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The provision of payment services in Germany is subject to the German Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz, ZAG). Anyone wishing to provide payment services commercially or on a commercial scale requires a permit from the German Federal Financial Supervisory Authority (BaFin) in accordance with Section 8 (1) of the ZAG, a so-called ZAG permit.
BaFin monitors the compliance of payment institutions, payment service providers and e-money institutions (often referred to as payment service providers, PSPs) with the rules and requirements of the ZAG. This is done both during start-up and in the course of ongoing supervision.
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Providers who want to offer payment services to their customers must meet numerous requirements:
Payment institutions therefore require detailed regulatory advice in German payment services law at an early stage, well before the start of business, and should be represented by our specialist lawyers for banking and capital markets law before the relevant regulatory authorities in the licensing procedure.
The intensity of ongoing supervision depends on the type and scope of business activity. The focus of supervision is on capital and liquidity requirements and the risk control mechanisms in place.
Companies already holding a license for operating payment services in a member state of the European Economic Area may also provide payment services in Germany by using the European Banking Passport if certain minimum requirements are met. No German license application of its own is needed then. Rather, the homeland supervisory authority must be notified about the intention of providing payment services in Germany as well.
Non-banks can also offer payment services, sometimes unnoticed. In addition to traditional payment services such as
for example, the financial transfer business also includes activities that are subject to BaFin approval and involve the transfer of funds to a third party on behalf of the customer in cash or cash-free form.
The scope of application of the financial transfer business is quickly affected in three-person relationships if, for example, a broker or intermediary receives and forwards payments from the contracting parties brought together.
A famous example was the Lieferheld ruling of the Regional Court of Cologne of September 29, 2011, Case No. 81 O 91/11. In these cases, it should be checked whether a statutory exception is relevant or whether the operation of the financial transfer business can be circumvented by clever legal drafting.
Commission transactions may also require a ZAG license if the commission agent is also involved in the payment process of the contract because he receives the remuneration for the principal and forwards it to the principal. If there is no license in this case, the commission agent commits a criminal offense punishable by imprisonment for up to three years or a fine.
Want to conduct ZAG license-based activities in Germany or engage the German regulatory authorities? Our specialized German payment services attorneys assist you in drafting and filing of license applications as well as coordinating your German banking business with BaFin and the German Central Bank.
(both Certified Specialists for Banking and Capital Markets Law) are looking forward to addressing every question you might have regarding financial regulation and payment services in Germany. You can reach them via e-mail (info@winheller.com) or by phone (+49 69 76 75 77 80).