Banks and payment service providers (PSPs) should be partners rather than rivals according to this document. PSPs are a new type of market player established by EU payment regulations to help banks and customers by diversifying risks and cutting costs. PSPs are authorized to perform various payment activities for lower costs than banks and can serve high-risk customers or issue innovative payment instruments. The document argues that banks should see PSPs as beneficial partners that can generate new customers, extend product lines, and share risks rather than as competitors.

1. Banks &
PSPs:
Partners rather than Rivals

2. Introduction
Since 2009 payment services in the EU have been regulated based on
Directive 2007/64/EC (PSD 64);
Since 2011 Directive 2009/110/EC (EMD 110) has been providing regulatory
framework for the business of e-money issuers.
The Directives have introduced a new type of market player: a payment
institution (PI) and an electronic money institution (EMI);
By 2018 all EU member states will have to adopt measures to comply with
the new version the Payment Services Directive - PSD 2 – which offers
payment institutions new business opportunities and requires that banks
open up and co-operate with PSPs.

3. Allowable Activities
An E-money / Payment Institution is allowed to:
• Open and maintain e-money / payment accounts (including in
IBAN format) for their customers – legal and natural persons;
• Issue payment instruments such as pre-paid and debit cards;
• Offer money remittance services (without a payment account);
• Receive payments made to their customers using various
payment methods including a payment card, money remittance,
credit transfer, etc.
IMPORTANT! The costs of setting up and managing a PI are far
below those involved in setting up and managing a bank

4. Authorisation and Initial Capital Requirements
Under PSD 64, a payment institution (PI) may operate as Small PI or
Authorised PI:
• There are no specific capital requirements for the small PI. However, in most
EU member states a total value of payment transactions of a small PI must
not exceed EUR 36,000,000 per year;
• An authorised PI offering a full range of payment services must maintain its
capital at any time at no less than EUR 125,000
EMD 110 also distinguishes two types of e-money institutions (EMI):
• Small EMI with an average outstanding e-money limited to EUR 5,000,000
and Authorised EMI;
• An authorised EMI must hold the capital of at least EUR 350,000;
A special attention is paid to the sources of funds used as capital!

5. Rivals or Partners?
Banks often perceive PSPs as:
a) rivals;
b) extra risk
WE FIND THIS UNJUSTIFIED!
PSP is a new instrument meant to:
a) help banks and their customers;
b) diversify risks;
c) cut costs
PSP + BANK =
PSP = RISK ?

6. Use Cases
A PSP will be good for:
1. serving customers under the high-risk category (FX, betting,
gambling etc.);
2. managing payment flows of a group of affiliated companies and
their counterparties by way of corporate treasury;
3. managing money remittance networks;
4. providing innovative payment services such as mobile and
contactless payments based on NFC, blockchain, HCE and other
modern technology;
5. issuing payment instruments such as pre-paid cards etc.

7. Benefits for Banking Partners
1. A fair commission for promoting our products and services;
2. Getting new customers and retaining existing ones;
3. Extended product line through innovative instruments offered
by PIs and EMIs;
4. Risk diversification

8. Our Value Proposition
A turn-key payment service business in the EU - the package includes:
• A preliminary consultation, the selection of proper infrastructure,
jurisdiction, type of licence, business model etc.;
• Assistance with the authorisation process in Cyprus, the Czech Republic, the
UK, Malta etc.;
• Preparation of internal procedures and documents;
• Local office set-up and staffing;
• A complete IT solution, including accounting engine, mobile and internet
banking applications, AML module etc.;
• Deployment of the IT solution on a hosting site and maintenance services;
• Assistance in establishing business relationships with banks, third-party
payment systems and payment service providers, including card issuers,
money transfer systems etc.

9. Our Clients
MoneyPolo is a universal payment system providing services for
tens of thousands of customers across the globe.
Registered in the UK as API FCA.
Website: www.moneypolo.com
PayDek is a master agent of the Anelik international money
transfer system.
Registered in the UK as API FCA.
Website: www.peydek.com
Connectum is a provider of online banking and internet
acquiring services.
Registered in the UK as API FCA.
Website: www.connectum.eu

10. About us
Advapay is a team of professionals with more than 20 years of
experience in IT, fintech, banking and financial consultancy
• Our success story is about 150+ successful IT projects with payment
systems, in-house bankers, payment service providers across the
world;
• We deliver complex large-scale business solutions in the fields of
banking and payment services;
• We treat each client individually bearing the specifics of their
business in mind;
• We are open to both established businesses and start-ups
We value creative ideas of our clients and work hard to
implement innovative and efficient solutions in each project!

11. THANK YOU FOR YOUR ATTENTION!
Maxim B. Ivanchenko
CEO & Founder Advapay OÜ, Canopus IT
E-mail: CEO@CANOPUS.RU
www.advapay.eu
www.epaysuite.com