Malta Open Banking Legal Requirements in 2026

Open banking is not simply an API project. For a bank, fintech or platform serving customers in Malta, Malta open banking legal requirements determine who may access payment-account data, how consent must be obtained, which security controls apply and where regulatory accountability remains. Getting the regulatory perimeter wrong can delay a launch, compromise a commercial partnership and create avoidable enforcement exposure.

The starting point is to identify the proposed service accurately. A business that merely supplies technology to a regulated firm faces a very different legal position from one that directly initiates payments or retrieves account information on behalf of users.

The legal framework for open banking in Malta

Malta’s open banking regime principally follows the EU’s second Payment Services Directive, commonly known as PSD2, as implemented through the Payment Services Regulations, Subsidiary Legislation 371.18. The Malta Financial Services Authority (MFSA) is the competent authority for authorisation, registration and supervision of relevant payment-service providers.

PSD2 created a legal route for authorised third-party providers to access payment accounts held with banks and other account servicing payment service providers, where the customer gives explicit consent. It covers two services most commonly associated with open banking: payment initiation services, which allow a provider to initiate a payment from a user’s account, and account information services, which allow a provider to consolidate and analyse information from one or more payment accounts.

The framework is wider than a technical connection. It regulates conduct, safeguarding, authentication, operational arrangements, customer information and incident handling. It also sits alongside data-protection, cybersecurity, outsourcing, consumer-protection and anti-money laundering obligations.

Malta open banking legal requirements by business model

Account servicing payment service providers

Banks, electronic money institutions and payment institutions that maintain payment accounts accessible online may be account servicing payment service providers, or ASPSPs. Their central duty is to provide authorised payment initiation service providers and account information service providers with secure, non-discriminatory access to relevant payment-account services.

In practical terms, this requires a compliant dedicated interface or another permitted access method. The interface must support the functions needed for third-party providers to provide their regulated services, perform reliably and meet the applicable security standards. An ASPSP cannot use access design, commercial friction or unnecessary data fields to favour its own digital channels over regulated third parties.

The institution should maintain clear internal ownership across legal, compliance, information security, product and operations teams. API documentation, testing environments, change-management procedures, service monitoring and a workable approach to interface disruption all form part of regulatory readiness. A contract with a technology supplier does not transfer the ASPSP’s responsibility to comply.

Payment initiation and account information providers

A business proposing to offer payment initiation or account information services from Malta must assess whether it needs MFSA authorisation or registration before commencing activity. The answer depends on the exact service, its customer relationship, whether it handles funds and its place in the payment chain.

A payment initiation provider generally requires authorisation as a payment institution. An account information service provider is subject to a registration route, but registration is not a light-touch substitute for compliance. The applicant must demonstrate, among other matters, appropriate governance, professional suitability, security arrangements and professional indemnity insurance or a comparable guarantee where required.

Authorisation planning should start early. The MFSA will expect a coherent operating model rather than a collection of policies prepared for the application. This includes a programme of operations, business plan, governance structure, risk assessment, security policy, outsourcing arrangements, financial information and evidence that senior management can oversee the regulated activity.

A firm may operate cross-border after using the relevant EU passporting process, but cross-border reach should not be assumed from a Maltese entity alone. The location of customers, regulated activities, contractual counterparties, data processing and local consumer rules must all be considered.

Technology providers and unregulated partners

Not every participant in an open banking ecosystem is itself a payment-service provider. API developers, cloud providers, data-analytics firms and software vendors may fall outside PSD2 authorisation where they provide only technical services and do not enter into possession of funds or perform regulated payment services.

That distinction is fact-sensitive. A provider that controls credentials, determines the purpose and means of account-data processing, contracts directly with users or presents itself as initiating payments may be closer to the regulated perimeter than its product description suggests. Firms should test the actual customer journey, data flow and contractual allocation of roles before relying on an exclusion.

Consent, data access and GDPR

Open banking consent is often treated as one concept, but two legal questions must be separated. Under PSD2, the provider needs the payment-service user’s explicit consent to perform the relevant payment or information service. Under the GDPR, the business must identify a valid lawful basis for each processing operation and meet transparency, purpose-limitation, data-minimisation and accountability duties.

Explicit consent under payment-services rules does not automatically mean that GDPR consent is the most suitable lawful basis. Depending on the processing, performance of a contract, compliance with a legal obligation or legitimate interests may be relevant. The correct analysis depends on the service design and must be documented.

Open banking firms should only request data necessary for the service the user has requested. They should not retain account data indefinitely because it may become commercially useful later. Privacy notices must explain what data is collected, why it is used, who receives it, how long it is kept and how a user can exercise their rights.

Where several parties participate, the allocation of controller, joint-controller and processor roles requires careful analysis. A bank, fintech and cloud provider may each have different obligations. Data-processing agreements, data-sharing terms, international transfer safeguards and incident-response procedures should reflect the real arrangement, not a generic template.

Security, strong customer authentication and resilience

The EU Regulatory Technical Standards on strong customer authentication and common and secure communication set detailed expectations for open banking. Strong customer authentication, or SCA, generally relies on two or more independent elements from knowledge, possession and inherence. It must also protect against the risk that authentication is linked to the wrong payee or transaction.

For payment initiation, the user must be able to authenticate with their account provider without disclosing personalised security credentials to the third-party provider, except through permitted secure processes. Account information providers must use credentials and data only as necessary for the service and must protect them against unauthorised access.

Security is not confined to the login screen. Firms should maintain access controls, encryption, key management, audit logs, vulnerability management, penetration testing and supplier oversight proportionate to their risk profile. They should also have clear processes for identifying and reporting major operational or security incidents to the relevant authorities and, where appropriate, affected users.

The Digital Operational Resilience Act, or DORA, adds another layer for many regulated financial entities. It addresses ICT risk management, incident reporting, resilience testing, ICT third-party risk and contractual arrangements with critical technology suppliers. For open banking businesses that rely heavily on cloud infrastructure and API availability, DORA should be integrated into governance rather than treated as an isolated IT compliance exercise.

AML, outsourcing and customer communications

Open banking can support better onboarding and transaction monitoring, but it does not remove AML/CFT responsibilities. Where a firm is a subject person under Maltese anti-money laundering rules, it must apply a risk-based approach to customer due diligence, record keeping, screening, monitoring and suspicious-activity reporting. Reliance on account data is not a substitute for understanding the customer and the purpose of the business relationship.

Outsourcing requires equal care. A regulated firm remains accountable for outsourced critical or important functions. Agreements with cloud, API-management, customer-support and analytics providers should deal with service levels, security, audit and access rights, sub-outsourcing, data location, business continuity, incident notification and exit planning. The contractual position must support, rather than undermine, the firm’s ability to meet MFSA and DORA expectations.

Customer-facing terms should be clear about the service, fees, data access, consent withdrawal, liability and complaint procedures. A technically correct product can still create legal risk if customers cannot understand who is providing the service or what they are authorising.

Building a compliant launch plan

A practical launch begins with a regulatory scoping exercise before the product is coded around assumptions. Map the customer journey, payment flow, account-data fields, jurisdictions, suppliers and contractual roles. Then determine whether MFSA authorisation or registration is required, which PSD2 duties apply and how GDPR, DORA and AML/CFT obligations affect the operating model.

The next step is to align documentation with operations. Governance policies, security controls, privacy materials, outsourcing contracts, incident playbooks and API procedures should tell the same story. Testing that story through realistic access failures, authentication challenges and data-breach scenarios is often where gaps become visible.

For firms entering Malta’s financial-services market, early legal input can turn open banking compliance from a late-stage obstacle into a structured route to launch. The most useful question is not whether an API can connect to a bank, but whether the business behind it can sustain the duties that connection creates.