What are the key steps involved with becoming a payment processing company?
Answer by Faisal Khan:
provides a very knowledgable answer. I would like to add to this by saying that in order to become a payment processing company, (in my opinion) if you are not handling the funds and are not holding on to the money being processed in your bank, an MSB is really not required, provided the following holds true:
- You become an MSP / ISO of a licensed Bank that does hold an MSB license. I wrote an answer that provides a little light on this
- Your partnership with the bank is limited to front-end customer accquisition and routing them through your system.
- The actual financial processing, storing and routing of the money processed is done by the bank that you partner up with. It is never done by you. You will only get your commission or margins that you have set into place.
Many companies have taken this approach. Needless to say, when you get large enough, then you can start applying for the individual MSB licenses as and where required. In my opinion, I find that it is more pragmatic to piggy-back on an existing license holder (the very premise of the MSP / ISO). Companies likehave done it the same way, they piggy back on the network and under their MSP/ISO program.
As always, and suggested by John, legal advise is mandatory.