Cyprus Payment Processing Agent Company

The online gaming and fintech industries have experienced remarkable growth in recent years, with more businesses seeking to expand into international markets to reach a global player base. However, companies operating in these sectors—particularly offshore-licensed iGaming operators—often face significant hurdles in securing reliable banking and payment processing services. Traditional banks and Payment Service Providers (PSPs) may be hesitant to partner with iGaming operators due to:

  • Regulatory Concerns: The iGaming sector faces heightened scrutiny from financial authorities, resulting in stricter due diligence and compliance checks.
  • Perceived Financial Risk: Gaming-related transactions can be prone to higher chargeback rates, money laundering risks, or fraud, raising the overall risk profile.
  • Strict AML (Anti-Money Laundering) Requirements: Regulators increasingly demand rigorous AML measures, which can deter risk-averse financial institutions from onboarding new iGaming clients.

To overcome these challenges, many offshore-licensed gaming operators establish a Cyprus Payment Processing Agent Company (CPPAC). A CPPAC serves as an intermediary between the iGaming operator and European financial institutions, leveraging Cyprus’s EU membership, strong financial infrastructure, and tax-friendly environment. By incorporating a CPPAC, gaming businesses can:

  • Access Banking Solutions: Secure reputable corporate bank accounts within the EU.
  • Contract with Licensed PSPs: More easily onboard merchant account services and alternative payment solutions.
  • Enhance Credibility: Operate under a recognised regulatory framework, demonstrating transparency and compliance to stakeholders.

Our law firm provides comprehensive CPPAC setup and support services, guiding clients through company formation, corporate structuring, banking and PSP onboarding, and regulatory compliance. Through our expertise, businesses can establish a fully operational and compliant CPPAC, facilitating cross-border payments within the European financial ecosystem.

Payment Processing Agent in the iGaming Industry

A payment processing agent company in the iGaming industry serves as an intermediary between the online gaming operator and the licensed payment service providers (such as banks, electronic money institutions, or PSPs). Here’s how it typically works:

  1. Facilitating Transactions:
    When a player deposits funds or makes a payment on the iGaming platform, the payment processing agent receives the payment instruction from the iGaming operator. Rather than processing the payment itself, the agent forwards these instructions to a licensed third‑party payment service provider, which is responsible for executing, clearing, and settling the transaction.
  2. Administrative and Reconciliation Functions:
    The agent company may maintain designated accounts with licensed third party banking institutions, where, once the third‑party processor completes its tasks, the funds are credited as a formal administrative step. Although these funds appear in an account under the agent’s name, the operational model ensures that the agent does not exercise independent control or benefit from these funds. Instead, they are held strictly on behalf of the iGaming operator and are subject to transfer or reconciliation according to the operator’s requirements.
  3. Compliance and Risk Management:
    In addition to facilitating transactions, a payment processing agent often supports the gaming operator with added value services such as fraud detection, risk assessment, transaction monitoring, and compliance with AML/CFT regulations. This is particularly important in iGaming, where regulatory scrutiny is high and there is a need to protect both the operator and the players from financial crime.
  4. Operational Integration:
    The agent typically integrates its systems with those of the licensed PSPs, ensuring that transaction data flows seamlessly between the parties. This integration helps to maintain robust record-keeping and facilitates real‑time monitoring of transactions, which is essential for detecting and preventing any illicit activities.

In summary, a payment processing agent in the iGaming sector primarily focuses on facilitating and coordinating payment transactions, handling administrative and reconciliation tasks, and providing supportive compliance functions without directly processing or controlling the funds. This operational model not only meets the stringent regulatory requirements but also allows the gaming operator to offer a seamless and secure payment experience to its players.

Our Services in Setting Up a Cyprus Payment Processing Agent Company

Overview

Establishing a CPPAC requires careful attention to legal structuring, substance requirements, AML/CTF obligations, and financial planning. Our firm specialises in an end-to-end approach that ensures each aspect of the formation, banking setup, and operational framework is legally sound and compliant with Cypriot and EU regulations.

Below is a detailed breakdown of the key steps and services we provide.

1. Company Formation and Corporate Structuring

The cornerstone of a successful CPPAC is its proper legal incorporation under Cyprus law. The primary legislation governing companies in Cyprus is The Companies Law, Cap. 113, which aligns with EU directives while drawing on common law principles. Our firm manages the entire incorporation process, including:

  • Company Name Registration
    • We submit your proposed name to the Cyprus Registrar of Companies for approval.
    • The name must comply with local guidelines. Restricted terms (e.g., “bank,” “financial institution,” “trust”) typically require special permissions or licenses.
  • Memorandum and Articles of Association
    • These foundational documents specify your CPPAC’s objectives, corporate structure, and governance.
    • We draft the Memorandum to clearly outline payment facilitation services rather than independent payment services, helping ensure the entity is not classified as a Payment Institution (PI) or Electronic Money Institution (EMI) under PSD2.
  • Company Registration and Filing
    • Once the documentation is complete, we file with the Registrar for official incorporation.
    • Incorporation typically takes 1–3 weeks, depending on complexity and the responsiveness of the authorities.
  • Tax and Regulatory Planning
    • We conduct an initial assessment to ensure the tax efficiency of the structure, considering Cyprus’s 12.5% corporate tax regime and double tax treaties.
    • We advise on local compliance obligations, such as annual audits and tax filings.

Key Benefit: Proper structuring at the outset ensures the CPPAC is recognised as a legitimate intermediary rather than a PSP or e-money issuer, minimising licensing complexities.

2. Corporate Governance and Substance Compliance

Cyprus has become more stringent about substance requirements in recent years. This ensures companies registered on the island maintain genuine economic activity within its jurisdiction. Our services include:

  • Directors and Company Secretary
    • At least one director is required by law, and a company secretary must be appointed.
    • While directors may be non-Cypriot, appointing a local director is strongly recommended to strengthen tax residency status and enhance credibility with banks.
    • We assist in recruiting or appointing qualified professionals who understand both local regulations and the iGaming sector.
  • Registered Office
    • Every Cyprus company must have a registered office in Cyprus for official correspondence.
    • Our firm can provide registered office services or help you secure a physical workplace, depending on your operational scope.
  • Substance Requirements and Local Footprint
    • Local staffing, office leasing, or active management from Cyprus can reinforce economic substance.
    • We coordinate with tax advisors to ensure that management and control are demonstrably carried out in Cyprus, reducing potential challenges from foreign tax authorities.

By ensuring your CPPAC meets these governance and substance requirements, you significantly enhance banking relationships, bolster your position with regulators, and mitigate risks related to tax residency or anti-money laundering controls.

3. Banking and Financial Services Setup

A central function of a CPPAC is to facilitate transactions between an offshore gaming operator and financial institutions. However, opening bank accounts for iGaming entities can be notoriously challenging due to heightened regulatory scrutiny. Our firm provides solutions to ease the process:

3.1 Corporate Bank Account Opening

  • Identifying Suitable Banking Partners
    • We leverage our network of EU-based banking institutions (in Cyprus, Malta, Lithuania, etc.) familiar with the iGaming industry.
    • Each banking institution has unique compliance standards, risk appetite, and pricing structures.
  • Preparation of KYB (Know Your Business) Documentation
    • Banking institutions typically require a robust due diligence package:
      • Certificate of Incorporation, Memorandum & Articles of Association, and Register of Directors/Shareholders.
      • Proof of business activities (i.e., references from the offshore parent’s license, business plan, projected transaction volumes).
      • AML policy, risk management procedures, and beneficial ownership details.
  • AML and Risk Management Guidance
    • We guide you through the specific AML/CTF checks that banks will perform.
    • To facilitate approval, we align your internal compliance protocols with the bank’s requirements, minimising potential red flags.
  • Facilitating Communication
    • Our team liaises directly with bank representatives, expediting the onboarding timeline and ensuring transparent communication.

With careful preparation and selecting the right banking partner, your CPPAC gains access to stable accounts for collecting deposits from PSPs, paying out winnings, and consolidating revenues.

3.2 Multi-Currency and Payment Solutions

As iGaming often spans multiple regions, we help you secure multi-currency accounts to handle EUR, USD, GBP, and other currencies essential for global player bases.

  • This streamlines settlements and conversions, and mitigates forex risks.
  • We can also advise on currency hedging strategies if you handle large transaction volumes.

By setting up appropriate payment solutions early, your CPPAC remains agile, cost-efficient, and competitive across diverse markets.

4. Payment Processing and Merchant Account Onboarding

Besides banking, a CPPAC typically needs to contract with licensed PSPs for credit card processing, e-wallet solutions, bank transfers, and other alternative payment methods.

  • Merchant Account Registration
    • We facilitate applications for merchant accounts with PSPs that specialise in iGaming.
    • This includes compiling merchant applications, describing the CPPAC’s role, and clarifying the offshore parent’s license details.
  • Technical Payment Gateway Integration
    • Our network of third-party payment gateway providers can seamlessly integrate with leading gaming platforms.
    • We oversee the integration process, ensuring payment flows meet both technical and legal standards.
  • Ongoing Relationship Management
    • Many PSPs conduct periodic compliance reviews. We assist you in maintaining the necessary documentation, AML policies, and risk protocols.
    • By remaining proactive, your CPPAC can avoid sudden account terminations or processing disruptions.

Key Note: Because CPPACs do not hold player funds or perform the direct execution of transactions, they do not typically require a Payment Institution or Electronic Money Institution license under PSD2.

Why Choose Chambers & Co?

Our law firm is dedicated to providing end-to-end support tailored to the unique needs of offshore-licensed iGaming operators. We combine legal expertise, financial acumen, and a broad network of banking and PSP partners to deliver a seamless CPPAC formation experience.

  • Company Formation and Corporate Structuring
    • Comprehensive company formation services, drafting custom Memorandum & Articles, and ensuring full regulatory compliance.
  • Corporate Banking and Multi-Currency Account Setup
    • Access to reputable Banking Institutions, guidance on AML documentation, and introductions to suitable financial partners.
  • Merchant Account and PSP Onboarding
    • Partnerships with PSPs specialising in iGaming, merchant account applications, and payment gateway integrations.
  • Regulatory and Compliance Advisory
    • Ongoing guidance on local and EU-level AML regulations, data protection (GDPR), and substance requirements.
  • Experienced, Multidisciplinary Team
    • Our lawyers, accountants, and industry consultants bring deep understanding of the global iGaming landscape, PSD2, and Cyprus corporate law.

Our mission is to ensure your CPPAC operates with maximum transparency, uninterrupted financial services, and a secure, compliant platform for facilitating online gaming payments within the European financial ecosystem.

Conclusion

A Cyprus Payment Processing Agent Company (CPPAC) is an ideal solution for offshore iGaming operators needing reliable banking and payment processing under an EU-recognised framework. By properly structuring the CPPAC to act as a commercial agent—rather than an independent payment service provider—it operates without requiring a PSP license, all while enhancing the credibility and financial stability of the parent gaming operation.

Key Takeaways:

  • EU Legitimacy: Cyprus membership in the EU opens doors to reputable banks and PSPs.
  • Tax Efficiency: A corporate tax rate of 12.5%, combined with extensive double tax treaties, supports cost-effective cross-border transactions.
  • Regulatory Compliance: A robust legal system, harmonised with EU directives, offers clarity and protects against reputational risks.
  • Substance Requirements: By maintaining a tangible presence (local director, registered office, potential staff), CPPACs gain acceptance from banks, PSPs, and regulators.
  • No PSP License Needed: When carefully structured, the CPPAC neither holds player funds nor executes transactions, thus exempting it from PI or EMI licensing under PSD2.

Contact us today to begin the process of setting up your fully operational Cyprus Payment Processing Agent Company. Our firm’s comprehensive services ensure your CPPAC is formed and managed with the highest standards of compliance, efficiency, and success in the European market.

Disclaimer: This article is for general informational purposes only and does not constitute legal or tax advice. If you need specific guidance on structuring a CPPAC or determining whether your activities require additional licensing, please contact us for professional assistance with Cyprus corporate, gaming, and financial regulations.