Practical aspects of establishing and maintaining payment services business in the Czech Republic

Presentation overview Doing business in the Czech Republic Licensing and regulation of payment services providers PI and EMI comparison Legislation and business Advantages of the jurisdiction Our services Questions and answers

Business in the Czech Republic GDP growth in 2015 is 4,8% Continuous reforms to simplify business administration Qualified and reasonably priced labour force Low operational costs Strong and stable financial system Low corruption level Fair authorities approach

Legislation and business Formal activities under the 284/2009 «Payment Services» law Business activities Execution of payments, initiated by a recipient or sender without a credit line Maintaining of current accounts, currency exchange services, cards acquiring, payments aggregation Placement and withdrawal of cash to/from payment account Cash operations related to payment accounts Execution of payments, initiated by a recipient or sender with a credit line Credit cards, overdrafts Execution of payments without usage of a payment account Money remittance Payment instruments issuance Issuing of debit or credit cards, internet banking service, mobile applications

Practice of licensing and regulation of payment services providers Regulator requires sufficient capital to cover the costs till the break- even point, at least 180k EUR for PI and 400k EUR for EMI Strict source of funds review process – legal and taxed income, lower toleration of holding structures and initial capital loans Rigorous process of business plan appraisal – real statistical data or deep and reliable marketing research required Simplified regime for SPI’s and SEMI’s – absence of capital requirements, simplified fit and proper tests, no operational risk management requirements etc. Always better to start with SPI and then apply for PI license

PI and EMI comparison The main advantage of EMI is the possibility of prepaid cards issuance : Less complicated process of acceptance as principal member of VISA and MC schemes , collateral deposit of approx. 500k EUR for prepaid card issuance vs. approx. 3 mio EUR for debit cards Besides all payment services, small EMI is allowed to keep max. of 5 mio EUR of electronic money in circulation, comparing to max. 3 mio EUR payment transactions TURNOVER (arithmetical sum) 12-months average with SPI

Advantages of the jurisdiction No formal shareholders and board members residency requirements, foreign owners permitted PI's are allowed to hold client money on payment accounts without time restrictions Low operating costs comparing to major jurisdictions Fair regulator approach Simple online EU resident customers identification (disadvantage: complicated process of non-EU resident clients onboarding)

Our services SPI, SEMI, PI, EMI, MiFiD license applications FI acquisition consulting Specialized FI accountancy Internal audit and compliance services Bank introduction services SWIFT and card schemes membership consulting Czech sort code application (IBAN assignment)

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