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Obtaining financial licenses
Financial (payment) licenses are a category of licenses related directly to monetary services in the field of payments.
Such licenses include licenses for currency exchange, electronic money, as well as banking licenses, licenses of payment institutions, MSB, AISP, PISP.
Licenses in the payments sphere differ from other financial licenses (investment licenses) not so much by the procedure of obtaining, but by the object of regulation, for what it is issued.
By obtaining a license from this category, a person or entity acquires the right to carry out various financial transactions (including operations, transactions, exchanges, issuance or representation of third parties). This makes such persons subject to regulation and control by authorized government agencies, most often the Central Bank of the respective country.
Does everyone need a license to accept third-party payments?
Absolutely.
In order to conduct any of the above activities, one must have a license issued by the state. Without a license, such activities will be viewed by the state not only as violating license requirements, but possibly as fraud, which could result in personal criminal liability for directors, shareholders and other beneficiaries.
What are the requirements for obtaining a payment license?
In addition to the fact that each license in this category has its own requirements, the requirements for the same license may vary from jurisdiction to jurisdiction.
In general terms, the regulator usually considers the following criteria when applying for a financial license in the payments sector:
- Financial security - the company must have sufficient funds to fulfill its obligations. Usually, the regulator determines the minimum amount of authorized capital that is considered necessary to carry out a particular activity.
- Record keeping - the company must maintain all documentation related to its activities: contracts, accounts, reports, etc., in a proper manner.
- Compliance with anti-money laundering (AML) and counter-terrorist financing (CFT) legislation.
- Qualified employees - as a general rule, there are strict requirements for AML officer and director of the company, while the requirements may also vary.
What is the time frame in which I will receive my payment license?
This issue depends on the type of license and the country in which it is acquired.
If you start the process of obtaining a license only with your intention, without prior preparation, the timeframe may vary from 3 months to 2 years.
The Law&Trust International team strongly recommends that you first determine the scope of your business and then the country in which you intend to obtain a license. Based on this information, it will be possible to more accurately establish the requirements for the license and provide a more accurate timeline for obtaining a license.
What is the best country to get a payment license?
A license issued by one state is valid only in the territory of that state. At the same time, obtaining a license to conduct one of these activities does not give the right to conduct other activities without a separate license.
Note that there is no universal jurisdiction in which it is best to obtain any of these licenses. Different business models work best in different jurisdictions.
As part of the study of your specific situation, Law&Trust will offer assistance in selecting the best jurisdiction for you.
It should be emphasized that among this category of licenses, there are some of the most sought-after jurisdictions where companies are particularly interested in obtaining such authorizations. Such jurisdictions include: United Kingdom, Ireland, Cyprus, Singapore, United States of America, Switzerland, as well as a number of European Union (EU) and European Economic Area (EEA) countries.
It is worth noting that some restrictions on the extraterritorial principle of license validity are relaxed in the EU and EEA.
If you still have questions, the Law&Trust International team will be happy to advise you and assist you in selecting both the license for your business and the jurisdiction in which it will be conducted.
What kind of payment license should I get?
For this purpose, we suggest you to get acquainted with each type of payment license listed below.
Obtaining a license for electronic money
License for those who plan to develop payment solutions, launch digital wallets, merchant, payment processing, VISA and Master Card connection, credit and other financial and technological products in the regulated market.
Obtaining a banking license
The service is suitable for those who plan to establish a credit organization or expand the financial capacity of an existing business within the legal framework and international standards.
A list of countries where we can assist to obtain this license
Obtaining a license of a payment institute
The license is relevant for fintech projects, payment platforms and companies entering the electronic payments market but not ready to obtain a banking license.
A list of countries where we can assist to obtain this license
Obtaining a PISP and AISP license
These licenses are suitable for companies that want to offer solutions for initiating payments and processing customer account information within a regulated financial market.
Obtaining a license for currency exchange
Obtaining an MSB license
MSB (Money Services Business) license service includes assistance in obtaining authorization for financial transactions such as currency exchange, money transfers, crypto exchange, EMI and other fund handling services in countries like Canada and USA.
