Body
FinTechs belonging to this category offer alternative payment services which are supposed to provide a faster and cheaper way for national, European, and international payments for private and business customers by using new technologies.
For example, payment service providers hereby offer solutions to easily integrate several payment services in online shops.
Some FinTechs furthermore provide real cash register systems and online-reservation solutions for restaurants and shops providing their own payment services or making use of the payment services of FinTechs described above.
Introduction
Attitude of the country towards modern payment services
Although Austria is a country in which cash is considered to be particularly important and in which cash payments are made relatively frequently, among others the COVID-19 measures not only introduced new social habits, but also advanced digitalisation. The trend toward card payments has massively accelerated. Although cash is still considered the most popular means of payment, accounting for 63% of all transactions at the point of sale, cash usage has declined by 3% within the past two (2) years compared to 2021. In parallel, the number of transactions with debit and credit cards at the point of sale rose by 1%. In terms of volume, cash and card payments at the point of sale have an almost balanced share of 48% and 46% respectively. The most common means of payment for online transactions in 2023 were bank transfers at 31% and Internet payment methods at 25%. Around 15% of online transactions were carried out using credit cards, followed by direct debit (11%). The payment providers PayPal and Klarna are particularly popular in Austria.
Legal affairs
Obligations and requirements to provide payment services or ancillary services described above
In Austria, payment services are regulated in the Payment Services Act' 2018 (Zahlungsdienstgesetz 2018 – 'ZaDiG 2018'). In addition to the ZaDiG 2018, anti-money laundering and data protection regulations are also to be complied with.
According to the ZaDiG 2018, the commercial provision of payment services in Austria requires a license issued by the Financial Market Authority (Finanzmarktaufsicht – 'FMA').
The costs of obtaining the license amount, in general, to approx. EUR 8,000.00. However, the costs can increase depending on which and how many kinds of payment services the license is supposed to cover.
To get a license, among other things, the applicant must have a business model setting out in particular the type of the envisaged payment services and evidence must be shown, that the payment institution has the amount of initial capital of up to EUR 125,000.00 depending on the exact payment service to be offered; for e-money institutions similar requirements apply with the difference, that an e-money institution needs an initial capital of at least EUR 350,000.00.
The license also covers the provision of operational and closely related ancillary services.
Additional comments regarding the legal situation for payment services or what FinTech’s must be aware of in this business area