Payment institutions

Business scope

Payment institutions (PIs) are firms, other than banks and electronic money institutions, authorized to provide one or more of the payment services referred to in Article 1(2)(h-septies.1) of the Italian Consolidated Law on Banking (TUB).

PIs can also:

• operate payment systems and provide operational services or other solutions closely linked to the payment services provided, such as:
  • ensuring the execution of payment transactions;
  • currency exchange services;
  • data storage, recording and processing;
• providing financing related to payment services within the limits set out in the applicable supervisory regulations;
• engaging in other business activities that do not involve the provision of payment services; the law provides that these services be delivered using a dedicated capital fund to be set up by the intermediary (which, in this case, would be classified as a hybrid payment institution).
• provide lending and investment-based crowdfunding pursuant to Regulation (EU) 2020/1503.

Payment institutions are not allowed to issue electronic money.

Requirements

In their licensing application, PIs must indicate one or more payment services they want to be authorized to provide.

Licensing is subject to compliance with the following requirements:

1. PIs must have the legal form of a joint-stock company (società per azioni), a limited joint-stock partnership (società in accomandita per azioni), a limited liability company (società a responsabilità limitata) or a cooperative (società cooperativa);
2. their registered office and head office must be located in Italy, where at least some of the operations involving payment services must be carried out;
3. the initial paid-up capital must amount to no less than that prescribed by law, depending on the payment services to be provided:
• €125,000 for PIs providing one or more of the payment services referred to in points 1 to 5 of Article 1(2)(h-septies.1) of the TUB;
• €20,000 for PIs providing money remittance services only (also known as money transfers), as set out in point 6 of Article 1(2)(h-septies.1) of the TUB.;
• €50,000 for PIs providing payment initiation services (PIS), as set out in point 7 of Article 1(2)(h-septies.1) of the TUB;
4. qualified shareholders must meet the relevant regulatory requirements;
5. the members of the management body must comply with the fit and proper requirements laid down by the legislation;
6. there must be no impediment to the effective exercise of the Bank of Italy's supervisory functions, with reference to its affiliation to groups and any close links between the PI (or other entities in its group) and other entities;
7. PIs providing payment initiation services (PISs) (point 7) or account information services (AISs) (point 8) must take out a professional indemnity insurance policy or comparable guarantee covering any damages they may cause while carrying out their business activities.

PIs must also submit other specific documents, as indicated in the Supervisory Provisions for Payment and Electronic Money Institutions, such as their memorandum and articles of association, a business plan with an analysis of the financial viability of start-up operations and a description of the services offered, and a report on the organizational structure.

The Bank of Italy shall reject licensing applications when, after verifying the above requirements, the sound and prudent management or the proper functioning of the payment system is not ensured.

Post-licensing requirements

Newly-licensed PIs are required to provide the Bank of Italy with a certificate showing the date on which they were entered into the Italian Business Register (for newly-established institutions) or the date when the amendments to their articles of association were recorded in the Register (for existing institutions). As of that date, licensed institutions are entered by the Bank of Italy into the PI register referred to in Article 114-septies of the TUB and are notified of their identification number.

For each intermediary, the PI register indicates the type of services they are authorized to provide and, for payment initiation service providers (PISPs), the identification details of the insurance policy or of any other comparable guarantee required.

Once registered, PIs are required to:

• adhere to an Alternative Dispute Resolution (ADR) system, as provided for in Article 128-bis of the TUB;
• notify the Bank of Italy of the start of their operations within 12 months of registration.

Intermediaries are supervised by the Bank of Italy according to the organizational criteria published on its website and are subject to its supervisory powers, as set forth in the relevant regulations.

Payment service providers holding payment accounts that are accessible online and opting for a dedicated interface for third party providers (TPPs) may submit an application to the Bank of Italy to be exempted from the obligation to set up a contingency (or fallback) mechanism, as described in Commission Delegated Regulation (EU) 2018/389. Applications that are not submitted during the licensing phase must be filed by following the instructions published on the Bank of Italy's website.