Payment services

FinTechs belonging to this category offer alternative payment services which are supposed to provide a faster and cheaper way for national, European, and international payments for private and business customers by using new technologies.

For example, payment service providers hereby offer solutions to easily integrate several payment services in online shops.

Some FinTechs furthermore provide real cash register systems and online-reservation solutions for restaurants and shops providing their own payment services or making use of the payment services of FinTechs described above.

Introduction

Attitude of the country towards modern payment services

Payment services provided by FinTechs have helped to reduce payment costs and security in payments. Use of FinTech providers is becoming more and more popular in Spain since they facilitate economic online transactions.

Customer authentication regulated by Directive 2015/2366 has been applied in Spain in September 2019 and has helped to make safe payments online and therefore has contributed to an increase of online sales.  

COVID has affected a quick growth of online sales and therefore of a more widespread use of payment services. 

Legal affairs

Obligations and requirements to provide payment services or ancillary services described above

FinTechs that offer payment services are regulated by Royal Decree Law 19/2018 of 23 November on Payment Services (“LPS“) which implemented the European Payment Service Directive 2015/2366 EU (“PSD“). Also, Decree (EU) 2018/389 is applicable to these services in Spain. According to Spanish law, payment services include (i) services enabling cash to be placed on a payment account, as well as all the operations required for operating a payment account; (ii) services enabling cash withdrawals from a payment account, as well as all the operations required for operating a payment account; (iii) 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; (iv) execution of payment transactions where the funds are covered by a credit line for a payment service user; (v) issuing and acquiring of payment instruments; (vi) money remittance; and (vii) payment initiating service; and (viii) account information service.

To provide payment services in Spain, a firm must fall within the definition of a “payment service provider”, which includes credit entities, electronic money operators, payment service providers, Sociedad Estatal de Correos y Telégrafos, SA (the national postal service of Spain), the Bank of Spain, and the Spanish general government administration, regional and local authorities.

A firm that provides payment services in or from Spain as a regular business (and is not exempt) must apply for registration as a payment institution at the Bank of Spain. Also, it must be registered at the Spanish Commercial Registry. Sanctions may be imposed on any individual or legal person providing payment services without being authorised to act in Spain as a payment service provider.

Generally, payment service providers are subject to requirements concerning:

• Minimum share capital that may range from €20,000 to €125,000.
• Suitability of shareholders, directors and managers; directors, managing directors and holder of other similar positions in financial institutions are subject to suitability, experience and honourability requirements.
• Corporate governance and internal control systems.
• Anti-money laundering policies.
• Customer services.

Additional comments regarding the legal

situation for payment services or what FinTech’s must be aware of in this business area Spain’s legislation on payment services is up to date and regulates these services properly. 

In general, FinTech businesses that are involved in payment services are subject to AML/KYC and prevention of terrorist finance requirements. Among the requirements, the most important obligations for FinTech companies are the ones relating to the formal identification of the beneficial owner of any legal person or individual intending to enter into a business with the FinTech company and also the ones relating to the implementation of due-diligence measures.    

Economic conditions

Market size for payment services and biggest payment service providers

It is a growing market. All major banks in Spain have their own subsidiary providing payment services. 

Bizum, whose shareholders are the main banks operating in Spain, is the most popular mobile payment app in Spain. As of 2021, this app channelized more than €26 billion from 19 million users. In 2021 alone, “bizumers” carried out 505 million transactions between individuals. The number of transactions recorded shows that, during 2021, Spaniards carried out, on average, more than 16 bizums per second; on December 1st alone, 2.4 million of such transactions were made.

In terms of e-commerce payments, “bizumers” made 5.3 million purchases worth €320 million. These figures have undoubtedly been boosted by the significant increase in the number of online retailers accepting Bizum payments, which almost tripled last year to 26,700 retailers.

Additional comments regarding the economic situation for payment services or what FinTech’s must be aware of in this business area

Since e-commerce is growing rapidly, we believe that payment services will boom in Spain.