In the realm of financial services, particularly within the jurisdiction of Georgia, the operation of payment services is subject to regulatory oversight. This regulatory framework aims to ensure transparency, security, and stability within the payment sector. Central to this regulatory landscape are entities known as Payment System Providers, which play a crucial role in facilitating various payment transactions. The Payment System Providers encompass a diverse array of entities, including commercial banks, microbanks, and microfinance organizations. These entities serve as intermediaries between users and the payment infrastructure, enabling the smooth transfer of funds and the execution of payment transactions.
Payment System Providers are mandated to register with the National Bank of Georgia (NBG), a regulatory requirement aimed at ensuring compliance with statutory regulations and safeguarding the interests of consumers and stakeholders alike. However, it is noteworthy that commercial banks, microbanks, and microfinance organizations are automatically authorized to provide payment services under Georgian statutory regulations. Consequently, the rules pertaining to registration as a Payment System Provider do not apply to them. Therefore, if an entity, excluding commercial banks, microbanks, or microfinance organizations, intends to offer payment services, it shall register as a Payment System Provider before the NBG.
In the Georgian market, several prominent entities have established themselves as major players in the provision of payment services. Notable among these is leading commercial bank such as JSC TBC Bank. Additionally, brands such as CPAY, OPPA and eMoney Georgia have also registered as Payment System Providers in Georgia.
The Scope of the Services Provided by Payment System Provider
Pursuant to the applicable Georgian law, the Payment System Provider is authorized to perform the following:
• Services that ensure the debiting of funds from the payer’s account and related transactions;
• Services related to the crediting of funds to the recipient’s account and related transactions;
• Making payments through direct debits (including one-off orders), payment cards, or other electronic means, as well as credit transfers (including standing orders) within the funds or credit resources of a payment service user;
• Issuance and/or acquisition of payment instruments, including electronic money instruments;
• Execution of remittances;
• Issuance of electronic money (issuance of tokens e.g. via an ICO and the exchange of fiat money into cryptocurrencies and the exchange from cryptocurrencies back into fiat money), along with the implementation of payment transactions through electronic money, utilizing methods such as mobile phones, the Internet, or other electronic means;
• Execution of payment transactions based on the consent of the payer given by means of telecommunication, digital, or IT devices, to or in favor of the telecommunication, IT system, or network operator that acts as an intermediary between the payer and the payee, as well as between the user and the supplier of goods or services; and
• Provision of payment initiation services.
Hence, entities intending to undertake any of the aforementioned activities are obliged to undergo registration as a Payment System Provider before the NBG.
Procedure for Registration of Payment System Provider
To initiate the registration process, entities must first establish a legal entity and then provide a comprehensive set of documents to the NBG. The required set of documents include general information about the entity, a comprehensive list of payment services, details about the administrators of the Payment System Provider, information pertaining to significant shareholders, beneficial owners or individuals with significant influence, and other documents related to the payment system.
All documents must be either original or notarized copies, with foreign documents legalized and translated into Georgian.
Moreover, the NBG retains the authority to request further information or documentation from the entity as necessary to finalize the registration decision. The NBG may, at any stage of the registration process, ask the entity to demonstrate the electronic system used for implementing payment services or grant access to its employees at the head office for assessment purposes.
Should the documentation provided by the entity fail to meet the stipulated requirements, the NBG will grant 30 calendar days for rectifying the deficiencies and/or clarifying the submitted data. After the documentation provided to the NBG meets its requirements, a thorough examination of the submitted documentation within a stipulated timeframe of 60 calendar days is conducted, reserving the prerogative to solicit supplementary information, if deemed necessary.
Upon successful registration, the NBG issues an administrative document confirming the entity’s status as a registered Payment System Provider, along with details of authorized payment services.
Provision of Payment Services After Obtaining Approval by NBG
It is important to note that Georgian law does not impose any additional costs to be paid to the NBG, apart from the application review fee of GEL5,000. However, Georgian legislation does establish general regulations applicable to all Payment System Provider companies, including rules for their administrators. The administrator of a Payment System Provider is a member of the supervisory board, a member of the board of directors, or an individual authorized to independently undertake obligations on behalf of the Payment System Provider. The administrators overseeing Payment System Provider activities must meet the specific criteria, including: (i) no record of serious criminal offenses; (ii) compliance with financial regulations; (iii) compliance with fiduciary duties; (iv) relevant education and managerial experience in finance or related fields.
Moreover, Georgian legislation categorizes Payment System Providers as the accountable entities under Anti-Terrorism and AML laws, mandating compliance with their provisions. Specifically, these laws require Payment System Providers to conduct customer identification and verification using reliable and independent sources, as well as identifying beneficial owners, and to undertake reasonable measures to verify their identity based on credible sources. Additionally, Payment System Providers are obligated to monitor their business relationships with customers to ensure compliance with the Anti-Terrorism and AML laws of Georgia.
In conclusion, the regulatory landscape governing Payment System Providers in Georgia underscores the importance of adherence to strict guidelines to ensure transparency, security, and accountability within the financial sector. The procedures outlined for registration as a Payment System Providers highlight the meticulous process involved in obtaining approval from the NBG and emphasize the significant role Payment System Providers play in facilitating payment transactions within the country. By navigating the registration process effectively and complying with regulatory requirements, entities can contribute to payment infrastructure in Georgia, fostering economic growth.
