements for actual head office premises of the company.
- Drafting of corporate documents and Fiduciary Services.
- Assistance in day to day Governance and Administration.
- Obtain Corporate certificates necessary for application.
Preparation of PI or EMI Application to Cyprus Central Bank (Part B)
- Selection of the appropriate license between Payment Institution or E-Money Institution and corporate structure.
- Provide an opinion letter summarizing the main legal features of the application.
- Preparation of the programme of operations of the PI/EMI.
- Preparation of group and organizational structure, business plan and business continuity arrangements.
- Preparation of the governance arrangements and internal control mechanisms of the PI/EMI.
- Preparation and/or review of measures to safeguard the funds, payment data and personal information of the services users and security policy.
- Preparation of the contracts between the PI/EMI and the services users.
- Preparation of Anti-Money Laundering and Combating Terrorist Financing internal control mechanisms.
- Arrangements for Indemnity Insurance or Comparable Guarantee by a credit institution.
- Advice on the outsourced functions, services and activities and review of relevant contracts.
- Advice on any other documents which may be required according to the situation.
- Preparation and submission of the license application with all the accompanying questionnaires and documents.
- Communication with CBC/EBA for all matters relating to the application which may arise after the submission.
Accounting and Audit Services (Part C)
- Tax and VAT Registration & Services.
- Introduction to External Auditors for the required certification.
- Advice on Statutory Auditors requirements.
For any queries regarding any aspect of Payment Institution and E-Money License in general, or any other legal matter under the sun, we are always available.
