How to become a payment institution in Luxembourg

How to become a payment institution in Luxembourg | Charles Krier from Annerton | PayTechLaw | Cover picture: Adobe Stock/Maxim

Payment services within the meaning of the second payment services directive (PSD2) may be provided by different payment service providers. Thus, credit institutions and e-money institutions may, besides payment institutions, also provide payment services. This article will focus on the authorisation procedure as payment institution.


Why Luxembourg?

Before having a closer look at the application for authorisation as payment institution in Luxembourg, it is worth depicting the success of the Grand Duchy of Luxembourg as a leading international financial centre and as a payment hub.

First, there is the constant economic and political stability with a triple A rating for many years by all three major rating agencies and a low public debt.  Then of course, Luxembourg counts more than 123 international banks from more than 26 countries and ranks first as investment fund centre in Europe and second in the world with a global market share of 57%. Moreover, Luxembourg is home to the first and only exchange platform in the world dedicated to sustainable, green and social securities and is the global leader in corporate and green bonds[1].

When it comes to the regulatory environment in Luxembourg, you may count on an experienced and existing payments ecosystem composed of a business focused and innovative regulator and professionals that know the international payments industry. Moreover, you will find a state-of-the art infrastructure and an international approach with, amongst others, official documentation accepted in English, French or German (e.g., during the authorisation process).

Large companies such as Amazon Pay, eBay, Paypal and Airbnb Payments have already made use of the high concentration of expertise that can be found in Luxembourg.


Preperation is key

Before approaching the regulator, it is of essence to carefully prepare the application for authorisation as payment institution and to familiarize with all the relevant requirements (especially those specific to Luxembourg).

Thus, the applicant should plan enough time and budget for such preparatory phase. Indeed, getting familiar with the regulatory requirements linked to the provision of payment services and building the activity around these requirements is key in terms of cost and time efficiency. This should ideally allow the applicant to react to the requests for information during the authorisation procedure in a timely manner and not to unnecessarily retard the application process.

Besides the purely regulatory part, the applicant should also consider other aspects of the application process such as corporate law, tax law or social security law aspects that come with settling in Luxembourg (e.g., incorporation of the company, hiring of staff or renting of offices).


Three phases

The authorisation procedure as payment institution has recently been updated by the Luxembourg supervisory authority of the financial sector (CSSF) and now counts three phases:

1. Preliminary phase

The preliminary phase starts, after a first contact through a dedicated communication channel, with a presentation meeting organised between the CSSF and the applicant. In preparation of such meeting, the applicant is requested to prepare a presentation documentation consisting at least of (i) a business plan, (ii) diagrams of the fund and data transfers and (iii) specific explanations concerning the involved business partners.

After such first meeting with the CSSF, the latter may invite the applicant to provide further information on certain aspects of the project like the structural organisation, financial data, or the shareholding structure.

Where no blocking point is identified after the pre-analysis performed by the CSSF, the applicant is invited to submit a pre-notification in view of launching the pre-instruction phase.


2. Pre-instruction phase

The pre-notification is submitted to the CSSF via the provision of the duly completed application form for the authorisation as payment institution (which can be found on the CSSF’s website) together with the relevant annexes.

This is of course a key step that requires extensive preparation by the applicant.

Once the CSSF has received the pre-instruction application file (to be submitted in electronic form only), it will start its examination during which it will exchange with the applicant via different communication channels or during meetings as appropriate.

The CSSF indicates that such examination will at least take 6 months and makes it depended on factors like the complexity of the payment serviced provided, the quality and completeness of the information and the reactivity of the applicant.

With the issuance by the CSSF of a “green light letter”, the applicant will be allowed to submit a formal application on the basis of a complete and sufficiently compliant application file.


3. Instruction phase

This final phase of the authorisation procedure starts with the submission by the application of its formal and consolidated application file to the CSSF.

The CSSF then carries out completeness and compliance checks and if these are positive, the authorisation procedure ends with the publication of the applicant in the national register of payment institutions of the CSSF (as well as in the corresponding register of the European Banking Authority).


Having your team on-site

A crucial point for regulated entities such as payment institutions is to have the necessary manpower on-site. Depending on the size of the institution, a reduced team may be sufficient during the first months, provided that an overall forecast of the staff numbers for the first three years showing a clear staff evolution is presented at the latest during the pre-instruction phase.

By the way, there are many arguments to move to this country located in the heart of Europe which has recently been ranked first in the latest European City Index published by Oxford Economics, benchmarking 100 cities based on factors such as human capital, economics and quality of life. Moreover, Luxembourg has free public transport and lately scored 87% (3rd place) in the 2022 eGovernment Benchmark Report released by the European Commission, showing the country’s commitment to citizens’ access to online public services.

For more information:


[1] Sources:;

Cover picture: Copyright © Adobe Stock/Maxim

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