On 22 October 2025, the Swiss Federal Council initiated the consultation process for a revision of the Financial Institutions Act. The proposed legislation aims to increase financial innovation under the Swiss regulatory framework. Under the revised Financial Institutions Act, the Federal Council, intends to introduce a new license category, the “Payment Instrument Institution“ which will replace the current FinTech license (also referred to as the banking license light) provided for under article 1b of the Federal Act on Banks and Savings Institutions. In the context of the consultation process on the Federal Council‘s draft legislation, the new licensing category has been subject to considerable and justified criticism, as it effectively excludes Swiss regulated banks from issuing regulated stablecoins. However, under the new licensing category, certain prohibitive legal requirements will be abolished which have in the past prevented non-Swiss regulated payment institutions from obtaining a FinTech license in accordance with article 1b of the Banking Act. This contribution outlines the regulatory opportunities that the new licensing category may bring for foreign payment service providers intending to establish a regulated presence in Switzerland.
1) Current Regulatory Framework
a) Introduction
The FinTech license pursuant to article 1b of the Federal Act on Banks and Savings Institutions (the Banking Act) was introduced in 2019 with the aim of creating a licensing regime for companies that are active in the FinTech area and accept public deposits within the meaning of the Federal Ordinance on Banks and Savings Institutions (the Banking Ordinance) but do not engage in the traditional interest differential business (Zinsdifferenzgeschäft) by re-investing and/or paying interest on the deposits. In view of the limited scope of activities that may be performed under the FinTech license, FinTech companies are subject to less stringent licensing requirements than those applicable to traditional banks and securities houses. In particular, FinTech companies are not subject to risk-weighted capital requirements and the applicable organizational requirements are more flexible than those under the traditional banking license taking into account that FinTech companies may have smaller and less complex governance and operational structures.
Whilst the aim of the new licensing category was to provide a regulatory basis for financial innovation in Switzerland, as of the date of this publication there are currently only four licensed entities holding a FinTech license under article 1b of the Banking Act. There are many reasons for this limited number of active license holders, such as the long duration of the licensing procedure, the exclusion of FinTech companies from the Swiss depositor protection regime and/or the fact that under the current bankruptcy regime, deposits held by FinTech companies cannot be segregated in the bankruptcy of the licensed entity. In addition, the methodology under which the applicable maximum deposit threshold is calculated, in effect, makes it difficult for foreign payment service providers to satisfy the applicable licensing requirements.
b) Permitted Activities under the FinTech License
FinTech companies are subject to the ongoing prudential supervision of the Swiss Financial Market Supervisory Authority FINMA (FINMA).
Under the FinTech license pursuant to article 1b of the Banking Act, regulated institutions are permitted to accept public deposits of up to CHF 100 million or crypto-based assets (the Deposit Threshold), provided that these are not invested and no interest is paid on them. Due to the fact that the deposits held by FinTech companies may not be re-invested and/or interest-bearing, the business models which can be operated under the license category are in effect limited to payment services, maintenance of payment accounts and provision of crypto-custody services.
The adherence to the Deposit Threshold is an integral part of a licensed FinTech company‘s operational risk management as the regulatory consequences of exceeding the Deposit Threshold are drastic. Pursuant to article 1b para. 6 of the Banking Act, if the Deposit Threshold is exceeded, (i) FINMA must be notified thereof within 10 days and (ii) the regulated entity must submit a full banking license application to FINMA within 90 days thereof. In view of the regulatory consequences of a breach of the Deposit Threshold, FINMA typically requires FinTech companies to put in place an early warning system which initiates an internal warning process in case the deposits exceed the thresholds of CHF 75 million and CHF 85 million; with technical implementation of a freeze on the acceptance of new deposits being put in place in case the deposits exceed CHF 90 million – whereas the exact quantitative thresholds may deviate depending on the business model in question.
c) Consolidated Calculation of Deposit Threshold
Whilst the permitted activities under the FinTech license are somewhat limited, the FinTech license may – even under the existing Deposit Threshold – have been an interesting regulatory option, in particular for non-Swiss neo-banks and payment service providers with an existing and successful business model intending to expand their operations into Switzerland. However, the methodology under which the Deposit Threshold is calculated under the FinTech license has so far made it challenging for non-Swiss neo-banks and payment service providers to obtain a respective license via an independent Swiss entity.
When determining the Deposit Threshold, all public deposits within the meaning of article 5(1) FBO held by the licensed entity must be taken into account. In accordance with article 24a FBO, the Deposit Threshold must be calculated on a consolidated group-wide basis, if the Swiss FinTech company is part of a financial group within the meaning of article 21 et seq. FBO. As a consequence, in addition to the deposits held by the Swiss licensed entity, when calculating the Deposit Threshold, all deposits within the meaning of article 5(1) FBO held by all other group entities belonging to the same financial group must be taken into account.
Article 24a FBO refers to the concept of a financial group pursuant to article 21 et seq. FBO. Thereunder, a financial group is a group of at least two entities which are active in the financial sector and form an economic unit. Whether a group of entities is part of the same economic unit is determined by FINMA on a case-by-case basis. Indications of an economic unit may be: (i) being subject to the control of a common entity (namely due to voting rights and/or other means of control, such as significant influence of the management), (ii) strategic, personnel, organizational or financial interdependencies, or (iii) the use of a uniform company name and/or market presence. To the extent that FINMA concludes that the licensed FinTech company is part of a financial group, then all public deposits within the meaning of article 5(1) FBO held by all entities belonging to such a financial group would have to be taken into account under a consolidated calculation of the Deposit Threshold.
FINMA may, pursuant to article 24a(1) FBO, exclude certain entities from the consolidated determination of the Deposit Threshold, if such entity is evidently independent of the financial group. Such independence may be deemed to exist if the entity in question clearly has a different business model or business goals than those of the financial group. Whether the independence requirement pursuant to article 24a(2) FBO is satisfied would be assessed by FINMA on a case-by-case basis in consideration of all relevant facts, including but not limited to the business model and business purpose of the financial group in question.
This exemption may provide a helpful basis which can be relied upon in the context of independent Swiss operations. However, for certain non-Swiss neo-banks and payment service providers that are not in a position to sufficiently evidence the independence of their Swiss business, the consolidated calculation of the Deposit Threshold has been somewhat prohibitive to obtaining a FinTech license.
2) The New Payment Instruments Institution
a) Overview
Under the consultation draft, the Federal Council proposes to introduce a new licensing category as a “payment instrument institution” (Zahlungsmittelinstitut) under the Financial Institutions Act. The new licensing category would replace the FinTech license currently set out under article 1b of the Banking Act. Under the new license category, licensed payment instrument institutions can accept customer funds on a commercial basis without paying interest, without the Deposit Threshold applying. In addition, they can issue regulated stablecoins at the nominal value of the customer funds accepted, provide custody services for regulated stablecoins and provide payment services (for a comprehensive overview of the proposed licensing framework; see Leisinger / Eckert, Proposed Regulation of Payment Instrument Institutions under the Swiss Financial Institutions Act: A Critical Analysis; in CapLaw-2026-02).
b) Abolishment of Deposit Threshold
As referenced above, under the new licensing category as a payment instrument institution, the Deposit Threshold will no longer apply, ultimately meaning that as long as the accepted deposits are not interest-bearing and/or re-invested, regulated payment instrument institutions will not be subject to a quantitative threshold with regard to the accepted deposits.
While the implementing provisions to be included in the Financial Institutions Ordinance are yet to be published, if no maximum limits on the accepted deposits apply – at least in the context of adhering to the licensing requirements – it can be assumed that the consolidated calculation of deposits will not be transferred into the FinIO. However, it remains to be seen whether a consolidated calculation will be applied in the context of the calibration of other regulatory requirements applicable to payment instrument institutions.
In summary, the abolishment of the Deposit Threshold should provide a more welcoming regulatory regime for non-Swiss neo-banks and payment service providers intending to establish a fully regulated Swiss presence, as adherence to the applicable licensing requirements will no longer require a consolidated calculation of the deposits within the entire financial group. This change to the regulatory framework may make the new licensing category more attractive to neo-banks and payment service providers with existing business operations outside of Switzerland.
c) Additional Requirements for Payment Instrument Institutions Subject to Foreign Control
While the abolishment of the Deposit Threshold may make the licensing category more attractive for non-Swiss payment service providers, it must be noted that under the revised legislation, payment instrument institutions subject to foreign control will, pursuant to article 51c FinIA, be required to obtain an additional license as a payment instrument institution subject to foreign control. A foreign payment instrument institution will be deemed to be under foreign control if a person and/or entity domiciled or incorporated outside of Switzerland can directly and/or indirectly exercise the majority of the voting rights in the Swiss regulated entity and/or can exert a controlling influence over the Swiss regulated entity in another manner. To obtain an additional license, the following will have to be evidenced:
– The home jurisdiction of the controlling entity grants reciprocity to FINMA which is generally the case for all jurisdictions that are party to the General Agreement on Trade in Services (GATS) of the World Trade Organization;
– The corporate name of the payment instrument institution does not imply a Swiss character. In practice, this is ensured by adding the term “(Switzerland)” to the corporate name; and
– To the extent that the Swiss payment instrument institution will be subject to the consolidated supervision of a foreign supervisory authority, the competent foreign authority must approve the establishment of the regulated Swiss presence (and typically confirm to FINMA that an effective consolidated supervision will be applied).
d) Introduction of a Legal Basis for a Branch and/or Representative Office
Under the current regulatory regime, it is somewhat unclear whether the FINMA Ordinance on Foreign Banks provides for a legal basis for foreign regulated FinTech companies to obtain a license as a branch or a representative office in Switzerland. Under the revised FinIA, the Federal Council intends to amend article 52 FinIA to clarify that entities domiciled outside of Switzerland that (without holding a license as a bank) employ persons in Switzerland which permanently and on a commercial basis accept client deposits that are not re-invested and/or interest-bearing are required and/or permitted to obtain a branch office license under FinIA.
A corresponding amendment will be made under article 58 FinIA clarifying that entities domiciled outside of Switzerland that (without holding a license as a bank) accept client deposits that are not re-invested and/or interest-bearing are required and/or permitted to obtain a representative office license under FinIA, if they employ persons in Switzerland that on a commercial and permanent basis engage in marketing and/or advertising activities on behalf of the foreign payment institution.
The introduction of a formal licensing category as a branch office or a representative office may also provide non-Swiss neo-banks and payment service providers that want to extend their operations into Switzerland without establishing a fully licensed Swiss entity with an additional option to service the Swiss market via a regulated presence.
3) Outlook
The attractiveness of the new license category as a payment instrument institution for non-Swiss neo-banks and/or payment service providers will ultimately depend on the final design of the new regulatory framework under the revised FinIA and the corresponding regulatory requirements to be stipulated under the FinIO. However, on the face of it, the new regulatory framework seems to address certain regulatory hurdles which had been preventing certain non-Swiss payment service providers from establishing a Swiss licensed presence. Also, the introduction of a legal basis to obtain a license as a branch office and/or a representative office may be a viable option that would allow the establishment of a Swiss regulated presence without going down the road of establishing a fully regulated entity in Switzerland.
Alexander Wherlock (alexander.wherlock@homburger.ch)