Establishing a Cyprus-Based Payment Processing Agent: Your Gateway to EU Payments
- Christopher Lytras
- Aug 23
- 4 min read
Introduction
Many online gaming operators are incorporated and licensed outside the EU in jurisdictions such as Curaçao, Isle of Man, Gibraltar, Antigua & Barbuda, Kahnawake, or Costa Rica. These locations offer cost-efficient licensing models that enable operators to legally run gaming platforms. However, they often face a significant challenge: restricted access to EU banking and payment service providers (PSPs).
This is because many European financial institutions apply stricter due diligence standards when dealing directly with offshore gaming companies. The result is that operators can struggle to open merchant accounts, secure card processing, or integrate with reliable EU payment systems.
A practical and widely adopted solution is the establishment of a Cyprus Payment Processing Agent (PPA) — a Cyprus-based company that acts as an intermediary between the offshore gaming operator and European banks, PSPs, and payment gateways.
Why Establish a Cyprus Payment Processing Agent?
(a) EU Presence and Credibility
A Cyprus company provides a recognised EU footprint, making it easier to establish banking and PSP relationships while also building confidence with players.
(b) Access to EU Financial Infrastructure
Through a Cyprus PPA, operators gain smoother access to merchant accounts, card acquirers, and trusted EU payment gateways.
(c) Attractive Tax Regime
Cyprus offers a 12.5% corporate tax rate — one of the lowest in the EU — along with an extensive network of double tax treaties, allowing for efficient structuring of management and service fees.
(d) No Payment Services Licence Required
Since the Cyprus PPA acts only as an agent of the parent gaming company and does not provide payment services to the public, it does not fall under the scope of the EU Payment Services Directive (PSD2). This means no separate payment institution licence is required.
(e) AML/KYC Compliance
While no payment licence is needed, Cyprus PPAs must still implement robust anti-money laundering (AML), counter-terrorist financing (CTF), and know-your-customer (KYC) procedures to satisfy banking and PSP partners.
How the Structure Works
Setting up a Cyprus Payment Processing Agent involves creating a seamless link between your offshore licensed gaming business and the European financial system. The structure typically works as follows:
(a) Gaming Operator (Parent Company)
Establish an offshore company and obtain a gaming licence in a jurisdiction such as Curaçao, Isle of Man, Gibraltar, Antigua, or Costa Rica. This entity is responsible for the gaming operations, platform, and player accounts.
Offshore licences are often cost-effective but can face credibility challenges with EU banks and PSPs.
(b) Cyprus PPA Company
A wholly-owned subsidiary is established in Cyprus to act exclusively as the Payment Processing Agent of the gaming operator.
The Cyprus company does not operate games itself; its role is to manage the financial flows between players, banks, and the licensed operator. This distinction is key: it allows the PPA to remain outside the scope of PSD2 licensing, while still offering a recognised EU presence.
(c) Banking & PSP Integration
The Cyprus PPA opens dedicated bank and PSP accounts in the EU. These accounts are used to receive player deposits and process withdrawals. From the perspective of European banks and payment providers, they are dealing with an EU-incorporated and regulated entity, which dramatically increases acceptance rates compared to direct applications from offshore companies.
(d) Flow of Funds
Players transact with the Cyprus PPA’s accounts.
The PPA reconciles and processes payments on behalf of the parent gaming company.
The PPA invoices the gaming operator for its services (a management or processing fee), which is subject to Cyprus corporate tax at 12.5%.
The balance of funds is then remitted to the gaming operator.
(e) Tax & Commercial Benefits
Management/service fees provide a legitimate business expense for the gaming operator.
Cyprus’s low corporate tax rate and access to double tax treaties help optimise overall tax efficiency.
The presence of a Cyprus entity allows for clean, audited financial statements, improving transparency for regulators, banks, and potential investors.
(f) Compliance & Governance
Although no PSP licence is required, the Cyprus PPA must still operate with robust AML/KYC procedures. This is often where offshore operators encounter difficulties. By using a Cyprus company, these standards are easier to implement and demonstrate, keeping both regulators and banking partners satisfied.
How We Can Help
At Lytras & Associates LLC, we provide end-to-end support for establishing and maintaining a Cyprus Payment Processing Agent, covering every stage of the structure:
Gaming Operator Advisory – guidance on aligning offshore gaming licences (Curaçao, Isle of Man, Gibraltar, Costa Rica, etc.) with a compliant EU payment structure.
Cyprus PPA Incorporation – formation of the Cyprus Payment Processing Agent company, including drafting constitutional documents, corporate governance, and full corporate administration.
Banking & PSP Onboarding – assistance with opening EU bank accounts, EMI accounts, and PSP integrations to ensure smooth player deposit and withdrawal flows.
Payment Flow Structuring – designing and documenting the flow of funds between the Cyprus PPA, PSPs, and the parent gaming company, ensuring clarity and regulatory compliance.
Management & Fee Arrangements – drafting service agreements that govern how the Cyprus PPA charges management/processing fees to the gaming operator, optimised for Cyprus’s 12.5% corporate tax regime.
Tax Planning & Treaty Structuring – maximising efficiency using Cyprus’s favourable tax framework and extensive double tax treaty network.
AML/KYC & Compliance Systems – implementation of anti-money laundering and know-your-customer procedures that satisfy both EU banking standards and gaming regulators.
Ongoing Corporate Governance – bookkeeping, audited accounts, substance solutions, and ongoing reporting to keep the Cyprus PPA in good standing.
Contact us at info@lytrasllc.com for a complimentary consultation or fill in our form at Contact Us.
The content of this article is valid as of the date of its first publication. It is only intended to provide a brief introduction to the particular subject matter.
Detailed specialist advice should be taken prior to taking or refraining from taking any action as a result of the information contained in this article.
