Obtaining a payment system license in the Czech Republic

The payment system requires obtaining an appropriate license. One of the jurisdictions where this can be done is the Czech Republic. Recently, it has attracted many fintech projects. In addition, the license obtained in the Czech Republic applies to the entire territory of the European Union after certification. Banks are more active with a license in the Czech Republic.

Contents:

• Types of payment system licenses in the Czech Republic
• Requirements for obtaining a payment system license in the Czech Republic
• Procedure for obtaining a payment system license in the Czech Republic
• Term for obtaining a license for a payment system in the 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 species that are distinguished in other European jurisdictions. These types include:

• Payment Institution (Payment Service Provider, PSP)
• Payment institution with a limited license (the Small Payment Institution License, SPI)
• The issuer of electronic money (Electronic Money Institution, EMI)
• The issuer of electronic money with a limited license (the Small of Electronic Money Institution, SEMI)

Payment institutions to electronic money issuer different possible activities and EMI, in addition to the functions of a payment institution, can conduct transactions with electronic money, including issuing them. EMI has the right to keep funds for an unlimited period of time and conduct transactions without specifying detailed information from the user. EMI is sometimes compared to a bank that cannot issue loans. Therefore, the EMI license provides more options. So that your fintech project does not have any obstacles in the future, you should immediately obtain an EMI license.

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
• The amount of electronic money - 5 million euros for six months - for the issuer of electronic money. 

However, this license will only be valid in the Czech Republic. Therefore, if you want to carry out activities on the territory of the entire European Union, and not only the Czech Republic, you should immediately 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 must meet certain requirements:

• Authorized capital, which is 
  • 20 thousand euros - for ordinary activities;
  • 125 thousand euros - if the applicant plans to accept and withdraw cash;
  • 350 thousand euros - for the issuer of electronic money.
• Corporate structure. 
  • A fintech project must have at least 2 directors, only individuals are allowed
• Half of the employees must have Czech citizenship
• The payment system must have an office in the Czech Republic

Procedure for obtaining a payment system license in the Czech Republic

Licensing is the responsibility of the Czech National Bank (Czech National Bank, CNB) so the documents must be submitted to this body. The package of documents includes:

• A business plan that includes a financial plan for 3 years. At the same time, the business plan should be focused on attracting clients in the EU;
• Funding source document;
• Information about the company's accounts, namely
  • Balance
  • P & L statement (income and loss)
  • Availability of funds to cover the payment system risk
• Description of methods for protecting customer funds;
• Description of the corporate structure;
• Description of technical processes, in particular, how the transfers will be carried out, etc. 
• Privacy Policy, which confirms that the procedure for processing personal data of the payment system complies with the requirements of European legislation, in particular, GDPR;
• Information about the founders: in addition to the basic documents, it is necessary to confirm the absence of cases of prosecution, and also indicate the source of funds for the authorized capital;
• Detailed information about the directors of the company.

Term for obtaining a license for a payment system in the Czech Republic

Typically, CNB reviews the application within one month. If the applicant meets all the requirements and the submitted documents are drawn up correctly, then the payment system receives a license. If there were any inaccuracies, the Czech Bank may require clarification of any questions.

Thus, the license of the Czech payment system increases the likelihood of cooperation with banks. However, at the same time, the Czech license implies compliance with European regulation standards. In this regard, it is necessary to describe in detail all the processes carried out by the payment system. Particular attention should be paid to drawing up a business plan. In addition, you need to take care of the presence 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 you need assistance in obtaining it, please contact the lawyers of A 4 Law Firm.