Payment Institutions

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Payment Institutions

A payment institution is a commercial company that provides payment services referred to in Paragraph one of Article 1 of the Law on Payment Services and Electronic Money (hereinafter – the Law) and that has received a licence for the operation of a payment institution issued by the Financial and Capital Market Commission (hereinafter – the Commission) or a person (natural or legal) that does not need a licence to commence the operation of a payment institution and that is registered with the register of institutions maintained by the Commission .

I. A payment institution does not need a licence issued by the Commission provided that it complies with the following conditions (Article 5 of the Law):

1) the average value of the payments made during the previous 12 months by the payment institution or its agent for whose activity the payment institution assumes responsibility or the average value of the payments intended to be effected within the next 12 months as set out in the commercial activity plan does not exceed 500 000 euro per month for the types of payment services referred to in Subparagraphs "a", "b", "c", "e" and "g" of Paragraph 1 of Article 1 of the Law or three million euro per month for the payment service referred to in Subparagraph "f" of Paragraph 1 of Article 1 of the Law ;

2) the restrictions set out in Paragraph 1 of Article 21 of the Law do not apply to any of the persons referred to in Subparagraph 10 of Paragraph 1 of Article 11 of the Law and they comply with the requirements of Article 20 of the Law .

A payment institution must take into account that if it provides a payment service referred to in Subparagraph "f" of Paragraph 1 of Article 1 of the Law and any payment service referred to in Subparagraphs "a", "b", "c", "e" or "g" of Paragraph 1 of Article 1 of the Law , it does not need a licence provided that the average value of the payments made during the previous 12 months or the average value of the payments intended to be effected within the next 12 months as set out in the commercial activity plan does not exceed 500 000 euro per month .

To commence its activity, a payment institution shall submit to the Market Commission an application to this effect (filled-in Annex 3 to the Financial and Capital Market Commission's Regulations No 64 of 15.04.2011; Regulations on Granting Payment Institution and Electronic Money Institution Operating Licences, Registration of Payment Institution and Electronic Money Institution, Documentation and Reporting ) and documentation and information referred to in Paragraph 2 of Article 5 of the Law and the Commission's regulatory provisions.

For an electronic money institution, whose activity does not need a licence, the territory of Latvia shall be the place for carrying out its commercial activity .

Within 30 days after the receipt of all the information and documents referred to in the Law the Commission shall assess whether the person that intends to commence operation of payment institution complies with the requirements of the Law. Where the person complies with these requirements, it shall be registered with the register of institutions maintained by the Commission .

II. Where a payment institution does not comply with the provisions set in Article 5 of the Law, it is required to receive a licence for the operation of a payment institution, by submitting to the Commission an application to this effect (filled-in Annex 1 to the Financial and Capital Market Commission's Regulations No 64 of 15.04.2011; Regulations on Granting Payment Institution and Electronic Money Institution Operating Licences, Registration of Payment Institution and Electronic Money Institution, Documentation and Reporting ), and documentation and information referred to in Article 11 of the Law and the Commission's regulatory provisions.

A licensed payment institution shall ensure that on the day when the decision to grant a licence for the operation of a payment institution is taken its initial capital is at least:

1) 20 000 euro where the payment institution provides only money remittance services ;

2) 50 000 euro where the payment institution provides the payment services referred to in Subparagraph g) of Paragraph 1 of Article 1 of the Law ;

3) 125 000 euro where the payment institution provides any of the payment services referred in Subparagraphs a), b), c), d) or e) of Paragraph 1 of Article 1 of the Law .

The Commission shall take a decision on granting or refusing to grant a licence and notify the applicant within three months after receiving all necessary documents; where it refuses to grant the licence, it shall specify the reason for refusal. The Commission grants the licence for the operation of a payment institution for an indefinite period .

Regulations and laws regulating the activities of payment institutions are available at : http://www.fktk.lv/en/law/payment_institutions/laws/2014-06-04_law_on_payment_services_and_electronic_money/

Provision of advice to potential market participants 

FCMC experts provide advice on the issues related to licensing of e-money and payment institutions, as well as registration procedures and assessment of business activities of potential market participants.

To arrange advisory service appointment or telephone consultation you can e-mail us on fktk@fktk.lv