Payment Institutions License In Poland

• Published date: 07 September 2023
• Subject Matter: Finance and Banking, Technology, Financial Services, Fin Tech
• Law Firm: Dudkowiak Kopec & Putyra
• Author: Mr Piotr Putyra and Aleksandra Walas

Payment Services Market in Poland

Due to the advanced digital payments and identity solutions, increasing digitalization of Polish customers, fast growing ecosystem, highly-skilled labour, and partner-oriented start-up cooperation models, since 2018 - 2022, the number of Fintech companies has nearly doubled. Poland with the biggest financial services market in CEE, aims to become one of the 30 most competitive financial centres in the world, within next 5 years, under the Future Finance Poland initiative launched in February 2023 jointly by the Polish Fintech Foundation, Polish Financial Supervisory Authority (KNF), and Finance Ministry.

Payment Services Grow Drivers

One of the major drivers of growth in the Polish FinTech market comes from the increasing expectations of financial market users, related to intelligent, customised and integrated value propositions. Next is a notable willingness of top banks to innovate and form strategic partnerships. Example of such partnerships is a local BLIK system, beloved by Poles, a universal mobile payment solution, launched in early 2015, with around 13,5 million users pay with it every month. From January to March this year, its users made 374 million payments worth PLN 50.1 billion.

Types of Fintech players

Although on the map of Polish Fintech we have several providers, the 3 following groups of players stand out in the forefront:

• payment institutions,
• finance management providers, and
• software providers.

In connection with the proposed changes to PSD2, this article will tackle national payment institutions in Poland, especially the licensing process.

A national payment institution ("PI") is one of several forms of payment services business available in Poland (in addition to e.g. small payment institutions ("SPI"), payment service bureaus and electronic money institutions).

As of August 2023, there are:

• 177 small payment institutions,
• 41 national payment institutions,
• 1138 payment service bureaus, and
• 1 electronic money institution.

Investors planning to conduct business in Poland usually apply for the status of a small payment institution (which can operate with certain restrictions on: territory, scope of payment services, value of transactions, and amount funds held for individual users - which solutions is good for startups), or national payment institution.

Payment Institution Regulation in Poland

A payment institution may operate both in the territory of the Republic of Poland and abroad. Payment institutions are not subject to restrictions on the limit of funds held in user accounts or the limit on the total value of completed transactions that a small payment institution is subject to. Payment institutions are subject to rigour with regard to the form of business (either a limited liability company or a joint stock company) and minimum capital requirements (depending on the service, it is at least '20,000 to '125,000).

The licensing procedure for payment institution differs significantly from the registration procedure that is carried out for small payment institutions. In practice, it lasts from 12 months to 2 years from the submission of the application and ends with the issuance of an administrative decision (either authorization or denial of authorization).

In terms of capital requirements, it should be mentioned that the draft PSD3, involves raising the capital threshold for service providers (services enabling cash to be placed on and/or withdrawn from a payment account, execution of payment transactions, including transfers of funds from and to a payment account, including where the funds are covered by a credit line with the user's payment service provider or with another payment service provider, issuing payment instruments, acquiring) from '125,000 to '150,000.

Payment Institution vs Small Payment Institution in Poland

The most significant differences are shown in the table below:

	Small Payment Institution	National Payment Institution
Payment services
Acceptance of cash deposits into and making cash withdrawals from a payment account and any operations required for account maintenance	Yes	Yes
Executing direct debits	Yes
Executing payment transactions made by payment card or a similar payment instrument	Yes	Yes
Executing transfer order	Yes	Yes
Payment credit	Yes	Yes
Issuing payment instruments	Yes	Yes
Acquiring	Yes	Yes
Money remittance	Yes	Yes
Payment initiation services (PIS)	No	Yes
Account information services (AIS)	No	Yes
Transaction limits
	Small Payment Institution	National Payment Institution
Monthly transaction limit	PLN 1,500,000	none
Limit of funds held in the user's accounts	'2,000	none
Formal requirements
Minimal capital	none	'20,000-125,000
Legal form	one-person business or commercial company	limited liability company or joint-stock company
Territory of operations	only Poland	-
Management board	Clean criminal record *no links to Russia and Belarus	Clean criminal record Experience and education time dedicated to the function of a board member *no links to Russia and Belarus Polish language (at least 50% of the board member)
Licensing time	up to 3 months	in practice around 1 - 2 years
Internal documents	Mainly business plan, financial plan, AML procedure, risk management procedure, safety incidents...