Malta Payment Institution Licence Services and Authorisation Support

A licensed payment institution in Malta is authorised to provide one or more of the payment services listed in the Second Schedule to the Financial Institutions Act, Chapter 376 of the Laws of Malta. These activities are transposed from the revised Payment Services Directive (PSD2) and  include enabling cash deposits and withdrawals on a payment account, executing payment transactions and credit transfers, issuing or acquiring payment instruments, and money remittance. 

Once licensed, a business becomes an authorised payment institution, sometimes referred to simply as  a PI licence, able to provide one or more of the payment services listed in the Second Schedule to the Financial Institutions Act, Chapter 376 of the Laws of Malta. 

Unlike an electronic money institution, a payment institution does not issue a separate transferable monetary value. It facilitates payment transactions and safeguards client funds for that purpose, without creating stored electronic value that can be held or transferred by third parties as e-money itself. Any funds which the  payment institution receives from customers for the provision of payment services do not constitute a deposit or other repayable funds under the Banking Act, and must be safeguarded rather than used for the licensee’s own purposes. 

Payment institutions may also carry out closely related ancillary activities, such as operational services connected to executing payment transactions, foreign exchange strictly tied to those payment services, safekeeping, and the operation of payment systems. 

Meeting the requirements for a Malta payment institution licence goes beyond satisfying a minimum capital figure. The MFSA assesses whether the applicant’s structure is credible, complete and genuinely aligned with how the business intends to operate. 

Initial capital depends on which payment services the applicant proposes to provide, under Chapter 3 of the Financial Institutions Rulebook (FIR/03):

• €125,000 for any of the services enabling cash placement/withdrawal, payment transaction execution, credit transfers, direct debits, or the issuing/acquiring of payment instruments 

• €20,000 where the institution provides money remittance only 

• €50,000 where the institution provides payment initiation-adjacent services executed via a telecoms, IT or network operator acting as intermediary 

The MFSA may also require a higher level of initial capital, or set an amount up to 20% above or below the standard “own funds” calculation, depending on its evaluation of the applicant’s risk-management processes and internal controls. 

Governance requires at least two individuals effectively directing the business from Malta, a board of at least three members including at least one independent non-executive director, and clearly defined reporting lines. If you want to understand how these roles are assessed in practice, our MFSA required positions guidance sets this out in more detail. 

Safeguarding is central to a payment institution’s regulatory model, since the institution does not accept deposits in the way a bank does. Client funds must be identified, segregated, reconciled and capable of being returned on request. Our additional support services include framework reviews, reconciliation controls and annual audit readiness for payment institutions specifically. 

Compliance requires a practical AML/CFT framework covering onboarding, monitoring and reporting, appropriate to the scale of the business. Our AML and KYC outsourcing services can help build tailored systems and procedures from the outset. 

Where applications commonly fall short is the gap between a structure that looks correct on paper and one that reflects how the business will genuinely function. A well-prepared business plan, supported by properly costed financial projections, are the ideal measures towards closing that gap early in the licencing process. 

The Malta payment institution application follows a defined structure, though the pace and outcome depend heavily on how well each stage is prepared. 

It begins with structuring and feasibility, where the proposed activities, safeguarding method and capital position are clearly defined, followed by a presentation and a formal submission of intent to the MFSA a. The presentation needs to cover the group structure, the licensable activities being sought, a flow-of-funds diagram, financial projections, the organisational chart for the first three years of operations, and the proposed safeguarding and outsourcing arrangements. 

Application preparation is the most demanding stage, bringing together the governance framework, policies, financial projections and supporting documentation into a coherent submission. Once submitted, the application enters regulatory review, where the MFSA may raise follow-up questions before issuing an in-principle approval. 

Pre-licensing conditions typically follow, including finalising the Memorandum and Articles of Association, confirming the recruitment or engagement of key functionaries, and evidencing the capital injection. Applicants are generally allowed six months to satisfy these conditions before the in-principle approval lapses. Once met, the MFSA issues the authorisation, followed by post-licensing pre-commencement conditions (such as confirming the safeguarding account arrangement) before the institution can begin operating. 

Timelines vary considerably depending on how complete and realistic the initial submission is. Getting the structure right from the outset, including through proper Malta company formation support, makes a meaningful difference to how smoothly the process runs. 

hoosing between a payment institution licence and an EMI licence is a structuring decision that should be made early, since it shapes the capital position, the safeguarding model and the scope of activities available. This comparison is often shorthanded as PI vs EMI, and getting the distinction right at the outset saves significant rework later. 

A payment institution licence is generally the appropriate route where the business facilitates payment transactions, processes transfers, issues or acquires payment instruments, or carries out money remittance, without creating a separate, transferable electronic monetary value. Capital requirements are proportionate to the specific services provided, ranging from €20,000 to €125,000 depending on the activity. 

An EMI licence is generally required where the business issues electronic money: a distinct stored monetary value, separate from the underlying funds, that can be transferred between users and held by third parties as e-money in its own right. This typically applies to wallet or stored-value models. EMI licensing carries a single, higher initial capital requirement of €350,000 regardless of which specific activities are undertaken, though an EMI would also be authorised to provide payment services alongside issuing electronic money. 

The right route depends on how the product actually works, not on how it is marketed. A wallet that simply holds a running balance of client funds for future payments is not automatically e-money; the question is whether a distinct, transferable monetary value is being created and accepted by third parties as such. This distinction has become more closely scrutinised following recent regulatory and judicial guidance on what qualifies as electronic money, and should be assessed carefully at the structuring stage, ideally before an application is drafted rather than after. 

The regulatory framework for both licence types is also expected to change under the forthcoming PSD3 and PSR requirements for payment firms, including implications for authorisation, safeguarding and licence transition. For firms already weighing up which route fits, our financial services advisory services can help assess the options against the actual business model before an application is drafted. 

Understanding the realistic cost of a Malta payment institution licence early helps set expectations and avoids issues later in the process. 

Initial capital sits between €20,000 and €125,000 depending on the specific payment services applied for, and must be fully paid and evidenced before formal authorisation. Beyond the initial capital, ongoing own funds requirements are calculated using whichever method the MFSA determines appropriate for the business (based on fixed overheads, payment volume, or relevant income), and the higher of that calculation or the initial capital threshold must be maintained at all times. 

Application and supervisory fees apply in terms of the Financial Institutions (Fees) Regulations, alongside operational costs such as local staffing, safeguarding arrangements, compliance systems and audit requirements. A realistic view of these costs from the outset certainly makes for good planning but also aligns with the MFSA’s expectations for a well-thought and sustainable financial model. 

A payment institution licence from the MFSA provides access to the European payments market within a recognised regulatory framework. Once authorised, the licensee can passport its services to other EU/EEA member states through a straightforward notification process, without needing a separate licence in each jurisdiction. 

Malta’s regulatory environment is well established for financial institutions, lending credibility with banking partners, acquirers and clients. For businesses building payment products aimed at European markets, Malta continues to offer a proportionate route to authorisation, since capital requirements scale with the actual services being provided rather than applying a single threshold which does not consider actual scope.