Payment Services

Malta Payment Service Providers

Since the implementation of the Payment Services Directive into Maltese law, Malta has seen the number of Payment Service Providers (PSPs) steadily increasing over the last few years. Coupled with thriving i-Gaming and e-Commerce industries, the island has become the jurisdiction of choice for the set-up of Payment Service Providers.

Why choose Malta for Payment Service Providers?

There are a number of factors which have contributed to Malta’s growth as a payment services hub. These include:

  • An approachable regulator that has rapidly built a sound understanding of the industry by maintaining an open mind to new ideas, but simultaneously acting as a strict regulator that requires adherence to high European standards
  • Low operational costs and a competitive fiscal environment
  • Availability of skilled, English speaking professionals
  • Sound ICT infrastructure
  • The availability to offer payment services cross border throughout the EU on the basis of a Malta payment services license without the need for further licenses or authorizations

Permissible Activities of Malta Payment Services Providers

PSPs may engage in various activities including: the execution of payment transactions, issuing and/ or acquiring of payment instruments, as well as money remittance. Like other financial institutions, PSPs are not allowed to receive deposits or other repayable funds from the public and must use funds exclusively to provide payment services.

The Licensing Process

As the regulating body, the MFSA is in charge of reviewing the applications of applicants looking to be authorized as Malta Payment Services Providers. The reviewing process follows a number of steps.

  1. The project is presented to the MFSA.  This is an informal face-to-face meeting during which the applicant explains the intended business model, systems, compliance procedures and operational set-up to the regulator. Possible potential difficulties are flagged and discussed at this stage.
  2. An application pack must be prepared. This consists of detailed documentation including business plans, financial projections, personal due diligence and other material that can serve to demonstrate its ability to operate in a viable and complaint manner.
  3. Reviewing of the material by the regulator. The material submitted is reviewed by MFSA and reverted with any enquiries. As soon as all the enquiries have been adequately addressed, the MFSA will issue its ‘in principle approval’. This is a ‘letter of intent’, indicating that the MFSA is satisfied with the application and will issue the license upon satisfaction of certain criteria stated in the document itself. These criteria are usually simple formalities.

One should note that the applicant is not required to constitute a corporate entity, commit share capital, or undertake any recruitment before in principle approval is issued. 

Criteria for Licensing

One of the duties of the MFSA is to carry out a ‘fitness and properness’ tests on the applicant to determine if it has the required levels of competence, integrity and solvency. Thorough background checks are undertaken to this end to ensure that only individuals who are highly professional are authorized. Moreover, MFSA undertakes a meticulous review of the application documents to ensure that these are compliant with local and EU requirements.

Another important requirement is that a business should have an operational presence in Malta which is proportionate with the volume and type of business which it intends to carry out. MFSA ensures that brass plate entities are not approved.

Malta Payment Services Directive 2

A revised Directive on Payment Services (PSD 2) has been adopted by the European Parliament and European Council of Ministers in 2015. PSD 2 succeeded PSD 1, which was intended to enhance efficiency, competition and innovation in the European payment services sector by introducing a harmonised rulebook governing primarily electronic means of payments. It has also worked toward filling any legislative and regulatory gaps in the current legal framework. While increasing the rigidity of certain rules runs counter to the primary intention to promote innovation and competition, increased regulatory cohesion is certainly a positive development which will benefit Malta as a hub for international business.

Our Malta Payment Services Team

The MFSA gives a fair chance to all applicants, but it expects high standards of professionalism and requires application documents to be completed to a high standard. Our dedicated financial services regulatory team has assisted a number of Malta payment services operators with their local set-up procedures. Our services include providing assistance with the preparation of all application documents, manage correspondence with the local regulator, advise on regulatory, tax and corporate matters and also provide practical knowledge of the jurisdiction and introductions. 

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