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The Bank - Column 1
Application for authorisation: Electronic Money Institution
Related links
I. Communication to the Banco de Portugal
II. Activities allowed
III. Regulatory Framework
IV. Stages for authorising the license
A. Authorisation
B. Special registration with the Banco de Portugal
V. Clarifications
VI. FAQs
I. Communication to the Banco de Portugal
What is an electronic money institution?
In accordance with Article 14(1) of the Legal Framework for Payment Services and Electronic Money, published by Decree-Law No 91/2018 of 12 November (Regime Jurídico dos Serviços de Pagamento e da Moeda Eletrónica – RJSPME), an electronic money institution is a company whose main activity is to issue electronic money.
Under Article 2(ff) of the RJSPME, “electronic money” means electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued on receipt of banknotes, coins, and scriptural money for the purpose of making payment transactions within the meaning of Article 2(ii)of the RJSPME, and which is accepted by a natural or legal person other than the electronic money issuer.
In addition to the issuance of electronic money, an electronic money institution may provide one or more payment services listed under Article 4 of the RJSPME, in accordance with Article 14(2) of the RJSPME. In line with the principle of exclusivity, the issuance of electronic money and the payment services may only be professionally provided by the entities listed under Article 12(1) and Article 11(1) and (2) of the RJSPME respectively.
The authorisation for the setting-up of an electronic money institution having its head office in Portugal is subject to the provisions of Title II of the RJSPME – Taking-up and general conditions of the activity of payment service providers and electronic money issuers, notably the provisions of Section I of Chapter II (“Authorisation and registration of payment institutions and electronic money institutions”) of that Title of the RJSPME (Articles 18 to 23).
Thus, any natural or legal person who intends to set up an electronic money institution having its head office in Portugal must inform the Banco de Portugal of such intention in advance (Article 18 of the RJSPME).
In general terms, the stages of the procedure are as follows:
- submission to the Banco de Portugal of a notification regarding the intention to set up an electronic money institution, containing all required elements and information;
- assessment of the project to set-up an electronic money institution by the Banco de Portugal;
- request for information and clarification necessary for a thorough examination of the process by the Banco de Portugal;
- decision of the Banco de Portugal, after proper examination and assessment of the process;
i. (positive or negative) authorisation decision by the Banco de Portugal, based on its assessment of the submitted project;
ii. notification of the Banco de Portugal’s decision to the applicant.
Type of legal act: Authorisation decision.
Competent authority: Banco de Portugal.
II. Activities allowed
In addition to the issuance of electronic money, an electronic money institution may provide one or more payment services listed under Article 4 of the RJSPME, in accordance with Article 14(2) of the RJSPME. The following activities are payment services:
- services enabling cash to be placed on a payment account as well as all the operations required for operating a payment account;
- services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account;
- 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, such as:
- execution of direct debits, including one-off direct debits;
- execution of payment transactions through a payment card or a similar device;
- execution of credit transfers, including standing orders;
- execution of payment transactions where the funds are covered by a credit line for a payment service user, such as:
- execution of direct debits, including one-off direct debits;
- execution of payment transactions through a payment card or a similar device;
- execution of credit transfers, including standing orders;
- issuing of payment instruments or acquiring of payment transactions;
- money remittance;
- payment initiation services [i.e. services enabling initiation of online payment transactions on behalf of the payer immediately with the payee, without the payer having to interact with their payment service provider (usually a bank)];
- account information services [i.e. services enabling users to consolidate in a single app or website information on their payment accounts held with one or more payment service providers (usually banks), provided that such accounts are accessible online].
In addition to the issuance of electronic money and the provision of payment services, and as provided for in Article 14(2) of the RJSPME, electronic money institutions may carry out the following activities, provided that they are included in their corporate purpose:
- credit granting relating to the payment services referred to in Article 4(d) and (e) of the RJSPME, in accordance with the conditions laid down in Article 15 of the same Legal Framework;
- the provision of operational and ancillary services closely related to the issuance of electronic money and payment services, such as ensuring the execution of payment transactions, foreign exchange services, safekeeping activities, and the storage and processing of data;
- the operation of payment systems, without prejudice to Article 68 of the RJSPME;
- business activities other than the issuance of electronic money, in accordance with the legal provisions applicable to such activities. Authorisation to carry out these activities is dependent on compliance with Article 21(1) of the RJSPME, applicable by reference under Article 21(2), i.e.,, those activities other than the issuance of electronic money may not impair (i) the financial soundness of the payment institution or (ii) the proper performance of the supervisory tasks by the Banco de Portugal.
If the applicant intends to pursue activities other than the issuance of electronic money and the payment services, the Banco de Portugal, under Article 21(1) and (2) of the RJSPME, may determine, as a condition for granting authorisation, the setting-up of a separate commercial company whose sole purpose is to issue electronic money and, where applicable, to provide payment services.
This ensures the separation of the issuance of electronic money and of the payment services from activities other than these services where such activities carried out or to be carried out by the applicant institutions impair or are likely to impair:
- the financial soundness of the electronic money institution;
- the proper performance of the supervisory tasks by the Banco de Portugal.
The RJSPME enshrines, under Article 37, a regime exempting from the application of all or part of the requirements and procedures for the necessary authorisation of payment institutions. This regime is further consolidated by Executive Order No 239/2019 of 30 July 2019 (Executive Order No 239/2019), which lays down the terms and conditions for its application.
This regime enables legal persons having their head office in Portugal and intending to provide any of the payment services listed under Article 4(a) to (e) of the RJSPME to be exempt, upon a favourable decision of the Banco de Portugal, from the application of all or part of the requirements and procedures for the necessary authorisation of payment institutions contained in Article 19(2) of the RJSPME, with the exception of subparagraphs (a) to (h), (j), (p) and (q) of that same Article.
The application of this exemption regime depends on the fulfilment of the following conditions:
- the monthly average of the preceding 12 months’ total value of payment transactions executed by the legal person, including any agent for which it assumes full responsibility, may not exceed €3 million;
- none of the natural persons responsible for the management or operation of the legal person has been convicted of offences relating to money laundering or terrorist financing or other financial crimes.
If the legal person has not obtained authorisation in accordance with Article 18 of the RJSPME yet or, in case the legal person has obtained authorisation, the 12-month time limit referred to in subparagraph (a) has not elapsed yet, the first condition is assessed by reference to the total amount of payment transactions provided for in its business plan, in accordance with Article 37(4) of the RJSPME and Article 2(3) of Executive Order No 239/2019.
Legal persons benefiting from the exemption regime are treated as electronic money institutions.
However, under Article 37(5) of the RJSPME, they may not pursue an activity in another Member State under the passporting regime. In turn, and as provided for in Article 37(6), those legal persons must comply with the laws and regulations preventing money laundering and terrorist financing. For such purpose, all elements relating to compliance with the legal provisions applicable to payment institutions having their head offices in Portuguese territory must be submitted, under the terms and for the purposes of Article 37(6), Article 18(2)(i) and Article 19(2)(h) of the RJSPME.
In addition, the minimum share capital for the legal persons covered by the exemption regime is now €50,000, in accordance with Article 3(2) of Executive Order No 239/2019.
Legal persons benefiting from the exemption regime must immediately notify the Banco de Portugal of any relevant changes to the conditions specified in Article 37 of the RJSPME. In any event, where the conditions set out in Article 37 of the RJSPME are no longer met, authorisation must be sought within 30 calendar days, under Article 37(10).
Article 5(1) of the RJSPME provides for a series of operations falling outside the scope of that Legal Framework and, as such, they are not subject to the authorisation regime applicable to the setting-up of payment institutions.
Nevertheless, under such exclusions, the following reporting obligations to the Banco de Portugal are applicable:
- Services excluded under Article 5(1)(k)(i) and (ii) of the RJSPME (“limited network” or “very limited range”) – where the total value of payment transactions executed over the preceding 12 months exceeds the amount of €1 million, a notification must be sent to the Banco de Portugal containing a description of the services offered, specifying under which exclusion referred to Article 5(1)(k)(i) and (ii) the activity is considered to be carried out (in accordance with Article 6(1) of the RJSPME).
On the basis of that notification, the Banco de Portugal makes a duly motivated decision on the basis of criteria referred to in Article 5(1)(k) of the RJSPME where the activities do not qualify as a limited network, and inform the service provider accordingly. - Services provided for in Article 5(1)(l) of the RJSPME – service providers pursuing activities to which this exclusion refers must: (i) send a notification to the Banco de Portugal containing a description of the services offered and (ii) provide an annual audit opinion, under Article 6(3) of the RJSPME, testifying that the activity complies with the limits set out in Article 5(1)(l) of the RJSPME.
III. Regulatory Framework
Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 (“PSD2”) | Directive on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC. |
Regulation (EU) 575/2013 of the European Parliament and of the Council of 26 June 2013 (“CRR”) | Regulation on prudential requirements for credit institutions and laying down the capital requirements applicable to payment institutions and electronic money institutions. |
Guidelines of the European Banking Authority (EBA) on information to be provided for the authorisation of payment institutions and e-money institutions and for the registration of account information service providers, under Article 5(5) of PSD2 (EBA/GL/2017/09) | These set out the information to be provided in the application for the authorisation of payment institutions, in the application for registration of account information service providers and in the authorisation applications of electronic money institutions. |
EBA Guidelines on the criteria on how to stipulate the minimum monetary amount of the professional indemnity insurance or other comparable guarantee under Article 5(4) of PSD2 (EBA/GL/2017/08) | These specify criteria and indicators on how to stipulate the minimum monetary amount of the professional indemnity insurance or other comparable guarantee to be held by undertakings, whenever holding such insurance is mandatory (e.g. providing account information services and/or payment initiation services). |
Commission Delegated Regulation (EU) 2018/389 of 27 November 2017 | It complements PSD2 with regard to regulatory technical standards for strong customer authentication and common and secure open standards of communication. |
These specify the conditions, laid down in Article 33(6) of Commission Delegated Regulation (EU) 2018/389, exempting payment service providers, which manage accounts that opted for a dedicated interface, from establishing the contingency mechanism under Article 33(4) of that Regulation. | |
Commission Delegated Regulation (EU) 2020/1423 of 14 March 2019 | These specify the criteria for determining when the appointment of a central contact point in a host Member State is appropriate and the functions that these contact points should have. |
EBA Guidelines on major incident reporting under Directive (EU) 2015/2366 (PSD2) (EBA/GL/2017/10) | These specify the criteria for the classification of major operational or security incidents by payment service providers as well as the format and procedures they should follow to communicate such incidents to the competent authority in the home Member State. |
EBA Guidelines on procedures for complaints of alleged infringements of PSD2 (EBA/GL/2017/13) | These lay down the procedures for managing complaints from payment service users under PSD2. |
EBA Guidelines on ICT and security risk management (EBA/GL/2019/04) | These specify the risk management measures that financial institutions must take in accordance with Article 74 of Directive 2013/36/EU to manage their ICT and security risks for all activities and that payment service providers must take, in accordance with Article 95(1) of PSD2, to manage the operational and security risks relating to the payment services they provide. |
EBA Guidelines on reporting requirements for fraud data under Article 96(6) PSD2 (EBA/GL/2018/05) | These specify statistical data on fraud related to different means of payment that payment service providers have to report to their competent authorities. |
These specify the internal governance arrangements that institutions should implement when they outsource functions, in particular with regard to the outsourcing of critical or important functions. |
Legal Framework for Payment Services and Electronic Money ("RJSPME") | It governs the taking up of the business of payment institutions and the provision of payment services, as well as the taking up of the business of electronic money institutions and the provision of electronic money issuance services. | ||
Legal Framework of Credit Institutions and Financial Companies ("RGICSF") | It regulates access to and pursuit of activity by credit institutions, financial companies and investment firms, and the exercise of their supervision. | ||
It sets forth anti-money laundering and counter terrorist financing measures. | |||
It lays down the criteria on how to stipulate the minimum monetary amount and all other minimum requirements of the professional indemnity insurance. | |||
It lays down the terms and conditions for the application of the exemption regime under Article 37 of the RJSPME. | |||
It regulates the internal control and governance systems and sets the minimum standards upon which the organisational culture of the entities must be based. | |||
Notice of the Banco de Portugal No 6/2021 of 2 November 2021 | It determines the information and elements required to be communicated to the Banco de Portugal in the procedures for the acquisition, increase or reduction of qualifying holdings. | ||
It governs conditions of application, procedures, instruments, mechanisms, enforcement measures, reporting obligations and other aspects necessary for ensuring compliance with obligations for the prevention of money laundering and terrorist financing, within the activities of financial entities subject to the Banco de Portugal’s supervision. |
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Instruction of the Banco de Portugal No 23/2018 of 5 November 2018 | It determines which elements the institutions must submit together with the authorisation request for the exercise of functions of the members of the management and supervisory bodies. | ||
Instruction of the Banco de Portugal No 18/2020 of 15 July 2020 | It regulates the reporting obligations relating to organisational conduct and culture and internal control and governance systems. | ||
Instruction of the Banco de Portugal No 1/2023 of 30 January 2023 | It strengthens the regulatory framework applicable to payment institutions and electronic money institutions. | ||
IV. Stages for authorising the licenCe
Authorisation
1. Submission and supporting information of the licensing application
The applicant must submit to the Banco de Portugal the application for the setting-up of an electronic money institution, together with all the elements and information required by the applicable legislation.
Article 18(2) of the RJSPME provides that electronic money institutions having their head office in Portugal must:
- take the form of a public limited company (sociedade anónima) or limited liability company (sociedade por quotas);
- have a share capital not lower than the legal minimum corresponding to the services to be provided, in accordance with Article 55 of the RJSPME (€350,000);
- have the principal and effective headquarters of the administration in Portugal and carry out at least part of their principal activity in Portugal;
- have robust governance arrangements in place, including a clear organisational structure with well defined, transparent, and consistent lines of responsibility;
- have effective processes in place to identify, manage, monitor, and report the risks the institution is or might be exposed to;
- have adequate internal control mechanisms in place, including sound administrative and accounting procedures
- have adequate internal control mechanisms in place to comply with the laws and regulations preventing money laundering and terrorist financing.
- have management and supervisory bodies composed of members whose reputation, professional qualification, independence and availability, at an individual level or at the level of the bodies as a whole, provide guarantees of sound and prudent management of the institution.
The application for the setting-up of an electronic money institution must be submitted to the Banco de Portugal, identifying all the activities and, where applicable, the payment services to which authorisation is sought and must, namely, include the following elements:
- elements listed in Article 19 of the RJSPME;
- elements listed in Chapter 4.3 of EBA/GL/2017/09: Guidelines on the information that applicants are required to provide for the authorisation of electronic money institutions.
The Banco de Portugal may also request any additional information necessary for proper examination of the application for authorisation.
The application for the setting-up of an electronic money institution must be sent to the Banco de Portugal at Prudential Supervision Department – Authorisations Unit, Rua Castilho, 24, 1250-069 Lisbon. If the communication is delivered by hand to that address, it must be delivered during working hours (8:30-16:30).
Alternatively, the applicant may send the communication by email to [email protected].
In cases where the documentation is sent to the Banco de Portugal by electronic means, it can, where possible, be delivered as a searchable PDF document.
2. Assessment of the application
Upon receipt of the application for the setting-up of an electronic money institution, the Banco de Portugal verifies the completeness of the information submitted for proper examination of the process, and assess whether the project submitted complies with all the conditions laid down in the applicable law.
The Banco de Portugal may, at any time, request additional elements and information from the applicant and make the inquiries deemed necessary (Article 19(10) of the RJSPME).
For the purposes of assessing the proposed setting-up of an electronic money institution, and within the framework of cooperation between the competent authorities, the Banco de Portugal may also carry out a series of steps, including consulting other entities, such as:
- the Portuguese Securities Market Commission (Comissão do Mercado de Valores Mobiliários – CMVM);
- the Insurance and Pension Funds Supervisory Authority (Autoridade de Supervisão de Seguros e Fundos de Pensões – ASF);
- foreign similar authorities.
3. Decision on the authorisation
The Banco de Portugal may take one of the following decisions:
- Granting of authorisation
If the applicant complies with all the conditions for authorisation in accordance with the applicable legislation, the Banco de Portugal decides to grant authorisation. Refusal of authorisation
The Banco de Portugal refuses to grant authorisation where it considers that the application does not meet all authorisation conditions laid down in the applicable legislation, notably in the situations provided for in Article 20(1) of the RGICSF, applicable to electronic money institutions mutatis mutandis under Article 23(3) of the RJSPME.In any event, before adopting a decision which may adversely affect the rights of the applicant (decision to refuse or authorise subject to conditions/obligations), the Banco de Portugal grants the applicant the right to be heard in accordance with Articles 121 et seq. of the Portuguese Code of Administrative Procedure
The applicant must be notified of the final decision within three months of the receipt of a complete application or of the additional information required, but in any case, within twelve months from the receipt of the initial application (Article 23 of the RJSPME).
The granting of authorisation enables the applicant to set up the electronic money institution, which is required to commence activity within twelve months of the Banco de Portugal’s decision. The authorisation lapses after this period. Nevertheless, this time limit for the commencement of activity by the institution may, upon request of the applicants and one time only, be extended for another period of twelve months, under Article 21(2) of the RGICSF, applicable by reference under Article 26 of the RJSPME.
For the institution to begin its activity, it must be registered in a special register with the Banco de Portugal (Article 34 of the RJSPME).
Special registration with the Banco de Portugal
4. Prior and on-site verification of compliance with the legal and operational requirements for the commencement of activity
After the setting-up of the electronic money institution is authorised by the Banco de Portugal, and after the project is effectively implemented, the parties concerned must request the Banco de Portugal to proceed with the institution’s special registration for the purposes of Article 65(1) of the RGICSF, applicable by reference under Article 34(2) of the RJSPME.
Upon such request, the Banco de Portugal carries out a prior inspection at the electronic money institution’s premises, in order to verify whether all conditions for authorisation necessary for the setting-up of the electronic money institution or for the pursuit of the activity are met.
5. Decision on registration
Following the on-site verification of legal and operational requirements for the commencement of activity, the Banco de Portugal may adopt one of the following decisions:
- Special registration of the institution, after verifying whether the conditions for the pursuit of activity are met. The special registration of the electronic money institution covers the items listed in Article 66 of the RGICSF, applicable by virtue of Article 34(2) of the RJSPME. The electronic money institution may commence its activity upon its registration being granted.
- Refusal to proceed with the institution’s special registration, particularly when any of the authorisation conditions for the setting-up of the electronic money institution or the pursuit of activity is not met, in accordance with Article 36 of the RJSPME.
V. Clarifications
The Banco de Portugal is prepared to clarify in advance any specific question regarding projects to set up electronic money institutions submitted to the Banco de Portugal. Questions can be sent by email (to [email protected]) or by post to:
Banco de Portugal – Prudential Supervision Department, Authorisations Unit
Rua Castilho, 24, 1250-069 Lisbon
All questions submitted to the Banco de Portugal must be presented with a highly specific factual basis and be well-reasoned, to allow an adequate analysis.
VI. FAQs
May the application for authorisation refer to an already incorporated commercial company?
Yes. However, if the application refers to an already incorporated commercial company, this company may not carry out any activities pertaining to electronic money institutions, nor include in its company or business name any expressions suggesting such activity, until the authorisation and registration process with the Banco de Portugal is successfully completed.
Under Article 12(3) of the RJSPME, only undertakings authorised as electronic money institutions may include the term “electronic money institution” in their company or business name or use it in their activity.
In addition, under Article 21(1) and (2) of the RJSPME, if the activities other than the issuance of electronic money and payment services carried out by the commercial company impair or are likely to impair (i) the financial soundness or (ii) the proper performance of the supervisory tasks by the Banco de Portugal, the Banco de Portugal may determine, as a condition for granting authorisation, the setting-up of a commercial company whose sole purpose is to issue electronic money and, where applicable, to provide the payment services listed in Article 4(a) to (g) of the RJSPME.
Is a criminal record certificate issued more than a year ago deemed valid for the purposes of the application for authorisation?
Criminal record certificates are deemed valid if they contain their validity period and this has not lapsed. In particular, the validity period of Portuguese criminal records is three months from the date of issue; thus, a certificate issued more than a year ago would not be valid for this purpose.
What should I do if, during the application process, there are changes to the information initially sent to the Banco de Portugal?
If, during the authorisation process, there is any change to the information included in the initial application or in the elements provided in the meantime (supervening fact), such change must be communicated to the Banco de Portugal as soon as possible and by means made available for this purpose, accompanied by all necessary supporting elements.
Does the Banco de Portugal charge any fee as part of an electronic money institution authorisation and registration process?
No, the Banco Portugal does not charge any fee for these processes.
In which languages can the communications be submitted to the Banco de Portugal?
The communications sent to the Banco de Portugal can be submitted in Portuguese or English.
Official documents (e.g,. criminal record certificates) which are not issued by Portuguese authorities must be certified under the Hague Convention or duly legalised.
If the documents accompanying the process are not drawn up in Portuguese or English, they must be accompanied by a certified translation and stamped with an apostille in accordance with the Hague Convention or duly legalised. Upon request of the Banco de Portugal, these translations must be accompanied by information certifying the suitability of the translating entity.
May the Banco de Portugal publicly disclose the information contained in the authorisation process?
No, the Banco de Portugal is subject to the duty of professional secrecy under Article 80 of the RGICSF.
Can the application for authorising the setting-up of an electronic money institution be submitted to the Banco de Portugal by the legal representative of the entity to be set up? For the analysis of the application, is it necessary to attach a power of attorney to the documents submitted?
Yes. The initial application must be either:
- signed by the applicant(s) with duly witnessed signatures;
- signed by the representatives of the applicants, provided that they have the necessary representation authority and that they send the power of attorney or the document evidencing the representation authority of the persons concerned for the relevant application.
I have a project or intend to pursue a certain activity. How do I know if I need to obtain an authorisation from the Banco de Portugal?
You should submit the intended project to the Banco de Portugal, with a high degree of detail, particularly with regard to the identification and delimitation of the activity to be carried out and the intended business model. This information is essential for a correct legal framing of your situation and, therefore, for identifying the conditions which may be required for the setting-up of the company and its placing under supervision by the Banco de Portugal or not.
Additionally, natural and legal persons intending to provide:
- exclusively account information services, under Article 2(tt) and Article 4(h) of the RJSPME, must submit a request for registration with the Banco de Portugal, under Article 22 of the RJSPME;
- account information services together with other payment service(s) (Article 4(a) to (g) of the RJSPME) must apply for authorisation as electronic money institution (if they intend to issue electronic money) with the Banco de Portugal under Article 18 et seq. of the RJSPME.
Lastly, in accordance with Article 25(1) of the RJSPME, the inclusion of payment services or extension of the range of payment services, among those listed in Article 4 of that Legal Framework, which electronic money institutions already established propose to provide is also subject to prior authorisation to be granted by the Banco de Portugal. Such intention to include payment services or extend their range must be materialised through a request for changes to the corporate purpose in the articles of association, in accordance with Article 25(1)(b) of the RJSPME.
Are payment initiation service providers and account information service providers subject to own funds requirements?
Payment initiation service providers and account information service providers are not subject to own funds requirements if they exclusively provide one or both of such services (Article 51(1) of the RJSPME).
However, meeting their liabilities should be safeguarded by compulsory professional indemnity insurance or some other comparable guarantee, which is a necessary condition for their registration in accordance with Article 19(6) of the RJSPME and Article 22(3) of the RJSPME respectively.
Are the provision of point of sale (POS) terminals and communication networks and the processing of data necessary for the provision of payment services subject to authorisation and registration with the Banco de Portugal?
Under Article 5(j) of the RJSPME, services provided by technical service providers, which support the provision of payment services, without them entering at any time into possession of the funds to be transferred, excluded from the application of the RJSPME. Thus, they are not subject to authorisation and registration with the Banco de Portugal.
The exclusion provided for in Article 5(j) of the RJSPME does not apply where these services are intended to support the provision of payment initiation services and account information services.