Licence needed for processing service with eu clients?

[JackAlabama]

Let's say I was allowing my customers in eu to deposit some money (bank transfer or crypto) into my company and allow them to pay out a third party on their behalf in lets say Africa (In a way similar to transferwise)..

Will I need some kind of license from eu or can I just move on and do that?
What country would be best to incorporate such a business?
Thanks for your insights.

 

[Sols]

Let's say I was allowing my customers in eu to deposit some money (bank transfer or crypto) into my company and allow them to pay out a third party on their behalf in lets say Africa (In a way similar to transferwise)..

Will I need some kind of license from eu or can I just move on and do that?

Yes. In the EU, you will need a Payment Institution license which includes money remittance services. There are similar license requirements elsewhere.

What country would be best to incorporate such a business?

If your clients are in the EU, an EU license makes the most sense. It takes between 6 months and a year (sometimes longer), you need a minimum share capital of 20,000 EUR but probably the full 125,000 EUR for a PI license to be able to operate the way you want. Reputable, reasonably easy to find partner banks, very popular.

Theoretically, you could go for a license in Hong Kong, Singapore, or other places but you will run into even bigger problems finding partner banks if you are physically located (your office/employees) in a country or even region that's unrelated to your customer base.

 

[JackAlabama]

Yes. In the EU, you will need a Payment Institution license which includes money remittance services. There are similar license requirements elsewhere.


If your clients are in the EU, an EU license makes the most sense. It takes between 6 months and a year (sometimes longer), you need a minimum share capital of 20,000 EUR but probably the full 125,000 EUR for a PI license to be able to operate the way you want. Reputable, reasonably easy to find partner banks, very popular.

Theoretically, you could go for a license in Hong Kong, Singapore, or other places but you will run into even bigger problems finding partner banks if you are physically located (your office/employees) in a country or even region that's unrelated to your customer base.

Thank you very much for your answer. Do you have a suggestion for a good country requiring 20,000 Eur?

 

[Sols]

It's an EU standard and defined in PSD2 (the 2nd Payment Services Directive). All EU countries have it.

https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32015L2366&from=EN

where the payment institution provides only the payment service as referred to in point (6) of Annex I, its capital shall at no time be less than EUR 20 000;

6.Money remittance.

But most money remittance businesses require additional parts of PSD2 to function normally. You usually end up needing the full 125,000 EUR (plus all the extra costs).

This isn't a business you can set up without at least a few hundred thousand EUR in funding.