Becoming A Licensed Money Transfer Business in the EU
Planning to establish your money transfer business in the European Union? You will need a money transfer license to legally set up your business and operate in Europe.
The regulatory environment, laws and licensing process of money transfer businesses are different for all European countries. However, what is interesting is, if you apply for a license in one European country, let’s say, Germany; you could then use the same license and pick up customers from other countries, through passporting.
Regardless of where in EU you plan to set up your money transfer business, you will first have to decide the type of license you want to apply for. Depending on your business size and the type of activities you wish to undertake, you may opt for any of these two licenses.
Types of Money Transfer Licenses in Europe
Before you apply for a money transfer license in Europe, find out which type of license will best suit your money transfer business.
Payment Institution (PI) License
A payment institution license, under PDS2 Directive, can offer the following services:
- Services enabling cash to be placed on a payment account as well as all the operations required for operating a payment account.
- Services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account.
- Execution of payment transactions, including transfers of funds on a payment account with the user’s payment service provider or with another payment service provider.
- Execution of payment transactions where the funds are covered by a credit line for a payment service user
- Issuing of payment instruments and/or acquiring of payment transactions.
- Money remittance
- Payment initiation services
- Account information services
For activities 1 – 5, a minimum paid-up capital of EUR 125,000 is required.
To offer money remittance services only, a minimum paid-up capital of EUR 20,000 will be required.
For offering payment initiation services, a minimum paid-up capital of EUR 50,000 will be required.
E-Money Institution (EMI) License
Under, EMI Directive, if your business activity includes the issuance of electronic money (the digital equivalent of cash store on an electronic device), you will need to apply for an e-money institution license.
An EMI license has all the features of a payment institution as well. In addition to this, they can also provide e-wallets, IBAN accounts, and payment cards.
To operate as an EMI, a minimum paid-up capital of EUR 350,000 is required.
How to Apply for a Money Transfer License in EU
The application process for a money transfer license is different for every European country. Irrespective of the country, here are some documents and information that are required by almost all European regulators.
The Licensing Process
Along with your licensing application, you will have to submit the following:
- Business plan
- Organizational structure
- Description of internal control mechanisms, including risk management, accounting procedures, etc.
- Proof of minimum paid-up capital
- Identity proof of applicant, directors, and shareholders
- Applicant’s legal status and articles of association
- Address of applicant’s head office
Depending on the jurisdiction you are applying in, there might be additional requirements that you will have to meet. Some regulators may even raise the minimum paid-up capital requirement based on the financial activity you apply for. Make sure that you you submit a complete application along with all the documents/information, else your application may be rejected.
The time required to obtain a money transfer license in Europe varies from country to country. It usually takes anywhere between 6 to 12 months to acquire a license.
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This page was last updated on January 28, 2020.