The execution of payment transactions and money remittance are payment services. If you want to provide payment services, you must have a license. There are five other payment services in addition to the execution of payment transactions and money remittance.
Execution of Payment Transactions
The execution of payment transactions is defined in Section 1 (1) sentence 2 no. 3 of the German Payment Services Act (Zahlungsdiensteaufsichtsgesetz – ZAG) as the execution of payment transactions by direct debit, payment instruments or credit transfer. The execution of payment transactions is only provided by the party executing the respective payment transactions and not merely initiating them. For this reason, only those companies that participate in the respective payment scheme perform the payment transaction. These are, for example, banks which are members of the European Payments Council themselves or through their banking organisations, or payment service providers which are members of the MasterCard and Visa payment systems.
Payment service providers which only instruct a bank to collect direct debits on behalf of a merchant on the payment service provider’s current account and transfer the money to the merchant do not normally carry out the direct debit transaction and therefore do not execute the respective payment transactions. This is because they only initiate the payment transaction in question. However, such payment service providers may provide other payment services (e.g. the acquiring business or the money remittance business). The payment transaction may be carried out with or without the granting of a credit line. This means, for example, that a payment service provider executing credit transfers may make advance payments to its customers.
Money Remittance
Under Section 1 (1) sentence 2 no. 6 ZAG, a money remittance is deemed to exist where payments are executed without setting up a payment account in the name of the payer or payee and where there is no other payment service. Typical examples of money remittance are the transfer of funds which are paid in by cash (e.g. Western Union, Moneygram or Ria) and the transfer of funds via a payment account of the payment service provider.
When money is transferred from a payment account of the payer to a payment account of the payee, this is usually the execution of payment transactions. Where an acquirer accepts payments on behalf of a merchant, this is usually acquiring, even if the acquirer does not keep a payment account for the merchant. Money remittance must not involve the granting of a credit line. The payment service provider may only transfer money that his payment service user has given him in advance. Something different applies to CRR credit institutions. These may also offer money remittance with the granting of a credit line.
Different Requirements for the Execution of Payment Transactions and Money Remittance
If the execution of a payment transaction or money remittance is provided by a payment institution or an electronic money institution, the different classification has consequences:
- The execution of payment transactions may involve the granting of a credit line, but money remittance may not.
- For money remittance, the requirements for initial capital are lower.
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