Payment Service Provider Limited to Offering Payment Services, Not Authorized to Operate as Financial Entity
A local payment service provider has clarified its scope of operations, stating that it is limited to offering payment services and is not authorized to operate as a financial entity. This distinction is crucial for customers, as deposits into their payment accounts are not guaranteed by the Deposit Insurance Fund.
Reporting Requirements
The payment service provider must comply with extensive reporting obligations to the Central Bank, including:
- Filing financial statements
- Capital adequacy reports
- Exchange transaction reports
- Other information related to its operations
In addition, the provider must designate two individuals responsible for complying with these reporting requirements.
Organisational and Governance Requirements
The payment service provider is subject to organisational and governance requirements similar to those of financial entities. These include:
- Clear separation between executive and administrative functions
- Comprehensive risk management process
Risk Management Requirements
The payment service provider must have a comprehensive risk management process in place, which includes:
- Oversight by the board and senior management
- Identification, evaluation, follow-up, control, and mitigation of all significant risks
- Adequacy to the size and economic importance of the provider, as well as the nature and complexity of its operations
Internal and External Audit Requirements
The payment service provider must perform:
- An internal audit, regulated by the Regulation on Minimum Requirements of Internal Audits issued by the Central Bank
- An external audit, regulated in the Regulation on Minimum Requirements of External Audits
Senior Management Requirements
The payment service provider’s senior management structure must comply with certain requirements, including:
- Appointment and removal of directors and senior executives
- Commitment to dedicating sufficient time and resources to fulfill responsibilities, monitor risks, and ensure activities align with business strategy
Executive Compensation
The payment service provider is free to determine executive compensation, but there are limits on director compensation. The maximum compensation for directors cannot exceed 25% of the entity’s profits.
Change of Control and Transfers of Banking Business
In the event of a change of control or transfer of banking business, the payment service provider must comply with certain requirements, including:
- Obtaining prior authorisation from the Central Bank
- Approval for mergers and portfolio sales
- Agreement ad referendum with the approval of the Central Bank for share transfers or irrevocable capital contributions capable of altering the structure of shareholders’ groups
It is essential for customers to understand these requirements and limitations when using the services offered by this payment service provider.