Licensing of a Payment Institution

We advise both domestic and foreign companies on all matters related to licensing process. Most companies require a professional advice on obtaining a licence of payment institution. Our law firm has extensive experience and knowledge in the licensing process. Generally, the licence of payment institution is granted by the Bank of Lithuania and a company which is willing to provide payment services such as money remittances, payment transactions, provide cash deposit and cash withdrawal services, etc., must have a licence of payment institution Our law firm advises local and foreign companies on the following matters:

• legal aspects of obtaining a licence of payment institution;
• assistance in dealings with govenmental authorities;
• drafting documents, necessary for obtaining a licence;
• providing necessary information for obtaining a license.

Knowledge & Insights

The EU Payment Services Directive adopted in 2007, aimed to removelegal barriers to the provision of payment services in the EU. According to EU payment Services Directive, all citizens and businesses are allowed to make all kinds of payment easily, safely, timely and cost efficiently. Licensed Payment Institution is the best choice for companies and star-ups, because it allows to process payments all around the Europe.

Licence of a Payment institution provides the following 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 payment service provider of the payment service user or with another payment service provider: execution of direct debits, including one-off direct debits, execution of payment transactions through a payment card or a similar device and/or 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: execution of direct debits, including one-off direct debits, execution of payment transactions through a payment card or a similar device and/or execution of credit transfers, including standing orders;
• issuing and/or acquiring of payment instruments;
• money transfers;
• execution of payment transactions where the consent of the payer to execute a payment transaction is given by means of any telecommunications terminal equipment, digital or IT device and the payment is made to the telecommunications network or IT system operator, acting only as an intermediary between the supplier of the goods or services and the payment service user.

Apart from the provision of payment services, payment institutions has the right to provide services related to payment services, such as ensuring the execution of payment transactions, foreign exchange services, safekeeping activities, and the storage and processing of data. Licence of payment institution consist of two different types:

• Payment institution engaged in restricted activities;
• Licence of payment institution.

According to the Bank of  Lithuania, the main difference between a payment institution engaged in restricted activities and a payment institution, is that the payment institution restricted activities is not subject to the minimum equity capital requirement. However, licence of a payment institution engaged in restricted activities is solely valid in the Republic of Lithuania.

Licensing process

In order to be granted a payment institution licence, a company must submit documents and information to the Bank of Lithuania, including the following:

• Articles of association;
• Programme of activities;
• Company‘s business plan including a forecast budget for the first three financial years;
• The evidence that minimum size of the equity capital does not fall below the specified amount;
• A description of measures taken to protect the funds of payment service users;
• Documents of the organisational structure;
• Information and documents of the company‘s shareholders (the data on the identity of persons holding qualifying holdings in the authorised capital and/or voting rights of the payment institution, the size of their holdings in the authorised capital and/or voting rights, also evidence of the suitability of these persons taking into account the need to ensure the sound and prudent management of a payment institution;
• Data of the firm conducting an audit.

Timing

Bank of Lithuania issue a licence of payment institution. Laws provide that within 3 months a Licence of a Payment Institution is obtained. 2 months to obtain payment institution engaged in restricted activities.