Payment Services and E-money Business
Erlaubnisvoraussetzungen : Deutsche VersionRequirements for the Granting of a Licence : English version
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Requirements for the Granting of a Licence

A licence for conducting payment services as a payment institution (section 8 ZAG) or conducting e-money business as an e-money institution (section 8a ZAG) can be applied for at the German supervisory authority BaFin. However, the BaFin will only grant the licence if the applying company (applicant) meets certain criteria and submits the necessary documents. In particular:

Note: The requirements regarding applications for conducting payment services and e-money business are largely similar. The requirements for a licence are detailed in common diagrams. Existing differences will be highlighted were appropriate.

  1. The applicant is a legal entity (e.g. LLC or stock corporation) or partnership (e.g. ordinary partnership or limited partnership) 
  2. The applicant’s headquarter is in Germany
  3. Description of the applicant’s business model
Payment Services
(section 8 ZAG)
E-Money
(section 8a ZAG)
The payment services to be provided must be named and their handling has to be explained. Any other activity of the company not involving payment services has to be described, too. The e-money business to be conducted has to be described and the business’ transaction must be explained. Any other activity of the company, in particular the potential transaction of payment services, must be described, too.
  1. Business Plan with a Budget Plan for the first three business years

The business plan should contain a description of suitable and appropriate systems, resources and procedures and a budget plan. The budget plan should contain budgeted balance sheets and projected calculations of profits and losses in accordance with the provisions of the regulation regarding accounting of payment institutions (in German called Zahlungsinstituts-Rechnungslegungsverordnung, abbreviated RechZahlV). Moreover, a calculation of equity capital requirements according to the regulation on equity capital of institutions under ZAG (in German called ZAG-Instituts-Eigenkapitalverordnung, abbreviated ZIEV) is necessary. In particular:

Payment Services (section 8 ZAG)E-Money (section 8a ZAG)

The required equity capital is to be calculated in accordance with the following three methods (see sections 3 to 5 ZIEV):

If solely the e-money business is being conducted, equity capital must amount to at least 2 % of the average expected e-money circulation (section 1a subsection 4 ZAG). If payment services are transacted in addition to the e-money business, the requirements regarding equity capital for the payment services are to be calculated in accordance with the three methods prescribed by ZIEV (see left column). Required equity capital is then equal to the sum of equity capital required for e-money business and payment services.
Method 1:10 % of the fixed overall costs of the previous year.
Method 2:Sum of corresponding fraction of payment services of the previous year multiplied by the scaling factor „k“ (between 0,5 to 1,0 depending on the payment service); for payment transactions in the amount of, for example, 240.000.000 € that corresponds with required equity capital between 212.500 € and 425.000 €.

Method 3:

Sum of corresponding fraction of the relevant indicator (profit and loss account) multiplied by the scaling factor „k“ (between 0,5 to 1,0 depending on the payment service); for an applicable indicator in the amount of, for example, 47.000.000 € this corresponds with required equity capital between 1.115.000 € and 2.230.000 €.
  1. Sufficient Initial Capital
Payment Services (section 8 ZAG)E-Money (section 8a ZAG)
The amount of required initial capital depends on the payment services to be conducted by the payment institution:Required Initial Capital: 350.000 €

Money Remittance Business only:

  20.000 €

Digitised Payment Business only:   50.000 €
Other Payment Services: 125.000 €
  1. Description of Measures to comply with the Safeguarding Requirements for the Acceptance of Moneys (see sections 13 and 13a ZAG)

Payment service institutions and e-money institutions have to safeguard client funds in a manner specifically prescribed by sections 13 and 13a ZAG. Safeguarding may be carried out by way of strictly separating client funds from the institution’s funds or by contracting an insurance ensuring full cover in case of insolvency.

  1. Description of the Applicant’s Corporate Management and Internal Controlling Mechanisms including Procedures of Administration, Risk Management and Accounting 
  2. Description of Internal Control Mechanisms for Compliance with Provisions regarding Money Laundering

It has to be demonstrated in particular, that the applying payment service institution or e-money institution will observe the duties of care prescribed in the German law against money laundering (Geldwäschegesetz, abbreviated GwG). The most important duty of care is the identification of the contractual partner, for example in the case of the establishment of a business relationship. 

  1. Description of the Applicant’s Organisational Structure 
  2. The Names of Owners of a major Participating Interest (section 1 subsection 9 ZAG) and the Extent of the respective Participating Interests 

It has to be proven that the owners of major participating interests meet the requirements to be demanded in the interest of the maintenance of a sound and prudent management of a payment service institution or e-money institution, which mainly means that they have to be reliable. For that purpose details have to be provided in a specific standard form regarding possible criminal proceedings or regulatory offence procedures, insolvency proceedings, actions taken by a regulatory authority or withholding or annulment of a business licence. The existence of one of the last mentioned cases does not automatically render a person unreliable, but is rather taken into account in the BaFin’s overall assessment. 

  1. Reliability and Professional Qualification of the Responsible Persons

Responsible persons according to ZAG can be divided into three categories: 

  1. All managing directors regardless of the applicant’s legal form.
  2. Where applicable, the persons responsible for managing the business (in Germany, that coincides with the managing directors under No. 1).
  3. If the company has other business activities besides payment services and/or e-money business, all persons responsible for payment services and/or e-money business (managers of the respective business units).

Someone is reliable, if the person warrants by the overall pattern of his behaviour and his personality that he will perform his duties properly. Generally, a person is deemed to be reliable. Therefore, to assert the opposite, the BaFin has to indicate facts which substantiate the person’s unreliability. Unreliability can be concluded from criminal or regulatory offences related to the business activity, company-related substantial and permanent arrears of taxes, violations of duties related to social security payments, other violations of duties stemming from public law (e.g. previous annulment of business licences or similar licences) or false statements in the procedure of applying for the licence. To this end forms have to be filled out and a résumé has to be submitted.

Someone is professionally qualified, if he or she has sufficient theoretical and practical knowledge for the provision of payment services and/or e-money business. Theoretical knowledge refers to economic, business administrative, tax and legal knowledge, as may be obtained by completing a professional training in banking or a business administration degree. Practical knowledge refers to experience in all business areas in which the payment service or e-money institution will be active under the licence it applied for. In that respect, cases need to be distinguished with regard to the payment services to be provided. For example, conducting digitised payment business will require a different kind of experience than “ordinary” payment business. Management experience is part of the required professional qualification, too. A person is considered to have the required management experience if the person has sufficient practical experience in taking on responsibility, organisational skills, human resources management and independently working with adequate decision-making authority. The required extent of management experience depends on the focus of the applicant’s business activities and the applicant’s size. The professional qualification is substantiated by submission of a résumé.

The following table shows which members of the three respective groups have to be reliable and possess the relevant professional qualification.

Managing Directors (§ 1 Abs. 8 ZAG)Persons responsible for ManagementManagers of respective Business Units

Reliability of every managing director is required


Specific professional qualification may be delegated to the person responsible for the overall management and the manager of the business unit

Must be reliable and must have the necessary professional qualification Must be reliable and must have the necessary professional qualification
  1. Names of auditors regarding the annual financial statements and consolidated financial statements 
  2. Indication of the company’s legal status and certified copy of the applicant’s articles or partnership agreement 
  3. Indication of the address of the applicant’s head office or statutory seat 

As soon as the BaFin has all required application documents at hand, a decision is made within three months. Frequently, the BaFin demands submission of further documents, so that the start of the three months deadline for a decision is delayed.