Electronic Payment Devices (Appstar Financial ! Appstar Reviews)

Appstar Financial is a leader in the electronic payments industry. Appstar Financial has excellent reviews/ratings in electronic payment processing services, careers growth and Job opportunities. Hiring procedure at Appstar is high level. Appstar has successfully assisted Career / Jobs hundreds of people that entered the business with little or no industry experience.

What are the key steps involved with becoming a payment processing company?

Answer by Gus Fuldner:

Here is a very high level summary of major operating and regulatory models for online payments businesses with high profile examples of each. 

1. Merchant acquiring as ISO / MSP
ISO/MSPs act as a reseller of a bank's merchant acquiring services to enable a merchant to accept credit cards. The merchant enters into a contract with the bank providing acquiring services and the ISO / MSP gets a commission and may provide some other software-only services (e.g., merchant gateway).

Financial contract: Acquiring bank providing a service to the merchant. ISO/MSP is a reseller / sales agent for the bank.
Primary regulated entity: Acquiring bank
 
Examples: Braintree (payments company), Merchant e-solutions

First step: Find an acquiring bank or ISO / MSP to sponsor you

2. Merchant acquiring as Payment Service Provider (PSP)
PSPs provide merchant acquiring directly to a merchant to enable the merchant to accept credit cards.  PSPs provide this service on the back end through a separate contract with an acquiring bank, but the PSP is underwriting the risk of the merchant (within bank guidelines) and doing most compliance tasks in order offer a better merchant / customer experience.

Financial contract: a) PSP providing a financial service to the merchant; b) Acquiring bank providing a service to the PSP
Primary regulated entity: Acquiring bank

Examples: Square (product), Stripe (company), PayPal's guest checkout products

A useful summary of PSP rules can be found here: http://usa.visa.com/download/merchants/visa-expands-payment-service-provider-model.pdf

First step: Find an acquiring bank to sponsor you

3. Prepaid program manager
Prepaid program managers provide the customer facing front end to a deposit product (a prepaid account) that is actually a contract between a bank and the consumer. 

Financial contract: FDIC insured bank accepts deposit from consumer.  Program manager services the deposit account for the bank. 
Primary regulated entity: FDIC insured bank

Examples: NetSpend, Simple (company)

First step: Find an issuing bank to sponsor you.  See Startups: What banks have startups had good experience partnering with?

4. Money transmitter
A money transmitter accepts funds from consumer and acts as agent to send to someone else (a merchant or anyone else) per the consumer's instructions

Primary regulated entity: The money transmitter (Federal MSB and 40+ states)
Financial contract: Money transmitter provides a service to the consumer (sender)

Examples: PayPal (core P2P product), Xoom (company), PopMoney/ZashPay

First step: Operate in a state that doesn't require licensing, find an exemption to licensing, or apply for state licenses.

5. Pure software
Don't touch the money, just move bits to send instructions for other people to effect payment

Primary regulated entity: N/A
Financial contract: None

Examples: Isis (mobile payment) (passes data from issuing bank to card terminal), Kickstarter (all payments via Amazon FPS)

First step: Find financial partners that that can to the payments for you (note that this often severely limits the flexibility of designing your product)

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The details and requirements of each model are very technical and specific to particular product functions, use cases, and the structure of the financial contract between the users and provider(s) of the payment service.  You should consult a regulatory attorney about your specific product and use cases.  This answer is also a bit US centric but analogues exist in most developed countries.

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