Consultation Paper - Proposed Payment Services Act (2025-08-29)

Summary

This is a consultation paper from the Bermuda Monetary Authority proposing a new Payment Services Act (PSA) that would replace the Money Service Business Act 2016 and create an expanded, activity based licensing regime for payment service providers (PSPs). It follows an earlier April 2025 Discussion Paper and incorporates stakeholder feedback, setting out revised definitions, licensing classes, exemptions, fees and consequential legislative amendments. The Authority is inviting further comments before finalising the legislative proposals.

• Scope: Applies to any person conducting payment services business in or from within Bermuda, including Bermuda entities and foreign entities engaging in PSP activity in Bermuda.
• New PSP activity categories: Introduces three licensable business activities: Digital Facility Providers (DFP, formerly Digital Wallet Providers), Payment-Handling Providers (PHP), and Payment Technology Providers (PTP), each with refined definitions responding to DP feedback.
• Licensing structure: Proposes multiple licence classes (T, M, F, F-PG, F-R, and a Professional Grade licence) with fees tiered by activity and scale; firms may apply directly for the PG licence without progressing through lower tiers.
• Exclusions and exemptions: Carves out system-level payment infrastructure (e.g. interbank messaging, card schemes, RTGS, base-layer decentralised protocols), closed-loop intra-group treasury transactions, payroll services, loyalty schemes, and certain DABA-licensed activity, subject to a look-through test for arrangements that in substance serve external customers.
• Transition for existing MSB licensees: Money Service Business licence holders will be grandfathered into the PSA regime with a one-year grace period to comply with the new requirements, during which their licence is restricted to existing business lines.
• Newly in-scope firms: Firms currently operating outside MSB scope but within the proposed PSA scope must submit a licence application within six months of the PSA coming into force, and may continue operating pending a decision.
• AML/ATF and other consequential changes: PSP activities will generally be treated as AML/ATF-regulated financial institution activity, with consequential amendments proposed to the BMA Act 1969, DABA, the Digital Asset Business Exemption Order 2023, and Bermuda's anti-terrorism, proceeds of crime and AML/ATF supervision legislation.
• Fees: Proposes a flat $1,000 application and licence fee for Class T; a $2,266 application fee for Class M, F, F-PG and F-R; and licence/supervisory fees for Class M, F, F-PG and F-R set at the greater of $15,000 or 0.0075 of estimated or actual annual client receipts.
• Innovation initiative: Proposes establishing an AI Payments Hub, within the Authority's existing Innovation Hub, to explore regulatory treatment of DeFi intermediaries, AI-driven payment arrangements and embedded/programmatic payment solutions, subject to further separate consultation.

As a consultation paper, the document does not yet impose binding legal obligations beyond the comment process; the licensing, fee and transition requirements described are proposals that would take effect once the PSA is enacted. Stakeholders are invited to submit feedback on the specific questions raised throughout the paper.

Key obligations

• Submit written comments on the proposed Payment Services Act and accompanying questions to fintech@bma.bm by close of business on 13 October 2025.
• Once the PSA takes effect, existing MSB licence holders will have a one-year grace period to comply with all applicable PSA statutory and regulatory requirements, during which their licence remains restricted to existing business line(s).
• Once the PSA takes effect, firms operating outside current MSB scope but within the new PSA scope must submit a licence application within six months of the PSA coming into force; they may continue operating pending a decision on that application.

Applies to

Payment Service Providers (PSPs), Money Service Business (MSB) licence holders, Digital Facility Providers (DFP), Payment-Handling Providers (PHP), Payment Technology Providers (PTP), Digital Asset Business Act (DABA) licensees

Deadlines

• 13 October 2025: Deadline for industry and stakeholders to submit comments on the Consultation Paper to fintech@bma.bm.
• one-year grace period: Period after the PSA comes into force during which existing MSB licence holders must comply with all applicable PSA requirements, with their licence restricted to existing business lines in the interim.
• six months of the PSA coming into force: Deadline for firms currently outside MSB scope but within the new PSA scope to submit a licence application.

Related documents

• This document repeals Money Service Business Act 2016