Payment Institutions, Intermediaries and Acquirers in Payment Services

Payment institutions and intermediary institutions are two types of financial institutions which are regulated by the Spanish Payment Services Act and the PSD2 regulation.

The main differences between the two are presented below:

Payment institutions:

• These are legal entities to which the Banco de España has granted administrative authorisation to provide and execute one or more of the payment services provided for in Royal Decree Law 19/2018 of 23 November on payment services and other urgent financial measures.
• They can provide payment services such as the deposit and withdrawal of cash on a payment account, the execution of payment transactions through a payment account by means of credit transfers, direct debits or payment transactions by card or similar device (debit payment transactions), the issuing of payment instruments or acquiring of payment transactions, money remittance, payment initiation or account information services.
• They are subject to a specific regulatory regime governing authorisation/registration requirements, set out in Royal Decree-Law 19/2018, Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services and Royal Decree 736/2019 of 20 December on the legal regime governing payment services and payment institutions.
• Payment service providers providing the account information service or small payment service providers are exempt from the general authorisation regime for payment institutions and are only subject to the registration procedure in the special register of the Banco de España.

Intermediary entities:

• These are financial institutions that offer and operate payment instruments, such as credit or debit cards, but do not directly process payment transactions.
• They are not subject to a specific regulatory regime for the provision of payment services, but are governed by the general rules applicable to financial institutions.
• They can be credit institutions, such as banks and savings banks, or non-banks, such as payment services companies or fintechs.

Differences between payment institutions and intermediary institutions:

In summary, payment institutions are those that are authorised to provide and execute payment services, while intermediary institutions are those that offer and operate payment instruments, but do not directly process payment transactions.

What is the acquiring of Means of Payment within the scope of the Payment Services Act?

Payment acquiring under the Spanish Payment Services Law refers to the ability of a financial institution to process card payment transactions on behalf of a merchant. Institutions wishing to provide payment acquiring services must obtain an administrative authorisation from the Banco de España and comply with the requirements set out in Royal Decree Law 19/2018 of 23 November on payment services and other urgent measures in financial matters. These requirements include the need to comply with certain security and data protection standards, as well as the obligation to register in the corresponding register and to comply with the reporting and transparency obligations established by the regulations.

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Legal obligations arising from having a payment gateway

The legal obligations in Spain arising from having a payment gateway are set out in Law 16/2022 of 28 April on Payment Services (LSP).

What is the acquiring and sub-acquiring of means of payment?

Acquiring and sub-acquiring means of payment refers to the ability of a financial institution to process card payment transactions. Acquiring refers to the process of accepting card payments on behalf of a merchant, while sub-acquiring refers to the ability of a third party to accept card payments on behalf of an acquirer. The Spanish Payment Services Law and European regulations set specific requirements for entities performing these activities, including the need to obtain a licence and to comply with certain security and data protection standards.

What are low volume payment institutions?

Low-volume payment institutions are those which plan to provide payment services with an average total value of payment transactions not exceeding 3 million per month and which do not plan to provide their services abroad. These institutions are subject to a specific regulatory regime which establishes the requirements for their authorisation and registration with the Banco de España.

What are the regulatory requirements for small payment institutions?

The regulatory requirements for these entities include:

• Obtain administrative authorisation from the Banco de España to provide payment services.
• Register in the Special Register of Payment Institutions of the Banco de España before starting its activity.
• Comply with the transparency and data protection requirements established by the regulations.
• Comply with the safety standards established by the regulations.
• Register the directors and general managers of the institution in the Register of Senior Officers of payment institutions managed by the Banco de España.

Low-volume payment institutions are exempt from some of the requirements that apply to regular payment institutions, such as the need to comply with certain minimum capital requirements and the obligation to submit regular reports to the Banco de España. However, these institutions are still subject to a specific regulatory regime which sets out the requirements for their authorisation and registration with the Banco de España.

How is it handled?

1. Access the Electronic Register using any of the authentication systems accepted by the Banco de España.
2. Select the option “Fill in the form” and then choose the option according to the person acting.
3. Fill in the requested data and, where appropriate, attach the necessary documentation.
4. Once you have filled in all the data and attached the necessary documentation, click on the “Send” button.
5. The Electronic Register displays a screen informing about the status of the application. In the event that the submission is successfully completed, the document “Acknowledgement of receipt” can be consulted. Optionally, it can be saved and/or printed as proof of the operation carried out.
6. At any time, from the option “Consult my documents submitted by Electronic Register”, you can consult successfully completed submissions.

What are hybrid payment institutions?

A hybrid payment institution is a payment institution which, in addition to providing payment services, carries out any other economic activity. This figure was introduced in Royal Decree 712/2010 of 28 May 2010 on the legal regime governing payment services and payment institutions, and applies to Financial Credit Establishments which, after applying for authorisation, provide some or all payment services. Some of the characteristics of hybrid payment institutions are:

• They carry out economic activities other than the provision of payment services.
• They are subject to a specific regulatory regime that establishes requirements for their authorisation and registration with the Banco de España.
• They must comply with the transparency and data protection requirements set out in the regulations.
• They must comply with the safety standards set by the regulations.
• They may be required to set up a separate payment institution if the pursuit of economic activities other than the provision of payment services may affect their financial soundness.

In short, hybrid payment institutions are those which, in addition to providing payment services, carry out any other economic activity. These institutions are subject to a specific regulatory regime that establishes requirements for their authorisation and registration with the Banco de España, and they must comply with the security and data protection standards established by the regulations.

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