Payment License Types

Payment licenses are legal permits issued by regulatory authorities to enable payment service providers (PSPs) to conduct transactions. There are various types of payment licenses that have been developed to accommodate the different needs of payment service providers. In this article, we will explore the different types of payment licenses, who issues them, in which countries they are valid, and what is required to obtain them.

• Payment Institution License: Payment Institution License is a permit that allows PSPs to provide payment services in the European Union (EU) and the European Economic Area (EEA). This license is issued by the national regulatory authority of the country where the PSP is established. To obtain a Payment Institution License, the PSP must comply with the Payment Services Directive (PSD2), which includes various requirements such as adequate capital, competent staff, and proper governance structures.
• E-Money Institution License: An E-Money Institution License is a permit that enables PSPs to issue electronic money in the EU and EEA. This license is also issued by the national regulatory authority of the country where the PSP is established. The requirements for obtaining an E-Money Institution License are similar to those for Payment Institution License, with additional obligations for safeguarding customer funds.

• Money Transmitter License: Money Transmitter License is a permit that enables PSPs to conduct money transmission activities in the United States. This license is issued by the Financial Crimes Enforcement Network (FinCEN), which is a bureau of the US Department of the Treasury. To obtain a Money Transmitter License, PSPs must comply with state-specific regulations, which vary in terms of fees, capital requirements, and compliance obligations.
• Payment Gateway License: Payment Gateway License is a permit that enables PSPs to provide payment gateway 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 includes various requirements such as net worth, security standards, and reporting obligations.

In conclusion, obtaining a payment license is crucial for PSPs to operate legally and offer their services to customers. The requirements for obtaining these licenses vary depending on the type of license and the country where the PSP is based. It is important for PSPs to understand the regulatory landscape in their respective jurisdictions and comply with the necessary requirements to obtain and maintain their payment licenses.