Payment Systems

Regulation

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. Further information related to Directive 2007/64/EC on payment services in the internal market is available here.


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 (259kb)

This Directive transposes Titles III and IV of Directive 2007/64/EC of the European Parliament and of the EU Council of 13 November 2007 on payment services in the internal market, more commonly referred to as the Payments Services Directive (PSD).

The Directive lays down rules concerning the transparency of conditions and information requirements for payment services, and the respective rights and obligations of payment service users and payment service providers in relation to the provision of payment services as a regular occupation or business activity.


Directive No. 2: Payment and Securities Settlement Systems (134kb)

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 Participation in TARGET2-Malta (643kb)

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 (123kb)

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 (50kb)

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 (66kb)

Application Form for Payment Systems (114kb)


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.