Payment systems in Europe: Cyprus, Switzerland, Estonia

VISA, MasterCard are popular, but not the only payment systems in the world. The direction is actively developing, and the registration of a payment system (PI) in Europe is becoming more and more popular.

PSD2: what is it

On January 13, 2018, the second Payment Services Directive (PSD2) was adopted, aimed at:

• increase the security of transactions;
• strengthen consumer protection;
• promote innovation;
• increase competition in the market.

The directive obliged banks to open access to accounts of not only familiar, but also of other payment systems, if the customer has given his or her consent. The bank has no right to refuse licensed PI and deny access to client data. Only the client him/herself can forbid it.

Thus, the directive opened the payment services market for more participants. On the one hand, it increased competition and, on the other hand, improved the quality of services. If you study the rules, each PI offers its own chips, has unique offers.

How to register a PI in the EU

A company which plans to register a payment system should familiarize itself with the requirements laid down in PSD2. In addition, it is necessary to study the rules of the particular country where the company will be registered.

Opening a PI in Cyprus

The Cyprus regulator works only with large companies, and a small company has no possibility to get a PI. A company applying to register a payment system in Cyprus must have an initial capital of £20000 or more. In some cases, at least £125,000 may be needed.

General requirements:

• The office of the company must be located in Cyprus;
• PI must at least partly provide services in the country;
• The rules require at least 2 executive and 2 non-executive directors. In practice, the regulator requires 5 directors, two of whom are executive directors residing in Cyprus. They must prove their professionalism in the banking and fintech sector;
• There must be at least 2 shareholders. They must confirm that they have sufficient funds to maintain the operation of the PI.

The regulator needs to submit all the requested information. A detailed business plan is mandatory. It should describe:

• the structure of the organization;
• the methods to protect users;
• management and internal control mechanisms;
• the monitoring procedure, tracking security incidents;
• mechanisms to ensure the continuity of the process;
• mechanisms of internal controls for fulfilling obligations related to money laundering and terrorist financing.

Additionally, it is necessary to appoint external auditors and an audit company. Detailed information on the payment system registration in 2022 will be provided by our specialist.

Opening a PI in Switzerland

Payment systems in Switzerland are trusted because of the developed banking sector, but their possibilities are rather limited. For example, PI can not accept deposits from €10 million, for this you need a full banking license.

To register a payment system in Switzerland, the company must meet the following requirements:

• minimum capital - from €300 thousand;
• annual audit is obligatory;
• a detailed business plan;
• detailed description of risk management;
• mandatory compliance with AML/CFT rules;
• qualified employees who can prove their professionalism.

Opening a PI in Estonia

In order to register a payment system in Estonia it is necessary to register a company as a JSC or a PI (limited liability partnership), whose authorized capital is not less than €350. Both companies must have an auditor. JSC structure must have 3 directors of the company, 1 board member, 1 founder (shareholder). Shares must be registered in the securities center. There are less requirements for PT: there must be 1 founder and 1 board member.

In order to register a payment system in Estonia, it is necessary to collect a package of documents, among which must be:

• copy of the Articles of Association;
• certificate of paid-in share capital;
• business plan;
• description of client protection measures, internal controls.
• internal accounting rules;
• list of shareholders, managers with detailed information, etc.

In Estonia, as well as in any other EU country, a thorough check awaits the applicant. Therefore, the work of PI must be perfectly fine-tuned before submitting an application.

Where to register a payment system in the EU

If you want to register a payment system in the EU, contact IT-OFFSHORE experts and we will help you.