Stakeholder Letter - Consultation Paper - Proposed Payment Services Act (2025-11-19)

Summary

This is a stakeholder letter from the Bermuda Monetary Authority summarising industry feedback on its August 2025 Consultation Paper on a proposed Payment Services Act (PSA), and setting out the Authority's responses and refined policy positions. It is an informational update on the direction of a future licensing regime for payment services, not yet a binding rule or law.

• Scope and DABA overlap: The PSA will use a functional, risk-based perimeter; stablecoin issuers may choose PSA or DABA licensing, and DABA licensees issuing stablecoins they are already licensed for will not need a separate PSA licence. DFP custody will be limited to the DFP's own stablecoins; custody of third-party digital assets stays under DABA.
• AI Payments Hub: BMA will implement a pre-licensing collaborative Hub for testing AI-driven and programmable payment models, with a future call for participation and entry criteria.
• Digital Facility Providers (DFPs): Fiat-redeemable stablecoin issuance will be treated under the PSA as a payment instrument activity, distinct from other token issuance under DABA, with a pathway for existing DABA licensees to avoid dual licensing.
• Payment Handling Providers (PHPs): The PHP definition (receiving or managing funds to effect payment transactions, including transfer, execution or settlement on behalf of users) will be refined in the forthcoming Bill, with further guidance to follow.
• Payment Technology Providers (PTPs): The definition has been updated to cover undertakings exercising direct or indirect control over initiation, authorisation or routing of a payment transaction, excluding those solely providing communication or messaging infrastructure.
• Class PG licence: A new wholesale-only licence class (Class PG) will be created as a standalone class (not a Class F subcategory), restricted from retail activity, using activity- and customer-based criteria rather than fixed thresholds.
• Class R licence: A separate reciprocal licence class (Class R) will be established for cross-border operations from jurisdictions with equivalent standards; detailed reciprocity parameters will be published once finalised.
• Next steps: BMA will proceed to develop supporting Codes of Practice, Rules and Guidance Notes to operationalise the PSA, with further consultation timing to be communicated later.

No new obligations are imposed by this letter itself; it previews the direction of a future Payment Services Act and related instruments that will be subject to further consultation and legislative drafting.

Applies to

money service business licensees, digital asset business (DABA) licensees, stablecoin issuers, Digital Facility Providers (DFPs), Payment Handling Providers (PHPs), Payment Technology Providers (PTPs), prospective wholesale payment services licensees (Class PG), cross-border payment services providers (Class R)