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Payment institutions and e-money institutions

Pursuant to section 10 (1) ZAG, an institution wishing to provide payment services as a payment institution in Germany, commercially or on a scale which requires a commercially organised business undertaking, needs written authorisation from the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, or BaFin). The requirement for authorisation by and registration with BaFin is intended to enhance the security of payment transactions and thus provide security for consumers who are economically vulnerable and thus in need of protection.

Pursuant to section 1 (1) numbers 1 to 8 of ZAG, payment services comprise:

  • deposit and withdrawal transactions
  • payment transactions in the form of direct debits, credit transfers and through payment cards excluding the granting of credit (payment transactions)
  • payment transactions involving the granting of credit
  • acquisition business
  • money remittance business
  • payment initiation services
  • account information services.

The same applies to e-money institutions pursuant to section 11 (1) ZAG. E-money business is the issuance of electronic money (e-money). E-money is defined as any monetary value stored in electronic (including magnetic) form, representing a receivable from the issuer that is issued against payment of a sum of money in order to make payments within the meaning of section 675 f (1) sentence 1 of the German Civil Code (Bürgerliches Gesetzbuch) and is accepted by other natural or legal persons other than the issuer. The provision of payment services is included in the licence to conduct e-money business.

In addition, section 2 (1) ZAG defines exceptional cases in which payment services are not rendered.

As part of the licensing procedure, a business model, a business plan with a budget plan for the first three financial years and a description of the measures required to fulfil the security requirements of sections 17 and 18 of the ZAG are among the items to be submitted. Payment institutions and e-money institutions are subject to different requirements, for instance with regard to initial capital (section 12 ZAG).