Payment Systems


Amendments to the Central Bank of Malta Act, which came into effect on 1 October 2002, entrust the Central Bank of Malta with the responsibility for overseeing and regulating payment systems operating in Malta. The amended Act also sets as an objective for the Bank to promote and participate in the establishment of a sound and efficient payment system in Malta.

A payment system is defined in the Act as a formal arrangement, between three or more participants with common rules and standardised arrangements, for the execution of transfer orders between participants, including a clearing house. It is also a formal means for the settlement of payments relating to securities. This system, which must have the Bank’s approval, may include a payment, a clearing, a settlement, a netting and/or similar system. The Act provides that the Bank may also, on a case-by-case basis, designate as a payment system such a formal arrangement between two participants if the Bank considers that this is warranted on grounds of systemic risk. Information related to Directive 2007/64/EC on payment services in the internal market.

Central Bank of Malta Directives related to Payment Systems

The Central Bank of Malta has issued the following directives related to payment systems:

Directive No. 1: The Provision and Use of Payment Services

This Directive repeals the previous Directive No 1 which was modelled on the requisites of Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market, more commonly referred to as the Payment Services Directive (PSD1).

The new Directive transposes Titles III and IV of the revised Payment Services Directive (PSD2) being Directive EU 2015/2366 of the European Parliament and of the Council of 25 November 2015 on the payment services in the internal market, amending Directive 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC.

This Directive lays down provisions aimed at improving the payment industry, and reinforce consumer protection by providing more stringent provisions on strong customer authentication and secure communication.

Information on the rights of consumers under this Directive.

Supplementary Documentation:

Directive No. 2: Payment and Securities Settlement Systems

This Directive applies to the operation of, and the participation in, domestic payment and securities settlement systems, as well as to any other form of cash or security transactions, whether domestic or cross-border, that may be involved therein. The Directive seeks to reduce the legal and systemic risks that are associated with participation in payment and securities settlement systems and to minimise the disruption to a system that can be caused by insolvency proceedings against a participant in that system.

Directive No. 3: Superseded by EC Regulation 924/2009

Directive No. 4: Superseded by Directive 2007/64/EC

Directive No. 6: Harmonised Conditions for Opening and Operating Payments Module Accounts, T2S Dedicated Cash Accounts in TARGET2-Malta, and Tips Dedicated Cash Accounts in Target2-Malta

This Directive constitutes the legally binding contract that lays down the legal framework for participation in the TARGET2-Malta component system. It provides the access criteria for direct and indirect participation and the application procedure, together with the provision of details of obligations of the parties, the management activity of Payment Module accounts and the processing of payment orders in line with SWIFT standards. The Directive also includes a description of optional liquidity management features outlining the payments within the scope of the system, and establishes the security and contingency requirements.

Directive No. 7: Provision of Intraday Credit and Auto-Collateralisation

This Directive lays down the framework for the provision of intraday credit to eligible entities.

Directive No. 9: Collection of Information - Repealed on 6 February 2012

Directive No. 13: Approval of Payment Systems

This Directive sets out the parameters as well as the applicable terms and conditions for the approval of payment systems prior to commencement of operations.

Application Process

The Central Bank of Malta, as the authority responsible to oversee and regulate payment systems, hereby draws the attention of all persons, whether corporate or not, who are currently operating, or who intend to operate a payment system (as defined in the Central Bank of Malta Act) in Malta, that these operations require approval and authorisation under the Central Bank of Malta Act. Enquiries and applications for approval and authorisation are to be directed to the Manager, Regulation and Oversight Office.

Introduction to the Application Process Leading to the Approval of a Payment System

Application Form for Payment Systems

SEPA Competent Authority

The Central Bank of Malta has been appointed as the Competent Authority for SEPA implementation in terms of EU Regulation 260/2012.

Interchange Fee Regulation Competent Authority

The Central Bank of Malta has been appointed as the Competent Authority for the Interchange Fee Regulation in terms of EU Regulation 751/2015, by virtue of Legal Notice 326 of 2015.