How do you build a peer-to-peer payments system?
Answer by Faisal Khan:
Though the question is very deep, here is a brief answer:
- On a legal level, this would constitute as a money transmitter business, so hence you would need a money transmitter license in 44 states (so far) that require you to be licensed for money transmitter services. You can see a list for example by PayPal here: https://www.paypal-media.com/state_licenses.cfm
- Here is a blog that I usually follow with regards to the legal aspects of money transmission business – http://www.perkinscoie.com/news/newspubs.aspx (also view their publications list).
- Here is a good question that was asked onon
- You also want to pay attention to the FinCEN (Financial Crimes Enforcement Unit) – http://www.fincen.gov/financial_institutions/msb/ – you will have to do checks/reporting like: SAR, CTR, AML, KYC, OFAC, etc.
- From a monetary processing angle, you would need a merchant account to process the card related transactions, especially cash advance transactions
- Depending on your model, you might also want ACH processing
- You also need to be careful not to be 'holding' money into any escrow account, as that would require a banking license if you are holding on to the deposits.
- On a Technical level, it is so nascent to describe, without having some detailed information about your payment processing (paying/receiving processes) and how you have modeled them.