Electronic payments

Electronic payment systems

Are there any rules, restrictions or other relevant considerations regarding the use of electronic payment systems in your jurisdiction?

Yes, the provision of payment services is regulated by the Luxembourg Payment Services Act, as modified. Such services include:

the execution of payment transactions where the consent of the payer to execute a payment transaction is given by means of any telecommunication, digital or IT device and the payment is made to the telecommunication, IT system or network operator, acting only as an intermediary between the payment service user and the supplier of the goods and services.

The Luxembourg Payment Services Act, which implements the EU PSD1 (Payment Services, 2007/64/EC) and e-Money Directives, imposes numerous requirements in relation to:

  • the payment service provider, which will need to meet a number of formal requirements (eg, obtaining a licence from the Ministry of Finance), administration and infrastructure requirements and legal form and shareholding requirements; and
  • the performance of the payments services themselves, such as a large number of information requirements to be honoured towards the payment service user, but also a number of requirements incumbent on the payment service user, such as the principle of irrevocability (ie, the payment service user may not revoke a payment order once it has been received by the payer's payment service provider).

At EU level, a second payment services directive (PSD2, EU/2015/2366) has already been adopted, but is yet to be implemented in Luxembourg despite the deadline for implementation having lapsed on 13 January 2018. A PSD2 Draft Bill 7195, which will amend the Luxembourg Payment Services Act, is however pending.

Virtual currencies

Are there any rules or restrictions on the use of virtual currencies (eg, Bitcoin)?

There is no legal framework in Luxembourg specifically for virtual currencies. That said, the Luxembourg Financial Sector Regulator issued an official warning on 14 March 2018 in relation to virtual currencies in which it:

  • stresses that any provision of financial sector services requires an authorisation by the Ministry of Finance; and
  • invites persons considering exercising an activity associated with virtual currencies to submit their draft documentation to the regulator beforehand; the regulator will then determine whether such activity is regulated.