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Choosing jurisdiction for registering a payment system

Published: 02 Sep 2019

Today, registration of a payment system is a highly demanded and popular service among leading companies, as it allows you to make payments between organizations and allows the buyer to pay for a service or purchase online without using cash. That is, it is a simple and reliable solution for conducting remote financial transactions. The capabilities of payment systems are being improved daily and the question arises: “Which jurisdiction to choose to obtain a license to make such a payment system popular among users?” We are offering criteria that you should be pay attention to when choosing.

1. Region of payments within the payment system

First of all, when choosing a jurisdiction, you need to focus on the countries of main contractors. If you will work with customers from the EU, we recommend you to obtain a license for a payment system in one of the European countries. Our company provides licensing services in Lithuania, the Czech Republic, Georgia, Latvia, Estonia, the UK, as well as Malta and Cyprus.

As for offshore countries, the best offer of financial licenses today is the company that received the payment license on Belize.

As for Asian countries, Hong Kong is the most favorable jurisdiction, because Hong Kong is the financial and commercial business center of all of Asia.

2. International Bank Account Number (IBAN)

When choosing a payment system, customers pay attention to the availability of IBAN. When counterparties will make transfers, in the "sender of payment" field they will see not a payment system, but a specific legal entity. Many customers do not agree for their partners receive funds on behalf of the payment system.

3. Payment methods

If you are willing to cooperate with international contractors, increase your client base and provide reliable money transfers to people and businesses, you should choose a payment method that is popular in market of your choice. It is also necessary to consider the possibility of accepting payments in various currencies (hryvnia, rubles, dollars, euros, local currencies).

One of the main functions of the payment system is the ability to make bank transfers. The most popular type of transfer in Euro is SEPA.

SEPA is a Single Euro Payment Area. It enables people and enterprises to make transfers in euros throughout Europe with the same convenience as when paying in their own country. SEPA works only between the banks of 28 European Union countries, as well as countries with the European Free Trade Association - Switzerland, Iceland, Norway, Liechtenstein, Monaco, San Marino and Andorra.

Another leading global interbank system for transmitting information and making payments is SWIFT. Today it is the fastest and most common method that allows payments to be made anywhere in the world and in any currency and can be received by the recipient on the same day.

However, the process of SWIFT transfers is complicated, when making a payment you must each time provide a bank identification code (BIC) and an international bank account number (IBAN) or your daily account number. For SEPA you must provide only one number - IBAN.

4. Payment system regulations in Europe and the USA

In the European Union, institutions that have received a payment license in one of the EU countries can provide financial services in any other EU country on the basis of the domestic market, with means free movement of services and goods. For example, a company that has received a payment license (PSP or EMI) in Lithuania may provide its services in Germany or France, having previously notified the regulator of such a country.

Payment services are regulated at the EU level and at the national level, which helps to remove legislative and market barriers between countries and provides free movement of money in the EU. Each country at the national level can determine the direction of development of electronic payments.

A feature of the United States is that the control of payment systems is carried out in each state differently. In most US states, money transfer services are regulated and licensed, but the requirements are significantly different. At the federal level, the conditions of providing banking services are determined in relation to the issuance and acceptance of payment cards.

Thus, we can conclude that there is no universal country for a payment system that would suit everyone. Each client, each applicant has its own requirements, therefore, before receiving a payment license, it is important to determine your purpose.

SBSB lawyers will help you choose the best jurisdiction for your payment system, taking into

account all the above criteria and the level of competition in the market

Yuliya Barabash

Firm: SBSB Legal Service
Country: Ukraine

Practice Area: Commercial

  • Kozhemyatska Street, 20
    Kiev


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