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Obtaining a PI license in Cyprus in 2020
Benefits of obtaining a PI license:
- Favorable business environment;
- Developed banking structure;
- High level regulation of the sphere at the legislative level;
- Ability to provide a wide range of payment services.
The provision of payment services in Cyprus is regulated by the Laws on Payment Services of 2018 and 2019, which at the national level include the provisions of Directive 2015/2366 / EC (PSD2).
According to the definitions of PSD2, a payment institution is a legal entity authorized to provide and carry out payment services within the territory of the European Union. The list of payment services includes the services outlined in paragraphs 1-7 of Appendix 1 to the Law:
- Services that allow you to deposit funds to a payment account, as well as conduct operations necessary for account management;
- Services that allow you to withdraw cash from the account, as well as conduct operations necessary for account management;
- Carrying out payment transactions, including transfer of user's funds to users of other payment systems;
- Carrying out payment operations when funds are covered by the user's credit line;
- Issuance of payment instruments and/or acceptance of payment transactions;
- Money transfer services;
- Execution of payment transactions, when the consent of the payer to perform the payment transaction is given using any telecommunication, digital or IT device, and the payment is made to the operator of the telecom, IT system or network, acting only as an intermediary between the user and the supplier of goods or services.
Accordingly, in order to establish a payment system in Cyprus, and to be able to provide payment services legally, you will have to obtain a payment institution license, which is issued by the Central Bank of Cyprus (CBC).
Obtaining a PI license in Cyprus: requirements
CBC accepts applications for obtaining a payment system license only from those legal entities that are registered in Cyprus and have a local office, from where at least a part of the payment servicing activity should be conducted. In addition, according to the local laws and PSD2, a person must comply with the following:
- Maintain the required amount of share capital, as well as a certain amount of equity;
- Delegate some operational functions to third parties;
- Follow the rules for protecting customer funds;
- Meet eligibility criteria for payment systems to be included in the CBC public registry.
As for the amount of share capital required to apply for obtaining a license for payment service provider in Cyprus, the applicant must have:
- Minimum 20,000 euros in order to provide the services described in clause 6, Appendix 1, Law;
- Minimum 50,000 euros in order to provide the services described in clause 7;
- Minimum 125,000 euros in order to provide the services described in paragraphs 1-5.
In addition, the applicant will need to provide data about the origin of the funds presented.
Submission of an application to CBC
In order to apply for a PI license in Cyprus, you will need to contact the CBC, having a prepared package of documents specified in clause 3, Article 5, Law:
- Calendar of events including a description of payment services;
- A detailed business plan for the first 3 years;
- Proof of the required amount of funds availability;
- Description of customer protection measures;
- Description of the governance structure and internal control mechanisms;
- Description of audit, accounting, security monitoring procedures, including failure reporting mechanisms;
- Description of the existing process of archiving, monitoring, tracking and restricting access to confidential data;
- Description of the system sustainability, including an emergency plan, and procedures for regular testing;
- Description of the principles and definitions applicable to the collection of statistics and other information;
- Description of security policy;
- Description of the methods of compliance with the obligations stipulated in the Regulation of the European Parliament and of the Council 2015/847/EU;
- Information about executives and owners of the payment institution, including evidence that they have sufficient moral qualities, knowledge and experience;
- Address of the head office.
The more accurate description of the list of necessary information that must be submitted by the CBC in order to obtain a license for the provision of payment services in Cyprus can be found in the guidelines EBA/GL/2017/09.
It is worth noting that this article was published for informative purposes, and should not be construed as legal advice and a call to action. In order to successfully prepare for applying for a PI license in Cyprus, it would be expediently to obtain reliable legal support.
Please, note that the IQD Consulting expert team is ready to:
- Provide you with legal assistance in preparing and applying for a PI license in CBC;
- Participate in the preparation of a business plan for a payment system;
- Assist in the search and appointment of directors to help the company to be considered as a tax resident of Cyprus, and provide other related legal services.
To find out detailed information about our company’s services, or to order legal advice on licensing a payment system in Cyprus, please fill out the feedback form or call our office right now using the contacts listed below.