July 20, 2024

PSP GEORGIA 2024: New Regulations for Payment Service Providers

A payment service provider license allows financial activities both within Georgia and abroad, offering services for debiting and crediting funds, issuing payment instruments including electronic money, executing monetary transactions (domestic transfers, international transfers, utility payments, depositing and withdrawing funds from online gambling and sports betting sites, payments through Apple Store, Play Store, Google Store, conducting P2P as well as B2B transactions for e-commerce), integrating with international electronic wallets (WebMoney, Yandex.Money), currency conversion, conducting payment operations with electronic money using smartphones, the internet, or other devices, debiting personal and credit funds using bank cards or other payment instruments, and performing transactions based on the payer's consent using digital or communication devices.
To obtain a license, a company must have a full substance presence in Georgia, including a registered office with a security system and video surveillance, qualified employees, and an administrative body that is permanently located in Georgia and manages the company from its territory (director, administrator). The company may have a development team/developers from other countries, but when submitting the application, it is necessary to disclose all information about agents, providers, and counterparties with whom the company cooperates. The electronic platform that will service and provide payment services must meet the following requirements:
- The platform must ensure the uninterrupted execution of all transactions, guaranteeing their accuracy and timeliness.- The platform must undergo regular vulnerability assessments to identify and address potential security threats.- The platform must use modern encryption technologies and other measures to protect client data and transactions from unauthorized access.- The platform must comply with international and national security and information protection standards, such as PCI DSS (Payment Card Industry Data Security Standard), necessary for working with Visa cards.- There must be protection against cyberattacks.- The platform must undergo regular audits and certification by independent experts to confirm compliance with established standards and requirements.
The company must appoint a qualified director with higher education in fields such as economics, law, finance, banking, or related areas. The director can be a citizen of any country but must spend at least 12 days in Georgia. Although this is a legal requirement, in practice, the regulator requires the effective management body to be permanently based in Georgia.
Requirements for Beneficiaries and Directors:
1. Personal Documents: - Notarized and legalized copy of passport. - Proof of residential address (recent utility bill or bank statement).
2. Financial Portfolio and Experience: - Business resume (CV) in English (no notarization required). - Notarized copies of educational certificates.
3. Documents Confirming Financial Activity and Status: - Bank statement (showing income sources for the last six months). - Credit report or information from the debtor registry (if available). - Police clearance certificate (issued no more than 60 days before the submission of documents). Note that if any of the beneficiaries/directors have a criminal record, the regulator will deny the application.
For complete information and documentation, please refer to the SOW (Scope of Work). Please contact us to obtain SOW - moc.srentrapezdavhkor%40proc
Notes:- Educational certificates must confirm higher education relevant to activities in the financial sector.- Photographs can be submitted in any format: digital or printed.- If you have other citizenships, please also disclose this information and provide the corresponding document copies.
To obtain the license, the company needs to develop the following document package:- AML Policy- AML Procedure (internal instruction)- Client Identification Procedure- Transaction Identification Procedure- "Know Your Employee" Policy- Document containing GDPR provisions- KYC/KYB Procedure (internal instruction)- Job descriptions for employees- Employment contracts with employees- Company business plan- Information on all counterparties
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On May 2, 2023, the National Bank of Georgia published updated regulations for payment service providers. The legislative changes include updated rules for capital adequacy, registration, and regulation of providers.
► For significant providers, depending on the type of their services, minimum capital requirements and a methodology for calculating capital have been established. This refers to the Capital Adequacy Ratio (CAR), which is used to assess the provider's resilience and ability to cover financial losses with its own funds. The ratio is expressed as a percentage and is calculated as the ratio of the provider's capital to its risk.
When calculating CAR, two types of capital are considered:- Tier 1 Capital: This can cover losses without the need to cease operations. It includes own funds such as shareholder capital and retained earnings.- Tier 2 Capital: This can cover losses in the event of the provider's liquidation. It provides a lower level of protection to depositors and includes elements such as subordinated debts and reserve funds. The regulator monitors this indicator to ensure the reliability of banks and their ability to cover losses, contributing to the provider's stability and efficiency.
► The changes came into full effect on January 1, 2024.