If you are a business owner who deals with financial transactions, it is essential to have the proper licenses. One of these licenses is a Payment Institution License (PIL).
Obtaining a Payment Institution license is not as difficult as it sounds. There are specific requirements you will need to meet, but the process itself isn’t too complicated.
This article will go over 8 things you should know about obtaining a Payment Institution License.
1) What is a Payment Institution
A payment institution (PI) is an entity that offers one or more of the following services: accepting deposits from users and providing credit; issuing electronic money; acting as an intermediary between payer and payee for funds transfers between them; providing payment services in connection with these activities or other financial service activity as agreed by the European Commission.
2) Why do I Need One?
A PI is an entity that offers one or more of the following services: accepting deposits from users and providing credit; issuing electronic money; acting as an intermediary between payer and payee for funds transfers between them;
providing payment services in connection with these activities or other financial service activity agreed by the European Commission.
You will need a PIL if you offer any of the following services:
● Accepting deposits from people and organizations
● Providing credit
● Issuing electronic money
● Acting as an intermediary between a sender and receiver for funds transfers between them.
*If you are not sure whether your business will require a PIL, then it is best to talk with a local agent to discuss what exactly your
3) Requirements for obtaining a PIL
To obtain a PIL, you’ll need to meet the following requirements:
● To be a resident of an EEA country or Swiss Confederation
● To have sufficient knowledge and understanding of the rules and procedures specific to your home country
● To be qualified for high fiduciary responsibility in your home country according to national law
● To have a clean criminal record
● To be in good standing with your local tax authorities
You must meet all of these requirements before applying for a PIL. If not, then it will most likely end up being denied.
4) The process of obtaining a PIL
The method of obtaining a PIL is straightforward.
You will be applying for a PIL in your home country and should already have an account with the central bank.
For instance, if you live in Lithuania, then you’ll find that they have their own procedures to follow. If you’re in need of a PI license Lithuania and you’re a local, you need to do the following.
First, you will need to fill out a unique form which can be obtained from the Lithuanian Central Bank website. Check out your local government’s central bank’s website to find this form, and the steps that follow usually follow the process provided below.
● We choose which services we want to offer through PI
● Submit application form
● Provide them with requested documents
● Verify that all information provided by the company matches data on file with the regulator.
● Obtain approval for PIL and then apply for a license
*The process is simple, but there are a few steps to take. If you adhere to them, obtaining your PI should be pretty easy.
5) How Long it Takes
The time it will take to obtain a PI depends on the country you are in. In some countries, such as France and Italy, the whole process of getting a license can be completed within six months.
The most extended waiting time for obtaining a PIL is 10 years, so you must stay updated with your local regulator.
It typically takes between six months to a year to obtain a PIL, depending on your country. It is best to stay updated with your national regulator so you will have an idea as to how long it takes.
6) Things to Consider Before Applying
Before applying for the license, it is important to consider:
● Do you have a clean criminal record? If not, then your application will most likely get denied.
● Does your company offer any of the services that are listed above? These would require a PIL, so make sure they are offered before applying.
● Are you resident in an EEA country or Swiss Confederation? If not, you will need to establish a company in your home country before applying for one.
● Are you qualified for high fiduciary responsibility under national law? Again this is a requirement that must be met.
7) Why You Should Get your PIL Now Rather than Later
You should get your PIL now because it will make the process of opening a bank account easier. Banks often require that prospective clients for an account have a PI license, and if not, they can refuse to open an account with you.
If you are looking to open up a new banking relationship to issue debit cards or credit cards, it is best to get your PI license first.
Banks will often refuse you an account if you don’t have one, and the process of getting a new banking relationship can be very long.
It is recommended that when starting with any type of merchant services or payment processing, obtaining your PIL (payment institution) should be on top of your list of things to do.
It will make opening a bank account much more manageable and can be done simultaneously it takes for an average business to start up.
8) The Benefits of Obtaining a PI License
● Making banking relationships with banks possible
● Getting access to more customers through payment processing service providers
● Being able to issue debit cards and credit cards
● It helps you establish your business as a trusted company by customers.
If you are a company that is looking to accept payments for goods or services online, then one of the first things that you should do is register your business as a payment institution.
That way, if you receive any sort of demand from customers asking about how they can pay their invoices with your service provider’s website, you will be in compliance and able to provide them with an answer.
This article has provided 8 vital points to help guide companies through obtaining this license so that they don’t find themselves unprepared when trying to set up their business.