Meaning and Uses of PSP License

Meaning and Uses of PSP LicensePayment Services Providers provide merchants with opportunities to accept e-payments through various ways, particularly, cards and banking payment-transactions such as direct debits, banking transfers and real-time bank transfer based on online banking. Typically, software as a unique model forms a single gateway for its clients (vendors) with various methods for payment-transactions.

There’re plenty of categories of licenses in this category, and there’re also various names for these industries in countries worldwide: monetary means service operators, payment institutions, etc.

Our firm provides expert services in establishing and licensing businesses worldwide. We offer high-quality consulting services, in particular, our specialists will answer any of your questions regarding PSP-licenses, crypto-sphere, gambling industry and other things.

Types of payment licenses

  1. Institution License. It’s a permit allowing firms to offer payment services in EU and closest Economic Area (EEA). License is issued by the national regulatory authority of jurisdiction of PSP establishment. To obtain this license, a PSP must comply with special Directive (PSD2), which contains various requirements such as sufficient capital, competent staff and appropriate governance structures.
  2. E-Money Institution License. It’s a permission allowing firms to offer issuance of electronic monetary means in EU and EEC. This permission is also issued by national regulative authorities of country where services provider is established. The requirements for getting an electronic money permit are similar to those for a PI-license, with additional obligations to protect customer funds.
  3. Money Transmitter License. Money Transmitter License is a permit that allows PSPs to conduct money transfer activities in the United States. This license is issued by the Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Department of the Treasury. To obtain a money transfer service license, providers need to follow government normative points, which vary in fees, initial capital needs, and compliance obligations.
  4. Payment Gateway Permit. It’s permission to provide these services in India. This license is issued by the Reserve Bank of India (RBI), which is the country’s central bank. To obtain a payment gateway license, PSPs must comply with the Payment and Settlement Systems Act, which contains various requirements as net capital, security standards and reporting obligations.
Each provider requires a schematic description of implementation of specified service. This should include a detailed specification of flow of data and money throughout the service providing way - from beginning of transaction to its completion.

With a PSP license you can offer the followings:

  • debiting of funds from the payer’s account;
  • services related to crediting funds to the recipient’s account;
  • making payments via direct debit;
  • issuance and/or acquisition of payment instruments;
  • payment transfers;
  • issuance of e-money;
  • execution of any payment-transactions.

Benefits of PSP license

Thanks to the presence of such a license, the entrepreneur will be able to legally carry out the following.

  1. Conduct payment-transactions for trade organizations on the Internet.
  2. Accept and provide processing of payment-transactions in various currencies.
  3. Open accounts for individuals and legal persons.
  4. Merchant.
  5. Issue cards of various types.
In addition, the following commercial advantages are available.

  1. Entering the potential payment market.
  2. Wide range of applications.
  3. Particularly suitable for the fintech industry.

Regulatory Compliance

List of needed documentation for application for PSP-license as a rule includes the following:

  1. Documentation confirming identity of Applicant (in the case of a legal entity, the company's statutory documents) and all shareholders of the Applicant’s company.
  2. A document confirming legal stay in the European Union.
  3. Original certificates of good conduct in the country of residence, country of citizenship and any other country in which the customer has been for more than 6 months over the past three years.
  4. Brief description of the project.
Our lawyers will prepare following documentation.

  1. Detailed plan for carrying out commercial deals.
  2. Business plan for 12 or more months in advance.
  3. Description of payment system.
  4. Investment and financial plans.
  5. Internal audit and compliance implementation plan.
  6. Internal regulations for ensuring the security of client funds.
  7. Internal regulations on compliance with limits on financial services provided.
  8. Internal regulations for handling customer complaints and claims.
With our help, starting your business-project will be fast and secure.

Requirements for a potential licensee vary by jurisdiction. However, several general nuances can be identified.

  1. Minimum 1 resident director (must have detailed information on all operations).
  2. Minimum 1 shareholder (individual or legal entity, mainly without restrictions on citizenship or place of residence).
  3. Registered Agent.
  4. Local physical office.
  5. Depositing of share capital.

Monetization and Revenue Streams

Firms with a PSP license are needed to confirm legitimacy of the origin of business funds and carefully describe income streams. In addition, this must be done in accordance with local legal requirements.

The starting capital ranges from 25-125 thousand euros for a PI license and about 350,000 euros for EMI.

The license review procedure contains many stages, and several divisions of regulator are involved, so the time frame for getting a permit averages from 6 to 12 months from the date of application. Authorities may repeatedly ask the applicant to supplement missing data and data on future activities, as well as make adjustments to the provided business plan.

The process of getting a PSP-license

  1. Identification of the type of the license. We will select licenses that meet your requirements and capabilities.
  2. Preparing documents. Prepare state-required licensing documents. We will help you create needed documentation for each permit.
  3. Filling out and submitting the application. After preparing the necessary documents, we will advise you on how to complete the application and submit the PSP-license procedure to the government.
  4. Business-license verification and compliance. We liaise with licensing authorities to ensure business licenses are issued. Once your license is issued, our experts will work to ensure the company is compliant while you focus on your business-activities.
Our specialists become your reliable allies on licensing path. Our knowledge and expertise are a guarantee of our professionalism and the most effective result for you.

Author of this article is Denys Chernyshov - CEO and founder of the world-famous law firm Eternity Law International.