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Deal 5: Paymont CEO Stefan Koscelnik on Securing an Electronic Money Institution License in Lithuania

Deal 5: Paymont CEO Stefan Koscelnik on Securing an Electronic Money Institution License in Lithuania

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On February 1, 2021, CEE Legal Matters reported that Adon Legal had helped Paymont obtain an Electronic Money Institution license from the Bank of Lithuania. CEEIHM spoke with Stefan Koscelnik, CEO at Paymont, to learn more about the matter.

CEEIHM: Could you begin by telling our readers a bit about Paymont?

Stefan: Paymont, a member of Czech Republic-based Ronda Holding group, is our new project specialized in providing payment services on a European scale. Paymont UAB is a Lithuanian entity with the aim of becoming a European provider of payment services as the markets are becoming more and more connected, especially within the EEA. Paymont means Payments-On-Time, which is our motto. By using modern technologies in connection with the pro-business environment in Lithuania we would like to deliver the product not only on time but also with high standards.

Paymont will focus on SME clientele and our strategy will be to support international businesses in their activities by facilitating cross-border payments for competitive prices. We come from Central Europe, where the market is dominated by the high street banks which seek to minimize their risk exposure and continue de-risking (rather than otherwise mitigating/managing the risks), therefore the offer of payment services for SMEs doing international business is limited. This creates new opportunities for other payments service providers as we can implement a more individualized approach to each potential/existing client. This is the market gap we have the ambition to fill,and that is the reason why we have entered the FinTech industry in Lithuania.

CEEIHM: Adon Legal recently helped your company obtain an Electronic Money Institution license from the Bank of Lithuania. What made Paymont decide to expand to Lithuania?

Stefan: The decision to apply for a license in Lithuania was based on an observation of trends in the financial market and on a business environment search of EEA countries. The Lithuanian government has been doing a great job in creating an innovative infrastructure and progressive regulation for the FinTech industry which leads to more and more new participants coming to the country. Another important incentive for us was the approach of the Bank of Lithuania, which provides FinTech companies with the same opportunity to connect to the SEPA infrastructure as it does traditional banks. A two-hour flight distance from Prague, where the headquarters of our group is based, is also very convenient, and I have to mention the Lithuanian pro-business mindset and diligence as great benefits for our project as well. To sum up, Lithuania presented itself as a perfect gateway for our expansion to Europe.

CEEIHM: Could you tell us about some of the next projects for Paymont in the country?

Stefan: Now that we have successfully established the company and got an EMI license from the Bank of Lithuania, we plan to proceed with the next step in our strategy, which is to enable the expansion of our sister company, Ronda Invest. Ronda Invest has been operating a crowdfunding platform in the Czech Republic and has been building its brand as a reliable and transparent partner for SME project owners and retail investors. Ronda Invest provides loans for SMEs mostly, but not only, engaged in real estate (i.e., financing of construction or purchase of development projects according to real needs of the developer) and on the other side offers individuals and legal entities an opportunity to invest in these loans. All loans are secured by real estate and thus they offer an interesting yield with low-risk potential.

Currently, Ronda Invest operates its platform in the Czech Republic, but, with its growing client base, we came to the point where we decided to extend the reach of our business to clients from other markets. With the upcoming EU Regulation on European Crowdfunding Service Providers, which will enter into force on November 10, 2021, we would like to take advantage of the EU’s Single Market and provide our services across the EEA on a cross-border basis. So our next project will be to apply for a Crowdfunding Service Provider license from the Bank of Lithuania. Having both EMI and Crowdfunding licenses, we will get a significant synergic effect and be able to offer our clients a complex service under competitive conditions.

CEEIHM: What did the process of obtaining the license entail and how did Adon Legal help you with it?

Stefan: As mentioned before, Lithuanian FinTech legislation is very progressive and because it’s been in place for a couple of years now, the process is transparent and predictable. These two factors are essential for any business. We started by creating an action plan with Adon Legal as our main local partner, where we defined all the strategic points like organizational structure, infrastructure, division of responsibilities, and so on. Adon Legal was an essential part of crafting the plan for the licensing process as they gave us an insight into the perspective of the Bank of Lithuania towards financial market participants and also crucial info about the Lithuanian market, without which we wouldn’t be able to tailor our plan and, in the end, the process would have cost us much more time, personnel, and financial sources. Adon Legal was also very helpful in advising us on how to make sure our policies comply with Lithuanian regulations, and, finally, the firm facilitated all necessary arrangements with regards to the local company establishment process.

CEEIHM: Why did you choose Adon Legal as your advisor? 

Stefan: When we started our market search in Lithuania, we were looking for a reliable partner with the necessary experience in the regulatory environment. We came across many law firms and business consultants who offered their services, but one thing that distinguished Adon Legal from others was their specialization in the FinTech industry, as well as their professional but-at-the-same-time human approach when negotiating the terms of a possible cooperation. Donatas Sliora, a partner at the firm, was very patient and precise in explaining the aspects of the licensing process to us, which assured us he knew the details from his own experience, not only on a theoretical basis.

We are very satisfied with the services of Adon Legal in the EMI licensing process and we will continue with our cooperation in the Crowdfunding licensing project as well — and I personally believe our close partnership will not be limited to these two projects.

Originally reported by CEE In-House Matters.

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