Payment Services and their Continued Expansion

From Traditional Banking to Cryptocurrencies, E-Wallets and Blockchain

What we consider to be traditional banking is slowly evolving, first with the introduction of credit cards in the 1950s, and today with the advent of contactless cards, mobile applications and e-wallets. The days of cash transactions as payment for services and goods has progressed to the exchange of digital currencies through new platforms such as, amongst others, blockchain technology. These evolvements within the financial industry have seen physical contact with banking institution evolve into digital transactions and slowly shift away from a centralised financial system.

Payment Service Providers and Electronic Money Institutions

The growth of Malta’s economy, especially in the areas of Fintech and iGaming, has seen an increase in Payment Service Providers (PSPs) and Electronic Money Institutions (EMIs) in Malta as a solution to companies within the industries that require fast and efficient payment and withdrawal solutions.

A PSP is a digital software that can process payments, regulating the link between the client and the merchant’s bank account. Such a solution means that the merchant will not need to set up such a link him/herself and will not be exposed to data and security risks. Meanwhile, an EMI is a financial institution which is licensed as a PSP which can also issue electronic money in an e-money exchange. PSPs and EMIs, are regulated by the Malta Financial Institutions Act, Chapter 376, and have been used to issue cards for payment accounts.

Blockchain and Payment Services

With the advent of blockchain technology, payment services have moved away from traditional banking to and towards the use of blockchain services. Cash is becoming less popular as blockchain technology moves payment services away from a central authority. Smart contracts, through which payment systems are self-regulated, offer more transparency and control over payments. In fact, payments administered via blockchain technology only take a few seconds as opposed to a few days.

Our Financial Services Practice

Malta’s strong financial legislation and sound framework for emerging sectors, has created the ideal environment for new payment services such as payment service providers and electronic money institutions. Chetcuti Cauchi Advocates' finance and fintech team offers a wide range of services ranging from licensing to regulation advice and compliance.