How to choose a payment service provider in Germany: BaFin licences, passporting and what to check

A payment service provider (Zahlungsdienstleister) serving merchants in Germany must either hold a licence from BaFin under the Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz, ZAG) or be authorised in another EEA country and passported into Germany. To choose one, confirm which legal entity holds and pays out your money, check it in BaFin's ZAG register or its home regulator's register, then compare the payment methods German customers use, settlement and reserve terms, and how disputes and reconciliation work. A licence is the entry ticket, not the comparison.

Who needs a licence to provide payment services in Germany?

BaFin states that anyone providing payment services in Germany commercially, or on a scale that requires a commercially organised business, needs written authorisation from BaFin as a payment institution under section 10 ZAG. Issuing e-money needs an e-money licence under section 11 ZAG. BaFin: activities of payment institutions, e-money institutions and account information services

According to BaFin's ZAG guidance notice, BaFin decides on a complete application within three months, can limit a licence to individual payment services, and providing payment services without the required licence is a criminal offence. BaFin: notes on the ZAG The statute itself is published by the Federal Ministry of Justice. ZAG on gesetze-im-internet.de

Who supervises a German payment institution?

Supervision is shared. BaFin authorises institutions and can issue orders to stop breaches, while the Deutsche Bundesbank carries out ongoing monitoring of the payment and e-money institutions active in Germany, in particular their solvency and liquidity. Bundesbank: payment institutions and e-money institutions Institutions must meet own funds requirements at all times and report on them quarterly.

Can a PSP licensed elsewhere in the EU serve German merchants?

Yes. Payment and e-money institutions authorised in one EEA state can operate across the EEA through a branch, through agents or under the freedom to provide services. BaFin describes how this European passport works in both directions, and its figures show thousands of agents of foreign payment and e-money institutions operating in Germany under passporting. BaFin: European passport

BaFin publishes the register of ZAG institutions under sections 43 and 44 ZAG. BaFin: ZAG institutions register For any EU or EEA payment or e-money institution, including agents and branches, the EBA's central register mirrors the national registers and is updated at least daily; banks are listed in the EBA's separate credit institutions register. EBA: register of payment and e-money institutions under PSD2

Passporting is legal and common. The point of the table is to know whose rules and which supervisor stand behind the firm holding your money, especially if a dispute or insolvency happens.

What should a merchant compare after the licence check?

Payment methods German customers use. German checkout needs are not the same as US or UK ones. Ask whether the PSP supports girocard for in-person payments, card schemes, SEPA Direct Debit, SEPA Instant transfers and the wallets you need. See girocard and German card acceptance and SEPA Instant and Verification of Payee.

Settlement and reserves. Ask when funds are paid out, in which currency and account, whether a reserve applies to new merchants, and what triggers a payout hold.

Pricing transparency. Ask for interchange-plus pricing on your actual card mix, and for every other fee in writing: per-transaction gateway fees, chargeback fees, payout fees and currency conversion.

Strong customer authentication. Under PSD2, online card payments in the EU generally need strong customer authentication unless an exemption applies. Ask which exemptions the PSP requests and how it handles soft declines. See PSD2 SCA exemptions.

Data and reporting. Ask for a sample settlement file and confirm it carries references your finance team can match to bank credits. Ask whether bank statements are available in camt.053 format, which German banks commonly provide through EBICS; see camt.053 vs camt.054 vs MT940.

Exit. Ask about notice periods, termination fees and whether stored card credentials can be migrated to another provider.

A step-by-step check before signing

1. Ask the PSP for the legal name of every entity in the contract chain: the one you sign with, the acquirer, and any institution that holds your funds.
2. Look up each entity in BaFin's ZAG register, the EBA's central register or the home regulator's register, and check the permissions match the services you will use.
3. If the firm is passported, note the home regulator and the home country's complaint and insolvency arrangements.
4. Ask how customer funds are safeguarded and how often they are reconciled.
5. Test girocard, card, SEPA and refund flows in a sandbox, including a failed payment and a refund.
6. Map who handles disputes, deadlines and evidence, using a gateway responsibility map.

FAQ

Does a payment service provider need a BaFin licence to serve German merchants?

It needs either a BaFin licence under the ZAG or authorisation in another EEA country passported into Germany. Providing payment services in Germany without one is a criminal offence.

What is the ZAG?

The Zahlungsdiensteaufsichtsgesetz, Germany's Payment Services Supervision Act. It implements the EU payment services and e-money rules and sets the licence requirements for payment and e-money institutions.

How do I check if a German payment provider is licensed?

Search BaFin's register of ZAG institutions for the legal entity name. For a firm passported from another EEA country, check the EBA's central PSD2 register or its home regulator's register.

Who supervises payment institutions in Germany?

BaFin authorises them and can take enforcement action; the Deutsche Bundesbank carries out ongoing monitoring, particularly of solvency and liquidity.

Is a PSP licensed in another EU country safe to use in Germany?

It can be, and passporting is legal. Check which regulator supervises it, how your funds are safeguarded and how complaints are handled in its home country.