Payment business involving the extension of credit

Subject to any exceptions, payment business involving the extension of credit is a payment service which requires a licence. Pursuant to Section 1 para. 1 sentence 2 no. 4 of the German Payment Services Supervision Act (ZAG), this includes the execution of payment transactions, including transfers of funds to a payment account with the payment service user’s payment service provider or with another payment service provider by

  1. the execution of direct debits, including one-off direct debits (direct debit business),
  2. the execution of payment transactions by means of a payment card or a similar payment instrument (payment card business),
  3. the execution of credit transfers, including standing orders (credit transfer business), that are covered by a credit line for a payment service user within the meaning of Section 3 para. 4 ZAG.

The term “payment business involving the extension of credit” is described in more detail in BaFin’s guidance note (Hinweise zum Zahlungsdiensteaufsichtsgesetz (ZAG) dated 22/12/2011, as amended on 29/11./2017 at no. 2. c)).