Payment Services License

What are Payment Services License?

Payment services are specific tools and platforms that payment institutions use to provide their services. Examples of payment services:

Online payments: payment of goods and services via the internet using bank cards, electronic wallets and other methods.
Mobile payments: pay with mobile devices, for example via NFC or QR codes.
E-wallets: online services for the storage and management of funds, as well as for making payments.
Payment gateways: services that allow online shops to accept payments from customers.

License for electronic money (E-Geld): What is it and why do you need it?

Electronic money (E-Geld) is a digital representation of the monetary value, stored in electronic form on a device or server and accepted as means of payment by persons other than the issuer.

In order to issue and manage electronic money, you must obtain a special license for electronic money (E-Geld). This license is issued by regulatory bodies (such as the central bank) and confirms that the company meets certain requirements and security standards.

Why do I need an E-Geld license?

Consumer protection: A license guarantees that the company issuing electronic money complies with the rules of consumer protection and ensures the safety of their funds.
Preventing money laundering and terrorist financing: Licensed companies are required to comply with KYC (Know Your Customer) and AML (Anti-Money Laundering) rules to prevent the use of electronic money for illegal purposes.
Ensuring the stability of the financial system: Regulation of the e-money market helps to maintain the stability of the financial system and prevent risks associated with the use of digital currencies.
Increased trust in the service: Having a license increases users’ confidence in the e-money service, as they know that the company is under the control of regulators.Where to register payment institutions, payment services and obtain a license for electronic money (E-Money)?

The issue of registration of payment institutions, payment services and obtaining a license for electronic money (E-Geld) is a complex and multifaceted process that requires careful study of legislation and regulatory requirements. Choosing a jurisdiction for registration and licensing is key to the success of your business.

Key factors to consider when choosing a jurisdiction:

Reputation of jurisdiction: How respected and recognized is jurisdiction in the world of finance? This directly affects the credibility of your business from clients and partners.
Regulation: How strict and transparent is the regulation in the selected jurisdiction? Too much regulation can lead to problems in the future, and too much can make it difficult to do business.
Cost: How much does it cost to register, license and operate in the selected jurisdiction? Not only direct costs, but also indirect costs such as lawyers and consultants should be taken into account.
Taxation: What are the tax rates and benefits in the selected jurisdiction? This can significantly affect the profitability of your business.
Access to banking services: How easy is it to open a bank account for your business in the selected jurisdiction? This is critical for payment and financial management.
Political and economic stability: How stable is the political and economic situation in the selected jurisdiction? This affects the long-term future of your business.Where to register payment institutions, payment services and receive

Popular jurisdictions for registration of payment institutions and obtaining license for electronic money:

European Union (EU):
Lithuania: Known for its favorable regulation for fintech companies, relatively fast licensing procedure and access to the European market.
Estonia: Also offers attractive terms for fintech companies, including the possibility of remote registration and low taxes.
Malta: Historically a popular jurisdiction for online gambling and fintech companies, but recently regulatory requirements have become more stringent.
Cyprus: Offers relatively low taxes and access to the European market.
United Kingdom: Despite Brexit, it remains an attractive jurisdiction for fintech companies due to its well-developed financial infrastructure and skilled workforce.
Singapore: It is one of the leading financial centers in Asia and offers favorable conditions for fintech companies.
Hong Kong: It is also a major financial center in Asia and offers access to the Chinese market.
USA: Offers different licensing options depending on the state and type of activity.

Registration and licensing process:

The registration and licensing process may vary depending on the jurisdiction selected, but usually includes the following steps:

1. Choice of jurisdiction: Carefully study the different jurisdictions and choose the one that best suits your needs and goals.
2. Preparation of documents: Gather all the necessary documents, including business plan, financial reports, information on owners and directors, and
also documents confirming compliance with the requirements of Anti-money laundering (AML) and Financing of terrorism (CFT).
3. Application: Apply for registration and licensing with the appropriate regulatory authority.4. Verification: The regulatory authority will verify your application and may request additional information.
5. Obtaining a license: If your application is approved, you will be licensed to operate as a payment institution or electronic money service.
6. Compliance: Once licensed, you will be required to meet regulatory requirements at all times, including capital, reporting and AML/CFT requirements.

Important aspects to note:

Anti-money laundering (AML) and counter-terrorism financing (CFT): All payment institutions and e-money services are required to comply with strict AML/CFT requirements. This includes the development and implementation of client identification (KYC) procedures, transaction monitoring and suspicious transaction reporting. Failure to comply with these requirements can lead to serious fines and even revocation of the license.
Data protection: Payment institutions and e-money services process confidential information about customers, so they are obliged to protect it in accordance with the requirements of data protection legislation (for example, GDPR in the EU).
Cybersecurity: Payment institutions and e-money services are an attractive target for cybercriminals, so they must take steps to protect their systems and data from cyber-attacks.
Professional assistance: Registration and licensing of a payment institution or electronic money service is a complex process that requires special knowledge and experience. It is recommended that you seek the assistance of lawyers and consultants specialized in this field. They will help you choose the appropriate jurisdiction, prepare the necessary documents and complete the licensing procedure.