The Netherlands as ideal gateway to the European payments market

Entering the EU market has many perks

With over 440 million consumers from 27 member states, the European Market is the largest single market in the world. Besides size, other factors contribute to the market being exceptionally attractive for payment service providers ("PSPs") to do business in. For example, the European market has a strong digital economy with over 90% of all European citizens using the internet in 2022. In addition, transparent rules and regulations create a stable and trustworthy environment with little obstacles for the free movement of goods and services. This includes payment services: European PSPs can do business in all European Union ("EU") member states on the basis of a single licence: a licence granted in one member state can be 'passported' to another with ease. Combined with the widespread adoption of online payment solutions by European consumers, these conditions create the perfect environment for PSPs. 

But there are several aspects that PSPs need to consider prior to their European market entry. They must determine where they want to locate and how to tackle licensing. The Netherlands is a good choice,  as a Dutch licence can be beneficial for stakeholder trust, allows for a straightforward passporting process when expanding to other EU countries, and places the PSP in the middle of a market with a growing interest in digital payments services. In this blog, we begin by setting out what makes the Netherlands so attractive as a jurisdiction of establishment, and then explain the basics of a PSP licence application.

Entering the EU market requires careful consideration

The Netherlands is a favourable choice for PSPs to establish their business because of the Dutch (digital) infrastructure, high-skilled workforce and business-minded taxation. In this blog we focus on another reason, namely our regulatory climate. Across Europe, Dutch supervision is perceived as being robust and consistent. This results in an increased level of consumer trust in the Dutch market and its institutions.  Once a licence has been issued, the firm and its stakeholders can be confident that the PSP has what it takes to successfully operate in the EU market from a regulatory compliance perspective. Furthermore, as EU supervisors are aware of the comprehensive Dutch requirements that firms are subjected to, the passporting procedure is usually straightforward since Dutch PSPs need to adhere to national conditions set by the Dutch regulator in addition to those set on EU level. This results in a general EU-wide understanding that a Dutch license is robust and has been thoroughly reviewed. 

Every aspect of a PSPs’ business is considered as part of the license application

The Dutch Central Bank (De Nederlandsche Bank, "DNB") is the Dutch licensing authority for PSPs. DNB can be characterised as a pragmatic and open regulator, but the applicant should nonetheless be prepared for a thorough application process. As part of the application, DNB expects PSPs to submit a large number of policies, procedures and other documents. A detailed business plan is required that explains, amongst others, why the PSP chose the Netherlands, its planning regarding the use of outsourcing and ”boots on the ground”, governance, financial projections and prospective services. Similarly, PSPs must be able to demonstrate the implementation of compliance arrangements such as the systemic integrity risk analysis ("SIRA"), outsourcing policies and risk management frameworks. Prospective directors will be assessed by the regulators for suitability and integrity (more commonly known as the ”fit and proper” requirements). Finally, qualified shareholders must complete the ”declaration of no objection” application procedure. The whole process typically takes between six and twelve months, depending on factors such as the complexity of the PSP's envisaged business operations, organisational maturity and the number of (prospective) directors and shareholders. Due to the complexity of a licence application, DNB strongly recommends firms to seek assistance from a specialised, external advisor. 

How we can help you

Deloitte is such a specialised, external advisor. The licensing specialists in our Risk and Legal practices regularly support firms to navigate the extensive local and European regulatory landscapes. For instance, we can help (prospective) PSPs build or improve adaptable and compliant policy frameworks, governance arrangements, internal (risk management) programs and controls.

No licence application is the same. Therefore, for every licensing assignment we first design a tailored plan of approach in close collaboration with our client. Our assistance can vary from focused support by subject matter experts on a specific part of the licence application (e.g. the SIRA) to comprehensive, multi-disciplinary full service support from start to finish. In all cases, the scope and extent of our involvement is based on the needs of the PSP and, thanks to our strong internal relationships, offered as a true integrated solution with a single point of contact. Once a licence has been obtained, our team can offer additional (operational) support in filling in any gaps in a PSPs internal organisation in the initial period succeeding the launch, when the business is still in the process of gaining momentum in the market. If you are considering entering the EU market, please reach out to one of our colleagues below.