Variation of Permissions
Speak to an expertVariation of Permission for Payment or Electronic Money Institution
Payment services firms are required to submit a variation of permissions application where intending to provide a new regulated service, cease, or change a requirement for existing services (such as capital requirements). However, a VoP can’t be used to change a firm’s status such as from authorised to registered, authorised to small, Account Information Service Provider to Payment Institution, Payment Institution to Electronic Money Institution, and so on.
The permissions for payment services
1) Services enabling cash to be placed on a payment account as well as all the operations required for operating a payment account
2) Services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account
3) Execution of payment transactions, including transfers of funds on a payment account with the user’s payment service provider or with another payment service provider:
a. execution of direct debits, including one-off direct debits.
b. execution of payment transactions through a payment card or a similar device.
c. execution of credit transfers, including standing orders.
4) Execution of payment transactions where the funds are covered by a credit line for a payment service user:
a. execution of direct debits, including one-off direct debits.
b. execution of payment transactions through a payment card or a similar device.
c. execution of credit transfers, including standing orders.
5) Issuing of payment instruments and acquiring of payment transactions
6) Money remittance
7) Payment initiation services
8) Account information services
9) Issuing electronic money
Common applications
Permissions 1 to 4 relate to issuing payment accounts under a payment institution licence, although firms should be mindful of the limitations in the PSRs to the effect that payment institutions require a payment order before receiving, and to hold customer funds, including a near-future fulfilment date.
Permission 5 allows PSPs to issue card-based payment instruments, and permission 6 allows remittance without a payment account created in the name of the payer.
Permission 7 and 8 relate to payment initiation and account information service providers. Payment Initiation Service Provider(s) (PISP) assist customers in making direct payments to merchants and other service providers. Account Information Service Provider(s) (AISP) can collect information from customer accounts and display it back to the customer or their agents.
Permission 9, issuing electronic money, only applies to e-money firms, but e-money firms have all 9 permissions, plus some more. For instance, e-money firms can provide customers with an ‘account’ often called an ‘e-wallet’ to hold balances indefinitely, and without a payment order. From the consumers point of view, an e-wallet and debit card provided by an Authorised Electronic Money Institution is similar to a bank account, but the e-money firm can’t pay interest to the customer on their balance, or use the funds to earn interest themselves.
What do I need to provide with the application for a Variation of Permission
The content of the submission is similar to the requirements of your original licence application, but specific requirements depend on the permissions you are applying for. Usually you will need to provide:
- A business plan, including how the variation supports it, and organisation charts noting the individuals associated with the new regulated business services.
- How the firm intends to comply with regulatory requirements related to its existing and proposed services.
- The controls applied to the new services.
How API Compliance can help with your Variation of Permission
Where you intend to make changes to the services your firm offers, API Compliance can advise on which permissions are required, the associated obligations, and assist in the planning and submission of the application.
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