Payment institutions and electronic money institutions
Published: 07.03.2023
Where a payment institution (PI) or an electronic money institution (EMI) wants to involve an outsourcing service provider or agent in the provision of services, it is bound by the requirements laid down in Chapter III of the Law on Payment Services and Electronic Money (LPSEM), i.e. a qualified and experienced service provider has to be chosen, customers have to be informed, as well as specific requirements have to be included in the contracts concluded with an outsourcing service provider or agent. These requirements refer to both licensed and registered PIs and EMIs.
PIs and EMIs can provide payment services as well as distribute and redeem electronic money through agents.
Information referred to in Section 27 of the LPSEM has to be included in the agent authorisation agreement.
PIs and EMIs have to take account of the fact that the Agent Authorisation Agreement enters into force only upon receipt of the consent from Latvijas Banka.
To enable Latvijas Banka to assess the Agent Authorisation Agreement, PIs and EMIs have to submit the information specified in Section 27 of the LPSEM to Latvijas Banka:
- an application,
- the description of the procedure of services to be provided,
- an original copy or a certified copy of the authorisation agreement (entered into with the agent),
- the description of internal control mechanisms which will be used by the agent for the prevention of money laundering and terrorism and proliferation financing,
- information on the conformity of the agent's responsible personnel (members of the Council, Board) with the requirements of the laws and regulations for the prevention of money laundering and terrorism and proliferation financing.
Latvijas Banka evaluates the information submitted within one month and approves the involvement of the agent or informs PIs or EMIs about its objections. Latvijas Banka does not coordinate the use of the agent in cases where:
- the requirements of the LPSEM are not complied with,
- false information is provided,
- the provision of services through the agent endangers the stable operation of PIs or EMIs and may infringe the interests of service users,
- the powers of the management body of the institution are limited
- and in other cases specified in Section 28 of the LPSEM.
Activities of PIs and EMIs in the fields of the provision of payment services or the issuance of electronic money may be delegated to outsourcing service providers pursuant to the requirements laid down in Section 29 of the LPSEM.
Prior to outsourcing, PIs and EMIs have to receive the consent from Latvijas Banka thereof. In order to enable Latvijas Banka to coordinate outsourcing, PIs and EMIs have to provide the following information:
- a motivated application on the receipt of the outsourced service,
- a description of the policy and procedure of the outsourced service,
- the original copy or certified copy of the outsourcing contract.
The outsourcing contract has to include the information specified in Paragraph five of Section 29 of the LPSEM.
When developing the outsourcing policy and procedure, PIs and EMIs have to comply with the provisions of Paragraph six of Section 29 of the LPSEM.
To ensure appropriate management and risk assessment of outsourcing and appropriate impact of outsourcing arrangements on business continuity, licensed payment and electronic money institutions should apply FCMC Regulation No 84 "Regulations on Outsourcing Arrangements" of 6 July 2021.
Latvijas Banka examines the information submitted within one month and approves the use of outsourcing or informs PIs or EMIs about its objections.
| Duty to provide information | Documents to be submitted | Basis | Submission deadline | Refers to PIs/EMIs |
| Changes in PI/EMI members | ||||
| - Management Board and Council; - the persons who, upon taking significant decisions on behalf of the institution, cause civil consequences for the institution; - the persons responsible for the implementation of AML/CTF requirements; - the persons directly responsible for the management of the payment services of the institution. |
A motivated application, individual CVs, education documents, as well as certificates, proofs of studies (if any) | Paragraph one, Section 52 of the LPSEM | Approval from Latvijas Banka has to be received before changes are made. Latvijas Banka carries out an assessment within 30 days. | Registered/Licensed |
| The obligation to make a notification in the cases of acquiring, increasing, terminating or decreasing a qualifying holding | ||||
| Where a person wants to acquire a holding of 10% or more (20%, 33%, 50%) | A written notification and information pursuant to Paragraph one, Section 15 of the LPSEM | Paragraphs one and two, Section 14 of the LPSEM | Approval from Latvijas Banka has to be received prior to the acquisition, increase or decrease of the holding. Latvijas Banka carries out an assessment within 60 business days. | Licensed |
| Where a person wants to terminate or decrease a holding (below 20%, 33% or 50%) | A written application and information pursuant to Section 16 of the LPSEM | Paragraphs one and two, Section 14 of the LPSEM | Approval from Latvijas Banka has to be received prior to the acquisition, increase or decrease of the holding. Latvijas Banka carries out an assessment within 60 business days. | Licensed |
| Changes in the information on persons having directly or indirectly acquired a qualifying holding | Written notification | Paragraph one, Section 52 of the LPSEM | Approval from Latvijas Banka has to be received before changes are made. Latvijas Banka carries out an assessment within 30 days. | Registered |
| Annual notification about stockholders/shareholders having a qualifying holding as on 31 December | Section 17 of the LPSEM | Annually by 31 January | Licensed | |
| Information on the compliance of the person, who wants to increase or has increased indirectly a qualifying holding in the PI/EMI, with the requirements specified in Paragraph one, Section 15 of the LPSEM | Paragraph two, Section 19 of the LPSEM | At the FCMC's request | Licensed | |
| Information to be made public | Basis | Place of publication | Publication deadline | Comments |
| The PI/EMI agent informs payment service users or electronic money holders that he/she is offering services on behalf of the institution | Paragraph 21, Section 27 of the LPSEM | Not specified | Applicable if services are provided through an agent | |
| Information as regards an obligation of the PI/EMI, within a year after expiry of the term of operation of the contract mutually concluded between the PI/EMI and the payment service user, to refund the unused money upon a request of the payment service user, without requesting payment for that | Section 42 of the LPSEM | In the contract | ||
| Information on the sum total of payments made in the reporting year | Paragraph two, Section 46 of the LPSEM | In the annex to the annual statement/consolidated annual statement | Timeframe for the production of the annual statement/consolidated annual statement | |
| Information on the outstanding electronic money as on 31 December of the reporting year and the amount of electronic money redeemed in the reporting year. (The requirement refers to EMIs) | Paragraph 21, Section 46 of the LPSEM | In the annex to the annual statement/consolidated annual statement | Timeframe for the production of the annual statement/consolidated annual statement | |
| Provision of information to the payer on the exchange rate to be used and the fee | Paragraph two, Section 58 of the LPSEM | Not specified | If, prior to commencing a payment at the site of selling goods or providing services, the seller offers the payer to perform currency conversion or if it is offered by the payee to perform currency conversion | |
| Information on the individual fee for each service included in the package | Paragraphs one and three, Section 581 of the LPSEM | In the customer service premises of the payment service provider or website thereof, and also – upon a request – in printed form or using another durable medium | If a payment service provider offers to open a payment account as part of a package together with another service which is not linked to the payment account | |
| Information on the fee for the whole package, as well as the individual fee for each service included therein | Paragraphs two and three, Section 581 of the LPSEM | In the customer service premises of the payment service provider or website thereof, and also – upon a request – in printed form or using another durable medium | If one or several services are offered as parts of a package of services linked to the payment account | |
| Information on a reduction for the use of a given payment instrument where the payee offers such a reduction | Paragraph one, Section 59 of the LPSEM | Prior to commencing a payment | ||
| Information on the fee where the payment service provider or another party involved in the payment requests a fee for the use of a given payment instrument | Paragraph two, Section 59 of the LPSEM | Prior to commencing a payment or pursuant to the requirements laid down in Section 63 of the LPSEM | ||
| A payment service provider is required to ensure that the informative leaflet developed by the European Commission regarding consumer rights in the field of payment services can be easily accessed by a consumer | Section 591 of the LPSEM (1) | On website or in printed form in branches, with representatives and outsourcing service providers, if any In relation to persons with disability, relevant alternative means have to be used in order to ensure that information is available to such persons in a form that is comprehensible |
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| The payment service provider provides information to the consumer regarding the fee applied thereby to the services most frequently used by consumers (the price list of services) | Paragraphs two and three, Section 601 of the LPSEM | In the customer service premises or on the website At the consumer's request – in printed form or using another durable medium Or together with the draft framework contract
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In a timely manner, prior to conclusion of a framework contract or submitting it together with the draft framework contract | |
| The payment service provider provides a report to the consumer on the fee applied to the services which are linked to a payment account | Paragraphs one and two, Section 602 of the LPSEM | The means (type) of communication upon which the parties have agreed Latvijas Banka determines the minimum requirements in relation to the type of the provision of the report The report may be provided together with another information to be supplied to the consumer regarding services which are linked to a payment account if the requirements of Latvijas Banka are not violated |
At least once a year | |
| The payment service provider provides the payer with information regarding the way of use of the payment instrument, liability of the payment service provider and the payment service user, fees applicable to the payment, and other information needed for the payer to take a justified decision in relation to the use of the payment service | Paragraph one, Section 62 of the LPSEM | If the payment service user is using a payment instrument which, according to the framework contract, concerns only individual payments that do not exceed 30 euro or that either have a spending limit of 150 euro or store funds that do not exceed 150 euro at any time | ||
| The conditions and procedures for redeeming electronic money shall be determined in the contract between the EMI and the electronic money holder, indicating also the fee for redeeming electronic money therein. | Section 621 of the LPSEM (2) | In the contract | Before the e-money holder is being bound by the contract or before it agrees to the offer of the EMI | |
| Information to be provided in the framework contract (Section 64 of the LPSEM) | Section 63 of the LPSEM | In printed form or using another durable medium | Before conclusion of a framework contract or before a payment service user has agreed to use the offer | |
| Information on the payment | Section 69 of the LPSEM (payer's PSP to the payer) Section 70 of the LPSEM (payee's PSP to the payee) |
After the amount of the payment is written off of the account of the payer or – in cases when the payer is not using a payment account – after receipt of the payment order To the payees – after the payment execution Or at least once a month if agreed upon in the framework contract |
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| The account statement if the parties have agreed upon in the framework agreement | Section 701 of the LPSEM | Provided for in the framework contract | Provided for in the framework contract | |
| Information on the single payment service not subject to the framework contract (Section 73 of the LPSEM) | Section 72 of the LPSEM | In an easily accessible manner Upon a request of the service user – in printed form or on any other durable medium |
Before the payment service user commits to use the single payment service | |
| Information on the single payment | Section 74 of the LPSEM (payer's PSP to the payer) Section 75 of the LPSEM (payee's PSP to the payee) |
Pursuant to Paragraph one, Section 72 of the LPSEM | To the payer – immediately after receipt of the payment order To the payee – immediately after the execution of a payment |
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| Information on the account switching service | Section 755 of the LPSEM | Upon a request – in printed form or on another durable medium, and also continuously at its customer service premises and on its website | ||
| Information on blocking the payment instrument | Paragraphs two and three, Section 81 of the LPSEM | In the manner agreed upon by the payment service provider and the payment service user | Before the payment instrument is blocked (where possible) and at the latest immediately thereafter | |
| Information on blocking access of the payment initiation service provider or account information service provider to the payment account | Paragraphs five and six, Section 81 of the LPSEM | In the manner agreed upon by the account servicing payment service provider and the payment service user | At the earliest opportunity, but no later than within the time period provided for in Section 94 of the LPSEM | |
| Information on the refusal to execute a payment order | Paragraph one, Section 91 of the LPSEM | In the manner previously agreed upon | At the earliest opportunity, but no later than within the time period provided for in Section 94 of the LPSEM | |
| Information to the consumer on the credit institution's decision to refuse the opening of a basic account and on the procedures for the examination of complaints and the procedure for out-of-court handling of disputes | Paragraphs eight and nine, Section 972 of the LPSEM | In writing to the address provided for communication (including electronic mail address) in the application from the applicant | Immediately | |
| Information on the basic account and the conditions for its use | Section 976 of the LPSEM | In a visible place at its branches and on its website | ||
| Complete written information regarding the procedure for the examination of submissions and complaints (disputes) | Paragraph one, Section 104 of the LPSEM | Freely available at the institution of the payment service provider or electronic money issuer and on the website of the payment service provider or electronic money issuer if such has been created | ||
| An answer to the complaint and information on the extension of the time period for the examination of the complaint | Paragraphs four and five, Section 104 of the LPSEM | In writing or using another durable medium on which it has been agreed upon | Within 15 business days after receipt of the complaint The time period for the receipt of the final answer may not exceed 35 business days since receipt of the complaint |
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| Information on at least such one out-of-court dispute resolution body within the meaning of the Law on Out-Of-Court Consumer Dispute Resolution Bodies which is competent to handle a dispute regarding the rights and obligations arising from the LPSEM | Paragraphs six and seven, Section 104 of the LPSEM | At the institution of the payment service provider or electronic money issuer and on the website of the payment service provider or electronic money issuer if such has been created, as well as in the section of general provisions in the contract |