You are here

Application for authorisation: Payment institution

1. Application

In order to provide the payment services referred to in Article 4 of the Legal Framework of Payment Services and Electronic Money, applicants shall submit an application to Banco de Portugal for the authorisation to set up a payment institution, identifying the services for which the authorisation is required.

 

Payment services correspond to the following activities listed in Article 4 of the Legal Framework of Payment Services and Electronic Money:

  • services enabling cash to be placed on or withdrawn from a payment account as well as all the operations required for operating a payment account;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;
  • execution of payment transactions where the funds are covered by a credit line for a payment service user;
  • issuing and/or acquiring payment instruments;
  • money remittance;
  • execution of payment transactions where the consent of the payer to execute a payment transaction is given by means of any telecommunication, digital or IT device and the payment is made to the telecommunication, IT system or network operator, acting only as an intermediary between the payment service user and the supplier of the goods and services.

In addition, payment institutions shall also be entitled to engage in the activities listed in Article 8 of the Legal Framework of Payment Services and Electronic Money, as long as they are included in the respective company’s object:

  • the provision of operational and closely related ancillary 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 39 of the Legal Framework of Payment Services and Electronic Money;
  • business activities other than the provision of payment services, having regard to applicable EU and national law;
  • activities included in the statutory purpose of exchange offices, pursuant to the legal provisions applicable to such institutions.

The Legal Framework of Payment Services and Electronic Money does not apply to the transactions listed in Article 5. 

Type of legal act: Authorisation or non-authorisation decision

Competent authority: Banco de Portugal 

2. Applicable regulations

European Union law:

Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market.

National law:

Legal Framework of Payment Services and Electronic Money; 

Legal Framework. 

 

3. Requirements

Within the scope of an application for authorisation to set up a payment institution, Banco de Portugal shall check whether the following general requirements, listed in Article 10 of the Legal Framework of Payment Services and Electronic Money, are complied with: 

  • take the form of a public limited company (sociedade anónima) or a private limited company (sociedade por quotas);
  • have a minimum share capital corresponding to the services to be provided, pursuant to Article 29 of the Legal Framework of Payment Services and Electronic Money;
  • have their head office and effective management in Portugal;
  • evidence of robust governance arrangements in place, including a clear organisational structure with well-defined, transparent and consistent lines of responsibility;
  • have effective procedures in place to identify, manage, monitor and report the risks to which it is or might be exposed to;
  • have adequate internal control mechanisms, including sound administrative and accounting procedures;
  • have internal control mechanisms that comply with anti-money laundering and terrorist financing obligations, including the provisions relating to information on the payer that accompanies the transfer of funds.

An authorisation by Banco de Portugal is also required for the extension of the payment services, from among those listed in Article 4 of the Legal Framework of Payment Services and Electronic Money, to be provided by payment institutions already set up.

 

4. Procedures

The authorisation procedures to set up a payment institution comprise two stages:

 

1st Stage – Licencing /authorisation

The application for authorisation to set up a payment institution shall be submitted to Banco de Portugal, and shall be accompanied by the following elements:

 

  • Application procedure
Elements listed in Art 11 of the Legal Framework
  • draft of the articles of association or amendment of the articles of association, containing express reference to the payment services the payment institution intends to provide, from among those listed in Article 4 of the Legal Framework of Payment Services and Electronic Money;
  • programme of operations, geographical location, internal organisation and material, technical and human resources to be used, including, if appropriate, reference to agents and branches of the institution, as well as to third parties to whom operational functions have been entrusted;
  • prospective accounts for each of the first three business years;
  • statement of commitment to the effect that on the date of setting-up and as a prerequisite of the same, the amount of capital stock required under Article 29 of the Legal Framework of Payment Services and Electronic Money will be deposited with a credit institution;
  • identification and respective evidence of the natural and legal persons holding, directly or indirectly, qualifying holdings, within the meaning of Article 2-A (ee) of the Legal Framework, as well as the size of such holdings, and evidence of their suitability, taking into account the need to ensure the prudent and sound management of the payment institution; 
  • description of the procedures intended to ensure the protection of payment service users’ funds, in accordance with Article 32 of the Legal Framework of Payment Services and Electronic Money;
  • evidence of robust governance arrangements in place, including a clear organisational structure with well-defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks that the payment institution is or might be exposed to;
  • have adequate internal control mechanisms in place, including sound administrative and accounting procedures, which shall be comprehensive and proportionate to the nature, scale and complexity of the payment institution's activities;
  • evidence of internal control mechanisms that comply with anti-money laundering and terrorist financing obligations , including the provisions relating to information on the payer thataccompanies the transfer of funds;
  • description of the applicant's structural organisation, including, where applicable, a description of the intended use of agents and branches and a description of outsourcing arrangements, and of its participation in a national or international payment system;
  • evidence of the identity of directors and persons responsible for the management of the payment institution and, where relevant, of  persons responsible for the management of the payment services activities of the payment institution, as well as evidence that they are of known repute and possess appropriate knowledge and experience to perform payment services, pursuant to Article 12 of the Legal Framework of Payment Services and Electronic Money; 
  • where applicable, the identity of statutory auditors and audit firms as defined in Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006;
  • the address of the applicant's head office;
  • description of the audit arrangements and the organisational arrangements it has set up to take all reasonable steps to protect the interests of its users and to ensure continuity and reliability in the performance of payment services.
Other elements
  • information confirming compliance with the general requirements referred to in Article 10 of the Legal Framework of Payment Services and Electronic Money;
  • certificate authorising the trade name or company name and provisional corporate number (NIPC);
  • the underlying assumptions of the prospective accounts for each of the first three business years; 
  • forecast information on the adequacy of own funds for each of the first three business years, pursuant to each of the three methods mentioned in Article 31 (1) of the Legal Framework of Payment Services and Electronic Money;
  • the information laid down in Notice of Banco de Portugal No 5/2010 regarding the proposed shareholders/partners (both legal and natural persons) of the payment institution, including detailed information on the financial resources used and their source (broken down by shareholder/partner), as well as on the means and network/circuit used for the transfer of funds to the project, with information on the respective source and country/jurisdiction of origin;
  • estimated number of internal employees and relevant employees, pursuant to Article 2 (5) and (6) of Notice of Banco de Portugal No 5/2013;
  • detailed information on (Article 4 (5) of Notice of Banco de Portugal No 5/2013):
  • the inherent risks to the specific activity that the institution intends to carry out;
  • the means and control procedures to be put in place and their adequacy for the mitigation of identified risks;
  • how the institution aims to monitor the adequacy and effectiveness of the means and control procedures to be put in place;
  • detailed information on the policies, means and procedures comprised in the institution’s internal control system with respect to the prevention of money laundering/terrorist financing (MLTF), including its customer acceptance policy;
  • detailed information on human, financial, material and technical resources to be allocated to the prevention of MLTF;
  • draft contracts of services to be provided by third parties, including accounting services;
  • statement by a specialised entity of good repute ensuring the sufficiency and adequacy of IT tools to the needs of the payment institution to be set up, namely as regards the provision of information to supervisory authorities.
  • Assessment of the application

After receiving the application, Banco de Portugal assesses whether the applicant complies with all the authorisation conditions laid down in the applicable national law.

Banco de Portugal shall reject applications, in particular in any of the situations described in Article 20 of the Legal Framework, applicable under Article 14 (2) and (3) of the Legal Framework of Payment Services and Electronic Money. If Banco de Portugal considers that the application does not meet all the legal requirements, Banco de Portugal shall notify the applicants and offer them a reasonable time period to address and remedy any of the identified shortcomings, before rejecting the authorisation.

 

  • Decision

Banco de Portugal shall adopt a decision to grant or refuse the authorisation.

The decision to grant the authorisation shall be notified to the applicants within three months of receipt of the complete application or, where applicable, of receipt of the additional information required from the applicants, but in any case within twelve months from the receipt of the initial application. 

The decision to grant the authorisation allows the applicants to set up a payment institution. However, the relevant institution shall not commence its activity without being subject to a special registration with Banco de Portugal.

The authorisation granted does not require the applicants to set up a payment institution and lapses if the institution fails to commence its activity within a period of twelve months following the authorisation. Banco de Portugal may, upon request of the applicants, extend this time limit for another period of twelve months.

 

2nd Stage – Special registration with Banco de Portugal 

After being granted authorisation to set up a payment institution, and prior to its special registration with Banco de Portugal, the applicants implement the means and conditions necessary to carry out the authorised activity.

Once the applicants consider that the payment institution meets all the conditions to commence its activity, they request Banco de Portugal to check, at the premises of the payment institution, whether the minimum legal and operational requirements necessary for the carrying out of the authorised activity are met, and whether the conditions mentioned in the project submitted to and authorised by Banco de Portugal are met.

After obtaining a favourable opinion from Banco de Portugal regarding the means and conditions to commence its activity, the applicants may request the special registration of the payment institution with Banco de Portugal. 

The registration of the payment institution covers the items listed in Article 66 of the Legal Framework, applicable pursuant to Article 21 of the Legal Framework of Payment Services and Electronic Money, as well as the payment services that the institution is authorised to provide.

After the respective registration, the payment institution may commence its activity.  

Tags