Old payment service providers in a new guise

Today’s qualified (licensed) payment service providers may have their licence withdrawn (revoked) by the Czech National Bank (ČNB) if they fail to prove within a given deadline that they satisfy the conditions for issuing a licence under a new law.

The new Payment Transactions Act came into force on 13 January 2018, transposing EU law rules into Czech law, in particular those of the new (Second) Payment Services Directive („PSD 2”).

The new Payment Transactions Act involves major changes, including a switch (as to the right to provide payment services) from the registration principle to the licensing principle for small payment service providers, and broader requirements which must be fulfilled by those wishing to obtain a licence. The changes are likely to lead to more protracted approval proceedings.

Payment service providers that are already established need to pay the utmost attention to the transitional provisions under the new Act. These provisions allow existing payment institutions to continue to provide their services, based on their current authorization, for another six months from the effective date of the Act. Once this transitional period has elapsed, the current authorization will be considered a licence within the meaning of the new Payment Transactions Act. However, within three months from the effective date of the Act (i.e., no later than by 13 April 2018) the payment institution must prove to the ČNB that they satisfy the requirements for being licensed as a payment institution under the new Act. Failure to do so will result in revocation (withdrawal) of the previous authorization to do business. For small payment service providers, the transitional period for proving compliance with the licensing requirements is nine months from the effective date of the Act.

All the above also applies to issuers of electronic currency.

Source: Payment Transactions Act No. 370/2017 Coll.

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