Payment Institutions

In terms of Article 2 of the Second Schedule of the Financial Institutions Act, the activities which can be carried out by a licensed payment institution consist of the following:

(a) Services enabling cash to be placed on a payment account as well as all the operations required for operating a payment account;

(b) Services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account;

(c) 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:

(i) execution of direct debits, including one-off direct debits;

(ii) execution of payment transactions through a payment card or a similar device;

(iii) execution of credit transfers, including standing orders;

(d) Execution of payment transactions where the funds are covered by a credit line for a payment service user:

(i) execution of direct debits, including one-off direct debits;

(ii) execution of payment transactions through a payment card or a similar device;

(iii) execution of credit transfers, including standing orders;

(e) Issuing and/or acquiring of payment instruments;

(f) Money remittance;

(g) Execution of payment transactions where the consent of the payer to a payment transaction is transmitted by means of any telecommunication, digital or IT device and the payment is made to the telecommunication, IT system or network operator, acting solely as an intermediary on behalf of the payment service user and the supplier of the goods and services.

The specific activities conducted by the operator will determine the minimum capital requirement. Thus, where the institution provides the payment service listed in paragraph (f), the applicable minimum capital requirement is of €20,000. Where the institution provides the payment service listed in paragraph (g), the applicable minimum capital requirement is of €50,000. Where the institution provides any of the payment services listed in paragraphs (a) – (e), the applicable minimum capital requirement is of €125,000. If the institution grants any sort of credit, these capital requirements are subject to revision by the MFSA.

If the company undertakes any of the activities listed in the First Schedule but not included in paragraphs (a) to (g) above, the initial capital of the financial institution will be set by the MFSA on a case-by-case basis and will be commensurate with the level of risk involved.

The time-frame for applying should take anything between 2 and 3 months from the moment that the application is submitted, depending on the completeness of the information provided in the application form and supporting documentation.  We will review the application in detail to ensure that all details in the application form are correctly completed to avoid any unnecessary delays.

Rule 17 of FIR 01/2010.01 requires that the company has at least two individuals who must effectively direct the business of the financial institution in Malta. The cost of such individuals could vary between Eur 50K and Eur70K per annum unless of course you could move some of your current staff complement. The 2-person requirement is a minimum which must then be properly justified in the application made to the MFSA indicating what contingency arrangements the company may have in case any one of the two individuals is unavailable for any significant period of time (travel, illness etc.) Besides, you will need to factor in an office in Malta at a cost that can range from Eur 1,500 to 3,000 per month depending on the size, location and quality of office space sought.

At this stage we remain available to discuss in further detail any other aspects of your proposed operations in Malta which will serve to assist you in your determination of the most suitable jurisdiction for you.

For further information about how GVZH Advocates can help you with your Malta banking and finance enquiries kindly contact us on finance@gvzh.mt