Cyprus Payment License

Having a favorable legal and tax environment for fintech businesses, Cyprus has positioned itself as a recognized and reputable financial and business center. It is worth noting that the legal system is based on the common law of England. For many companies, this country is the most attractive, as well as obtaining a Cyprus EMI license (Electronic Money institution) for payment systems. Also, this place is well suited for doing business in the EU zone after the Brexit transition period.

Regulatory Framework for Electronic Money Services in the Republic of Cyprus

In the Republic of Cyprus (referred to as “the Republic”), electronic money services are governed by The Electronic Money Laws from 2012 and 2018 (“the Law”). These laws incorporate the following European Parliament and Council directives into the domestic legal framework:

  1. Directive 2009/110/EC dated 16 September 2009 deals with the establishment, operation, and prudent supervision of electronic money institutions.
  2. Directive (EU) 2015/2366 dated 25 November 2015, related to payment services within the internal market, also called PSD2.

Authorization from the Central Bank of Cyprus (the “CBC”) or any EU member state must offer electronic money services within the Republic per established laws. This authorization aligns with the right of establishment and the liberty to provide services as detailed in the legislation.

A Number of Areas Covered by the Cyprus EMI License

The company is authorized to carry out certain activities after obtaining a financial license in Cyprus. It is allowed by the EU and Cyprus Legislation:

  • Facilitating cash deposits withdrawals, and managing payment account operations.
  • Conducting various payment transactions, transfers, and managing standing orders.
  • Handling payment operations, including card transactions and direct debits, supported by a credit line.
  • Managing credit transactions, encompassing direct debits, card payments, and standing orders.
  • Issuing payment instruments and acquiring payment transactions.
  • Offering money remittance services.
  • Providing services for payment initiation.
  • Delivering account information services.

Thanks to the EMI license, it is also essential to issue electronic money, which is presented as a claim on the issuer. It is available in various forms, such as electronic or convertible bank money. The E-money license in Cyprus also provides the advantage of opening bank accounts with any local or European bank with a branch in the country. This ensures diversified risk management.

Benefits of Starting a Fintech Business in Cyprus

Holding a Cyprus Electronic Money Institution license offers significant advantages:

  1. Efficient tracking of virtual currencies leads to lower taxation than physical assets.
  2. No compulsion to convert capital, with all currencies accepted in Cyprus.
  3. The certificate for virtual funds usage streamlines many financial processes.
  4. Opportunities to innovate in the digital money realm, from tool creation to electronic wallet lending.
  5. Convert electronic money transactions into cash equivalents and facilitate electronic product resale.
  6. Under the Cyprus Electronic Money Licence, businesses benefit from EU-wide operations, thanks to Cyprus’ adoption of the relevant EU Directive.

EMI Licenses in Cyprus and Other Countries

If you choose an Electronic Money Institution license in Cyprus, you can get simplified tracking of virtual currencies. In addition, there will be innovative opportunities in digital finance and tax benefits. The financial system accepts all currencies, and businesses can operate in the EU with a Cyprus payment license.

In comparison, Lithuania offers an efficient e-money licensing process. The country is friendly to digital transactions and can issue global payment cards. In addition, it has a high tax competitiveness rating and access to the EU market.

Requirements and Documentation for Obtaining an EMI License in Cyprus

A comprehensive set of documents and information is crucial for submission when applying for a license to establish an electronic money institution in Cyprus. Here’s a detailed guide:

Operational Plan and Services

  • A detailed program of operations, particularly highlighting the issuance of electronic money.
  • Outlining potential payment services intended to be provided.

Strategic Business Planning

  • A business plan, inclusive of a forecast budget for the initial three financial years.
  • Ensuring the establishment can maintain appropriate and efficient systems and procedures for a stable operation.
  • Assurance that the legal entity applying has secured the necessary initial capital of no less than EUR 350,000.

User Fund Safeguarding

Clear strategies and measures are implemented to protect users’ funds in electronic money transactions.

Governance and Control

Operational and Distribution Networks

  • Detailed information about the applicant’s involvement in national or international payment systems.
  • Plans for operational activity outsourcing and the intended use of agents, branches, and third-party entities for electronic money distribution and redemption.

Ownership and Management

  • Disclosure of identities and details of individuals or entities with substantial control over the applicant.
  • Comprehensive profiles of directors and key management personnel affirming their integrity and competency in handling electronic money and payment services.

Legal and Organizational Details

  • Information on the applicant’s legal structure and articles of association.
  • The location of the principal office.
  • Contracts and Security Protocols
  • Drafts of contracts between the electronic money issuer and holder.
  • Overarching framework contract.
  • A clear outline of procedures for filing, monitoring, and safeguarding sensitive payment information, alongside strategies for managing security incidents and related customer complaints.

The Procedure for Obtaining a Cyprus EMI License

Initial Assessment and Planning

  • Match the intended financial service with the Central Bank of Cyprus’s list of regulated activities.
  • Ensure that management and directors are based in Cyprus.
  • Demonstrate sufficient resources (financial, management, staff, systems) to operate the business.

Document Preparation and Submission

Submit a business plan, safeguarding measures for client money, governance arrangements, risk management policies, procedures for handling security incidents, customer complaints, and measures against financial crime.

Detailed Application Requirements

Provide company identification details, program of operations, financial forecasts, organizational structure, initial capital evidence, user fund safeguarding measures, compliance and governance arrangements, internal controls, procedures for security incidents, and AML/CFT obligations.

Establishing Operational Presence in Cyprus

  • Establish a physical base and office in Cyprus.
  • Develop a risk framework addressing operational, security, and money laundering risks.

Licensing and Decision by the Central Bank of Cyprus

  • The Central Bank of Cyprus reviews the application and makes a decision within 3 months, though it usually takes 4-5 months.
  • The initial capital requirement for an Authorised EMI license in Cyprus is €350,000.

Post-Licensing: Passporting Rights

Once authorized, provide regulated services across the European Economic Area without needing additional licenses.

Continued Assistance and Growth

  • Management of accounting, auditing, and protection of accounts.
  • Incorporation into payment systems.
  • Support for global business activities and reporting to the central bank.
  • Advisory services for new developments involving the central bank.

Business Establishing Services

Before obtaining an EMI license in Cyprus, you can get expert assistance setting up a business infrastructure.

  • IT Compliance Check: We conduct a rigorous IT analysis for your proprietary software to meet regulatory standards or suggest proven alternatives like BAAS or SAAS solutions through partners such as Crasula and Canopus.
  • Third-Party Connections: We specialize in connecting payment systems like SEPA and SWIFT via third-party EMI companies, facilitating operations in over 140 currencies and potentially saving on integration costs.
  • Direct Connections: For established entities, we can establish direct links to payment networks such as CentroLINK and SWIFT, though it demands more time and financial investment.
  • White Label Solutions: To expedite card issuance, we recommend White Label solutions through partners like DECTA and Wallester, bypassing the lengthy and costly process of direct VISA or MasterCard membership.

Benefits of Taxation

The island will offer a favorable tax regime with an extensive network of double taxation treaties. Cyprus also has a low % corporate tax rate of 12.5% and many incentives for foreign investors. For example, there is no withholding tax on dividends.

The Central Bank of Cyprus doesn’t require payment for license application submissions. Nevertheless, it reserves the right to apply charges or set fees for upcoming submissions retroactively.


Why is Cyprus considered a favorable location for EMIs post-Brexit?

Cyprus offers an efficient legislative framework, passporting rights, a beneficial tax regime, a business-friendly environment, and a straightforward licensing process, making it an attractive jurisdiction for EMIs post-Brexit.

What are the operational costs associated with running an EMI in Cyprus?

You should budget for operating expenses, such as office rent, staff salaries, and IT infrastructure, depending on the size of the company and its activities.

Can you explain the different methods for calculating additional capital requirements?

Method 1: Own funds should be at least 10% of the preceding year’s fixed overheads, adjusted for significant business changes or, if a new institution, projected overheads in the business plan.

Method 2: A tiered payment volume (PV) percentage with scaling factor k (0.5, 0.8, or 1).

Method 3: The relevant indicator (income and fees) multiplied by a tiered multiplication factor and the scaling factor k.

Must an EMI be based in Cyprus?

Yes, an EMI must be incorporated in Cyprus and provide at least part of its services in Cyprus to be granted a license.

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