Part of our POBO & COBO Solutions guide.
The Problem
A payment company may want to let its customer instruct a payment while the PSP or MSB executes the transfer from program banking infrastructure. This can resemble corporate POBO operationally, but it involves external customers and therefore raises different questions about licensing, customer funds, FBO accounts, KYC/KYB, sanctions, and settlement authority.
The correct design starts with the flow of funds: who owns the funds, who owes or is owed money, who owns the external bank account, what the relationship is between the parties, and whether the underlying parties are related group companies or external customers.
Typical Flow
The diagram is intentionally generic. Actual implementation depends on the legal entities, jurisdictions, bank/provider rules, payment rails, currencies, licensing status, and reconciliation model.
The Licensing Layer
If the provider accepts and transmits customer money, the flow may fall within regulated payment or money-transmission activity.
The Banking Layer
Customer funds may need segregated, safeguarded, FBO, or pooled program accounts rather than a normal corporate operating account.
The Data Layer
The transaction should preserve underlying payer information so the payment is not an unexplained third-party transfer.
Core Design Questions
- Who is the legal account owner?
- Who is the economic owner of the funds?
- Who is the debtor and who is the ultimate debtor?
- Who is the creditor and who is the ultimate creditor?
- Are the underlying parties related companies or external customers?
- Which countries and currencies are involved?
- Which rails are required?
- What monthly volume and transaction count are expected?
- Is a named, virtual, pooled, FBO, or safeguarded account required?
- Who performs KYC/KYB, sanctions screening, and transaction monitoring?
- How will the internal ledger and reconciliation work?
What We Can Help With
We can help map the transaction, identify the appropriate banking/payment architecture, determine what type of provider is required, prepare the provider-facing flow of funds, and source or introduce suitable banks, PSPs, MSBs, or program partners where there appears to be a fit.
Frequently Asked Questions
Can a PSP call every outbound customer payment POBO?
Operationally it may be on-behalf-of, but the label does not answer licensing or safeguarding questions.
Does POBO solve beneficiary rejection of third-party payments?
Only if the provider, message format, and beneficiary accept the underlying-party presentation.
Related POBO / COBO Pages
- POBO & COBO Solutions
- What Is POBO? Payments On Behalf Of Explained
- POBO & COBO U.S. Money Transmission and Licensing Considerations
- POBO & COBO Account Structures: Named, Virtual, FBO, and Pooled Accounts
- POBO & COBO Compliance: Ultimate Debtor, Ultimate Creditor, and Payment Transparency
Related Services
Get Help Designing This Structure
Send us your entity chart and flow of funds. If you do not have a diagram, describe who pays, who receives, who owns each account, what the underlying obligation is, and where the money ultimately goes.