Malta Payment Institutions
Malta being one of the first EU countries to regulate online gaming has a mature Payment Institution industry due to the added benefits of flexible registration and regulation, as well as low tax benefits to such companies.
Governed by the Financial Institutions Act, Financial Institutions Rules, and EU legislation – Title II of the Payment Services Directive (Directive 2997/64/EC) (“PSD”), which sets out a supervisory regime for “Payment Institutions”, i.e. companies (excluding credit or electronic money institutions) that undertake payment services.
A “Payment Institution” covers a wide range of activity from non-bank regulated financial institutions to money remitters and mobile network operators.
One huge benefit for licensing as a Payment Institution is the limited activities of a Payment Institution, the regulatory and supervisory requirements for Payment Institutions are less stringent than those applicable to banks.
Under the above legislation and rules, a Payment Institution’s permitted activities are:
- Services in relation to a payment account which enable cash to be deposited in or withdrawn from a payment account, or the execution of payment transactions by direct debits, through a payment card (or similar device) or a credit transfer;
- Issuing and/or acquiring payment instruments;
- Money remittance;
- Execution of payment transactions where payer’s consents to execute a payment transaction by way of any telecommunication, digital or IT device and the payment is made to the telecommunication, IT system or network operator; subject to the operator only acting as an intermediary for the payment services user.
A Payment Institution is also allowed to provide ancillary services and may operate payment systems and business activities other than the
provision of payment services.
The primary difference between a Payment Institution and credit institutions, or electronic money institutions is that Payment Institutions are not allowed to
receive deposits or other repayable funds from the public and must use funds solely to provide payment services.
Such funds cannot constitute a ‘deposit or other repayable funds’ with maximum execution time limits regarding the period of holding such funds and the Payment Institution can only accept such funds on a payment account with an order for executing a payment transaction(s) on a certain date – e.g. direct debits or standing orders – where funds on a payment account are required to be placed prior to the execution of payment.
- Own funds determined in accordance with the payment services provided
- There have to be at least two individuals who will effectively direct the business of the credit institution in Malta
- The following requirements have to be satisfied:
- prudent conduct; fit and proper persons; integrity and professionalism; adequate flows of information;
- and the possibility of consolidated supervision.
The application procedure for licensing with the Malta Financial Services Authority (MFSA) consists of two processes: (i) the
analysis of the business plan (including financial projections) and (ii) the due diligence exercises on directors, senior managers
Payment Institutions need to submit the following documents:
• A copy of the Memorandum and Articles of Association of the institution or the deed of partnership
• Audited financial statements for the last three years (if applicable)
• A business plan including the structure, organisation and management systems of the institution (plan needs to include financial information which enables the MFSA to set the own funds requirement)
• Description of the internal control mechanisms
• Description of the structural organisation
• Measures concerning safeguarding of funds where applicable
• Where applicable the identity of the statutory auditors and audit firms
• Identity of all directors, controllers and managers of the institution
• Identity of all shareholders with qualifying shareholding or partners; and
• Identity of the individuals who will be effectively directing the business of the prospective institution
The MFSA may require the applicant to submit additional information in order to determine an application for a licence.
The licence will be determined within three months of receipt of application or submission of any additional information that
may have been requested by the MFSA.
- Application and processing one-time fee payable upon submission of an application: €1,200
- One-time licensing fee payable once a licence has been granted: €1,800
- Annual supervision fee: equivalent to 0.000175 of the total of the items in the balance sheet, but in any case not less than €2,500 and not more than €50,000 (equivalent to a percentage of its deposit liabilities).
For further information at EU level, please go here.
Please contact us for further information