How to obtain payment system license in the Czech Republic?
The activity of the payment system requires an appropriate license. One of the jurisdictions where this can be done is the Czech Republic. Recently it has been attracting many fintech projects. In addition, the license obtained in the Czech Republic applies to the entire territory of the European Union after passporting. With a license in the Czech Republic, banks are more active.
Table of content:
- Types of payment system licenses in the Czech Republic
- Requirements for obtaining payment system license in the Czech Republic
- Procedure for obtaining of payment system license in the Czech Republic
- Terms of obtaining of payment system license in Czech Republic
Types of payment system licenses in the Czech Republic
The Czech Republic is a member of the European Union, so there are the same types distinguished in other European jurisdictions. These types include:
- Payment Service Provider (PSP).
- Small Payment Institution License (sPI)
- Electronic Money Institution (EMI)
- Small Electronic Money Institution (sEMI)
A payment institution differs from an electronic money issuer in the activities it performs. In addition to the functions of a payment institution an EMI can carry out transactions with electronic money, including the issuance of electronic money. EMI has the right to hold funds for an unlimited period of time and conduct transactions without specifying detailed information from the user. EMIs are sometimes compared to a bank that cannot issue loans at all. That's why an EMI license gives you more options. So that your fintech project does not have any obstacles in the future, you should get an EMI license from the start.
Limited licenses for both types of institutions are available for payment systems whose turnover does not exceed:
- 3 million euros per year - for payment institutions
- 5 million euros per half year - for an electronic money issuer.
However, this license will be valid only in the Czech Republic. Consequently, if you wish to operate in the whole European Union and not only in the Czech Republic, you must obtain a regular license of the payment system that suits you.
Requirements for obtaining a payment system license in the Czech Republic
In order to obtain a payment system license in the Czech Republic you will have to fulfill certain requirements:
- Share capital, which is
- Corporate structure
- Fintech project must have at least 2 directors, only persons are allowed
- Half of employees must have Czech citizenship
- Payment system must have an office in the Czech Republic
The procedure for obtaining a payment system license in the Czech Republic
Licensing is the competence of the Czech National Bank (CNB), therefore the documents must be submitted to this institution. They include:
- A business plan including a financial plan for 3 years. The business plan must be focused on attracting customers in the EU;
- Documents disclosing the sources of financing;
- Information about the company's accounts, particularly
- Balance sheet
- P&L report (profit and loss)
- Availability of funds to cover the risks of the payment system
- Description of methods of protection of clients' funds;
- Description of the corporate structure;
- Description of technical processes, in particular how transfers will be performed, etc.
- Privacy policy, which confirms that personal data processing by payment system complies with the European legislation, in particular the GDPR;
- Information on the founders: in addition to the basic documents, it is necessary to confirm the absence of liability cases, as well as to indicate the source of funds for the share capital;
- Detailed information on the company's directors.
Terms of obtaining a payment system license in the Czech Republic
As a rule, the CNB considers the application within one month. If the applicant meets all requirements and the documents are correct, the payment system gets a license. If there are any inaccuracies, the Czech Bank may require clarification of any issues.
The Czech payment system license increases the probability of cooperation with banks. However, at the same time, the Czech license implies compliance with European regulatory standards. In this connection, it is necessary to describe in detail all processes performed by the payment system. Particular attention should be paid to business plan. In addition, it is necessary to take care of the availability of an office in the Czech Republic, Czech employees and directors. If you still have questions about the payment system license in the Czech Republic or if you need assistance in obtaining one, please contact the lawyers of A4 Law Firm.
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