Licensing requirements under the Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz, ZAG)

Anyone wishing to provide payment services commercially or conduct e-money business in Germany must obtain written permission from the Federal Financial Supervisory Authority (BaFin) in accordance with Section 10 para. 1 or Section 11 para. 1 ZAG.

Particularly relevant as a payment service is the money remittance business. It is already considered to amount to providing the money remittance business if funds are accepted for transfer to a third party. The receipt and forwarding of funds also involves numerous companies from the non-financial sector. For example, the website “Lieferheld” was prohibited from accepting and forwarding customer funds to restaurants (judgement of the Regional Court of Cologne of 29.09.2011, ref. 81 O 91/11). BaFin also examines whether a trustee acting as a controller of the use of funds provides the financial transfer business when forwarding funds. Even maturity factoring is considered as money remittance business by BaFin, even though it does not per se fall within the scope of the legal provisions.

In addition to the licensing requirement, the ZAG specifies numerous exemptions from the licensing requirement. For example, a person who provides or operates payment services or e-money business within so-called interconnected payment systems (e.g. within a limited network of service providers) does not have to have a licence pursuant to Section 10 para. 1 or Section 11 para. 1 ZAG.

The boundaries between situations in which a licensing obligation exists and those in which a licensing obligation does not exist are often fluid. Therefore, an examination of the specific individual case is always necessary.

If BaFin does not grant a corresponding licence and no exceptions apply, BaFin has reason to believe that transactions are being carried out without the required permission. In this case, BaFin will investigate the facts by requesting extensive information and, if the suspicion is confirmed, will prohibit the respective company from doing business.

Our range of services includes:

• Conducting licensing proceedings pursuant to Section 10 para. 1 or Section 11 para. 1 of the Payment Services Supervision Act (ZAG);
• counselling on supervisory law regarding the design of alternative payment methods;
• Legal representation in the event of information, prohibition or liquidation orders by BaFin due to unauthorised performance of transactions subject to regulation.

We offer you further information on the regulatory obligations pursuant to the German Payment Services Supervision Act (ZAG) on our website www.zag-recht.de.