Payment institution licence in Spain

What is a payment institution licensed in Spain?

Payment institutions are legal entities to which the Banc of Spain has granted an administrative authorisation to provide and execute one or more of the payment services regulated in “Real Decreto” (Decree Law) 19/2018 of 23 November on payment services and other urgent financial measures.

What services does a payment institution offer in Spain?

According to Article 1.2 of the aforementioned Decree, these services include:
– Cash deposits in a payment account and all operations necessary for the management of a payment account.

– Withdrawal of cash from a payment account and all transactions necessary for the management of a payment account.

– Execution of payment transactions through a payment account by means of credit transfers, direct debits or payment transactions by card or similar device (debit payment transactions).

– Execution of payment transactions when funds are covered by a credit line, by means of credit transfers, direct debits and payment transactions by card or similar device (credit payment transactions).

– Issuing payment instruments or acquiring payment transactions.

– Sending money.

– Initiation of payments.

– Account information.

Each institution can choose which services it wants to offer, as long as they are well defined in its business plan.

Where is the license to operate as a payment institution regulated in Spain?

The regulatory regime for payment institutions is outlined in “Real Decreto” (Decree Law) 19/2018, of November 23, on payment services and other urgent measures in financial matters, in the EU Directive 2015/2366 of the European Parliament and of the Council of November 25, 2015, on payment services, and in “Real Decreto” (Decree Law) 736/2019, of December 20, on the legal regime for payment services and payment institutions.

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What procedure must be followed to obtain the license?

Entities wishing to provide payment services in Spain by establishing a payment institution must apply for authorization.
Before initiating the procedure, it is necessary to precisely define the business model to be carried out and analyse the applicable regime for the institution. This distinction can be made between general payment institutions and those with low business volumes. Additionally, there are separate procedures for entities that only provide information services, as well as applicants for limited networks and telecommunications operators.
For payment institutions with low business volumes wishing to provide payment services other than account initiation and information, the institution may resort to a simplified registration procedure. This procedure requires that the total average volume of payment transactions executed by the institution in the preceding 12 months does not exceed 3,000,000 euros per month and that they do not intend to operate abroad.
Furthermore, they must register, after verification by the Bank of Spain, in the Special Register of Payment Institutions referred to in Article 13 of “Real Decreto” (Decree Law)
19/2018. The company must comply with the following requirements:
• Have its registered office, administrative body, effective management, and payment services in Spain.
• The administrators of the payment institution must have integrity and possess the appropriate knowledge and experience for providing payment services.
• Establish procedures and internal control bodies and reporting to prevent and deter money laundering and terrorism financing.
• The institution will not exercise the freedom of establishment or the free provision of services in the rest of the European Union.
• Establish a company in Spain, registered in the Mercantile Registry.

On the other hand, if the institution will not be subject to the limitations mentioned regarding transaction volumes, it will undergo the general authorization procedure for payment institutions.

How is the application processed to obtain the license?

It will be the responsibility of the Bank of Spain, following a report from the Executive Service of the Commission for the Prevention of Money Laundering and Monetary Offenses, to authorize the creation of payment institutions.
The application must be submitted to the Bank of Spain in person, by postal mail, or through electronic registration, along with all the necessary forms and documentation.
There are no fees associated with the authorization application or its processing, and no deposit needs to be made.
The maximum period to resolve payment institution authorization procedures is three months. This period starts from the receipt of the complete application or from the moment when all necessary documentation is provided. If no express resolution is communicated within this timeframe, the application will be considered denied, and the procedure will be concluded accordingly.

What requirements are necessary to obtain the payment institution license?

• Structure: Payment institutions must have a proper administrative and accounting organization along with the internal control procedures required to ensure effective management.
• Suitability: Administrators, directors, and shareholders with significant stakes must meet criteria such as commercial and professional integrity, as well as financial solvency.

• Capital:
a) If the payment institution solely provides money transfer services, its capital must not be lower than 20,000 euros at any time.
b) If the payment institution offers payment initiation services, its capital must not be lower than 50,000 euros at any time.
c) If the payment institution offers any of the payment services described in the applicable regulations, its capital must not be lower than 125,000 euros at any time.
• Registration: Once authorization is obtained and, if applicable, after registration with the mercantile registry, payment institutions must, before commencing their activities, be registered in the special register of Payment Institutions of the Bank of Spain.

What documentation is required to accompany the application for the payment institution license?
The application for the establishment of a payment institution shall be directed to the Bank of Spain, accompanied by the following documents justifying the corresponding requirements that the payment institution must meet:
• Identification details of the entity for which authorization is requested, as well as a draft of the articles of association coherent with the activities that the entity will carry out once it obtains authorization.
• A program of activities specifying the type of payment service intended to be provided, along with auxiliary services or those closely related to the intended services.
• A business plan related to the activities mentioned in the previous section, including a calculation of budget forecasts for the first three years of the payment institution’s operations, demonstrating the ability to employ suitable systems, resources, and procedures for proper operation.

• Description of the organizational structure of the institution, including a detailed organizational chart showing each division, department, or similar organizational unit, including the name of the person(s) responsible, particularly for internal control functions, as well as a general forecast of the required staff for the next three years.
• Documentation verifying the initial capital, in accordance with article 19.1 of “Real Decreto” (Decree Law) 19/2018, dated November 23.
• Description of the measures taken by the payment institution to safeguard user funds in accordance with article 21 of “Real Decreto” (Decree Law) 19/2018, dated November 23.
• Description of the corporate governance procedures and internal control mechanisms of the payment institution, including administrative, risk management, and accounting procedures, demonstrating that these corporate governance methods, control mechanisms, and procedures are proportionate, appropriate, robust, and adequate.
• Description of the established procedure for supervising, processing, and monitoring security incidents and user complaints, including an incident notification mechanism complying with the notification obligations established in Article 67 of “Real Decreto” (Decree Law) 19/2018, dated November 23.
• Description of the established procedure for recording, controlling, tracking, and restricting access to sensitive payment data.
• Mechanisms ensuring business continuity, particularly a clear delineation of critical operational functions, effective contingency plans, and a procedure for testing and periodically reviewing the adequacy and efficiency of such plans.
• Principles and definitions applied for collecting statistical data on results, operations, and fraud.
• Document regarding the security policy, including a detailed risk assessment concerning its payment services and a description of security control measures and risk mitigation adopted to adequately protect payment service users from such risks, including fraud and illegal use of sensitive personal data.
• For payment institutions subject to obligations regarding money laundering and terrorism financing, a description of the mechanisms, procedures, and internal control bodies intended to be established by the applicant to prevent and deter money laundering or terrorism financing.
• Identity of individuals holding significant interests in the payment institution, in accordance with article 17 of “Real Decreto” (Decree Law) 19/2018, dated November 23, indicating the amount of their effective participation and evidence of their suitability to ensure sound and prudent management of the payment institution.
• Identity of the administrators of the payment institution and the managing directors responsible for the management of payment services, as well as supporting documents demonstrating their integrity and the possession of necessary experience and knowledge to provide payment services.
• Identity of the auditors responsible for auditing the payment institution’s accounts.
• Description of the services, instruments, or other means available, in accordance with article 69 of “Real Decreto” (Decree Law) 19/2018, dated November 23, to address and resolve complaints and claims from its customers, including the “Reglamento” for Customer Defence, prepared in accordance with the provisions of Order ECO/734/2004, dated March 11, regarding customer service departments and services and the customer ombudsman of financial institutions.
• Documentation proving professional liability insurance or comparable guarantee for payment initiation services and account information services.

Once the application with the provided documentation is evaluated, authorization will be granted or denied. After obtaining authorization, the institution must be registered in the Special Register of the Bank of Spain.


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