Qualified outsourcing in Polish payment services

Outsourcing has become a common practice in the financial services industry, including payment services. However, it is crucial for payment institutions to comply with regulatory requirements when outsourcing their activities, especially those outlined in the Payment Services Act of 19 August 2011. In Poland, the concept of "qualified outsourcing" has been introduced to ensure proper oversight and risk management.

According to Article 86 of the Payment Services Act, qualified outsourcing refers to the outsourcing of operational functions that are essential for conducting payment services or for the payment institution's risk management. This includes activities such as IT systems, data processing, and customer service operations. When engaging in qualified outsourcing, payment institutions must meet specific obligations under the supervision of the Polish Financial Supervision Authority (KNF).

Key obligations for payment institutions regarding qualified outsourcing include:

Due Diligence: Payment institutions must conduct thorough due diligence on potential outsourcing service providers, assessing their ability to meet regulatory requirements, ensure data protection, and maintain business continuity.

Contractual Arrangements: Outsourcing agreements must include provisions that enable the payment institution and the KNF to effectively monitor and audit the outsourced activities. The contracts should also address data protection, confidentiality, and the right to terminate the agreement if necessary.

Risk Management: Payment institutions must implement robust risk management processes to identify, assess, monitor, and mitigate risks associated with outsourcing. This includes regular reviews and audits of outsourced activities.

Business Continuity Planning: Payment institutions must ensure that outsourcing arrangements do not impair their ability to maintain business continuity and provide uninterrupted payment services.

Notification and Approval: Depending on the nature and scope of the outsourced activities, payment institutions may be required to notify the KNF before engaging in qualified outsourcing.

By adhering to these obligations, payment institutions can leverage the benefits of outsourcing while maintaining regulatory compliance. The KNF's supervision in the abovementioned scope aims to ensure that outsourcing arrangements do not compromise the stability, security, and integrity of the payment services market.