The process of licensing commercial activity is characterized by a complex organizational and legal structure. It will be possible to pass it successfully only with a clear understanding of the formal rules and conditions of obtaining a particular license, as well as the law enforcement practice of a specific jurisdiction. Different licenses are required for non-credit financial organizations in each country, regulating various types of activities, including payment operations. Each of them provides an opportunity to use a certain set of financial instruments and often its choice is determined, among other things, by the size of the enterprise.

 

A small company (given the amount of gross income) that intends to legally manage a payment system in the territory of a particular country should obtain an SPI license (Small Payment Institution license). Without it, it becomes impossible to process, store and transfer payment data. The Lawrange Law Firm provides professional assistance in preparing and applying for Small PI licensing. Our company’s specialists have extensive experience in solving such tasks. We will help you obtain this license in any jurisdiction you are interested in. If you have not yet decided where to register a small payment organization, or you have other questions on this topic, our experts will provide detailed advice and advise you in which direction to move to achieve your goal.

 

What is the SPI license

Such a license is issued to a small financial enterprise that offers a limited set of payment services without the need for full authorization as a payment organization. SPIs provide payment services on a smaller scale compared to fully authorized payment institutions (APIs). For example, for a small payment institution, the average monthly annual amount of transactions should not exceed EUR 3,000,000. They are subject to less stringent regulatory requirements due to the limited scope of their operations.

 

SPIs must be registered with the relevant national regulatory authority. Specific thresholds and requirements for SPI may vary by jurisdiction. In addition, SPIs cannot provide payment initiation and account information services, whereas an Authorized Payment Institution can provide both.

 

The regulatory framework for regulating the activities of SPIs is usually less strict compared to APIs because they operate on a smaller scale and offer a more limited range of services. However, small payment institutions must still register with the relevant national regulatory authority (for example, in the UK, this is the Financial Conduct Authority – FCA). Licensing ensures that such organizations will adhere to certain standards and requirements to maintain the integrity and stability of the financial services sector.

 

It is important to note that the specific thresholds and requirements for qualifying as a small payment institution may vary from jurisdiction to jurisdiction. Generally, SPIs must demonstrate that their average total value of payment transactions executed over a period is below a certain threshold, usually set by the regulatory body. In addition, SPIs must adhere to compliance standards such as Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations to ensure the security of operations.

 

Importantly! The SPI license makes a more affordable market entry point for smaller financial service providers. Such companies serve a niche market within the broader financial services industry, providing valuable services to customers who do not require comprehensive API services.

 

Who issues licenses for SPI

This is done by the national regulatory body of the country where, in fact, the opening of the payment company is planned. Licensing generally follows a general scheme, but at the same time, each state has its own rules and requirements for this process. For example, obtaining an SPI license is possible by applying to:

 

  • FCA (Financial Supervision Authority) – UK Regulator. In this jurisdiction, it takes up to 7 days to process an application, after which all the information provided in the application is reviewed over the next several months.
  • The Czech National Bank (CNB) is the regulatory body of the Czech Republic, which is directly involved in the registration and authorization of any business in the territory of this country. Its permission or prohibition to conduct this or that activity is regulated by Law No. 284/2009 Sb. about payment services.
  • The Netherlands Bank (DNB) is one of the most active Regulators in the European Economic Area, taking into account the total number of SPI licenses issued. Also, this regulatory body is known for its fairly prompt work in reviewing and issuing licenses.
  • Malta Financial Services Authority (MFSA) – a one-time application fee of €3.5 thousand is charged here. This amount is not refundable, regardless of the results of the application review.

 

These and other Regulators operating in the jurisdiction you are interested in have both general and individual requirements for applicants. It is practically impossible to independently cope with the preparation of documentation and answers to requests received from the regulatory body. To solve this task, it is recommended to enlist the support of qualified experts of Lawrange, who are familiar with all the nuances and “pitfalls” when issuing payment licenses in any of the jurisdictions.

 

Requirements for applicants to receive SPI

Depending on the country, applicants must meet different conditions. With the introduction of the pan-European Directive on payment services, the application of uniform rules and requirements to the participants of this market is practiced:

 

  • Limited average monthly amount of payment transactions. If this figure is exceeded, the firm cannot be considered an SPI and, therefore, must become an API and comply with other capital requirements.
  • A Small PI business must not include payment initiation services or account information services.
  • Managers or persons responsible for managing the business must have a good reputation. They must have no criminal record for money laundering, terrorist financing offenses or any other offenses in the financial sector.
  • Compliance with Anti-Money Laundering, Anti-Terrorist Financing and Anti-Money Laundering Regulations (AML policy).
  • The office must be registered in the country of obtaining the license.
  • The presence of evidence of qualified skills and knowledge for the effective operation of the business and integrity of each director. In other words, directors must have economic, financial education (or in a similar field).
  • The composition of the top management should be represented not only by foreign citizens, but also, by necessity, residents of the jurisdiction in which the license is issued.
  • If the Applicant is related to political activity, it should not prevent the Regulator from monitoring the business.

 

It is also worth noting the need for serious preparation of the document base for obtaining an SPI license. You will need extracts from the company register, documents with the organizational structure, which, among other things, will contain data on:

 

  • bank accounts;
  • processing centers;
  • settlement banks, etc.

 

The applicant must indicate which payment instruments he plans to use for transfers.

 

What are the possibilities of obtaining a SPI license?

The Small Payment Institution license allows you to offer services with:

 

  • Placement of cash on a payment account and all operations necessary for working with a payment account.
  • Withdrawal of cash from the payment account and other operations necessary for working with the payment account.
  • Carrying out transactions, including transfers of funds to the user’s payment account or other payment system.
  • Carrying out transactions using a payment card or similar device;
  • Making payments in which the funds are secured by a credit line of the user of payment services.
  • Execution of credit transfers, including standing orders.
  • Issuing payment instruments or acquiring payment transactions.

 

With an SPI license, your business will also be able to handle e-wallets and mobile payments.

 

At the same time, it is worth noting some limitations for a company operating under an SPI license. Regionality is one of the main ones – that is, the company’s activities must be conducted with mandatory registration on the territory of the country in which the license was obtained. In order to work with other countries, an appropriate agreement can be concluded with partner companies. In addition, do not forget about the limitation on the average monthly turnover.

 

Best Jurisdictions to get an SPI License

The financial sector is strictly regulated by states. At the same time, some of the jurisdictions create the best conditions for foreign investors and startups. Your main task is to choose the most suitable country (or countries) for your future business. The licensing process will depend on this. When choosing, it is important to consider many factors, including tax policy, fees, requirements for hiring employees. And although, in general, obtaining an SPI payment license takes place according to a general principle, it is still not necessary to exclude other nuances of registration specific to a specific jurisdiction.

 

Although there are others, more difficult to obtain a license, designed for large volumes of transactions, still obtaining a Small Payment Institution also requires serious preparation. If you are at the stage of choosing a country for conducting a payment business, our specialists are ready to provide assistance in this and other matters. Next, you can familiarize yourself with the countries where favorable conditions for SPI licensing apply.

 

Features of obtaining a license in the Netherlands

While most European jurisdictions allow for licensure within 12-15 months, the Dutch Regulator allows it to be completed in approximately 9 months. If your reputation is crystal clear and all documents are collected, it is quite possible to invest in 6 months. This jurisdiction is also characterized by:

 

  • Minimum requirements for team presence – while in many countries the requirements for increasing the local presence of SPI applicant companies are increasing, the Netherlands, on the contrary, is quite loyal in solving this issue. Here it is necessary to have two local directors, and the rest of the team can be in other European jurisdictions.
  • Ability to open accounts for end users and freely dispose of own funds.
  • Strict control over the implementation of the AML policy – the Regulator in this country pays special attention to the in-depth study of all nuances, including the construction of a balanced portfolio of clients, and the management of AML risks.

 

SPI registration in the Czech Republic

In this jurisdiction, the Regulator scrutinizes the details of the business plan. He is usually interested in both quantitative indicators and the degree of processing of operations. Therefore, it is important in the provided business plan to describe in detail the nuances of execution of future transactions, liquidity risks and the policy for the execution of AML/CFT procedures. Obtaining an SPI license in the Czech Republic is much cheaper than in other European jurisdictions. The level of capabilities provided by this license is one of the highest in the EU. At the same time, it is worth emphasizing its legitimacy on the territory of other European countries.

 

What you should know about obtaining an SPI license in the UK

It is preferred to choose Great Britain for the opening of SPI for a number of reasons:

 

  • the fifth largest economy in the world;
  • low income tax;
  • low costs during business;
  • business tax credits for research and development;
  • access to the highly qualified labor market;
  • strong growth of fintech industry and investment;
  • impeccable reputation in the field of financial services.

 

At the same time, it is emphasized that there are no requirements for initial capital. The management body of the payment organization must have a good reputation and have the appropriate qualifications and experience to perform its functions.

 

Peculiarities of passing SPI-licensing in Lithuania

For those wishing to obtain a license here, there are slightly more requirements than in other jurisdictions. After receiving the appropriate permission, you will not be able to provide funds storage services and issue electronic money. As with other Regulators, the local regulatory authority carefully examines each application, so it is quite common to make revisions as the application progresses and to provide additional documentation.

 

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What difficulties can be faced when obtaining an SPI license

Obtaining this type of license can be a long and complicated process. The main difficulties are usually represented by the need:

 

  • Accurately meet every regulatory requirement of the Regulator.
  • Provide evidence that the Applicant has sufficient financial resources, knowledge and experience to run a payment services business.
  • Demonstrations to the Regulator of reliable anti-money laundering procedures.
  • Prepare a detailed comprehensive business plan, which, among other things, will present a viable long-term perspective.

 

Another difficulty in the licensing process is sometimes long periods of application review and decision-making by the Regulator. At the same time, you should be ready to provide additional documents and detailed answers to the questions that arise.

 

Ready-made company with SPI license

Those who have their own business or, for example, want to implement a ready-made business plan into reality, or expand the scope of their activities, are recommended to take advantage of the opportunity to buy a ready-made company in Lawrange. This will allow you to start a business much faster and get the first profit, without spending time, effort and extra money on registering a legal entity and obtaining a license of interest.

 

Advantages of purchasing a ready-made company with an SPI license

You, as an investor, get a company that is already in the market of the jurisdiction that interests you. The main advantages of such a purchase are as follows:

 

  • Availability of an active account ready for commercial use.
  • Availability of ready-made starting capital, if necessary, the new owner can adjust it at any time.
  • Ready-made SPI license – no need to collect documents for obtaining it and wait for the regulator to approve the Application.

 

Ready-made companies with an SPI license are the best option for those who want to avoid red tape and exhausting settlement of administrative documents. You have a company at your disposal, designed in exact accordance with the current legislation of the country in which you intend to do business. At the same time, it will start working for you almost from the first days.

 

Why you should contact Lawrange

Obtaining an SPI payment license should be entrusted to the professionals of the bar association, because:

 

  • Our team consists of leading experts in fintech, banking, payments, e-commerce, regulatory compliance, anti-money laundering, business development, due diligence and information technology.
  • With us, you can get a wide range of services in one place, which makes it much easier for you to become a leading player in the financial sector.
  • We are focused on the result – we practice an individual approach, we provide really valuable advice and practical help in achieving the goal.

 

All processes related to obtaining an SPI license are significantly accelerated when our experts get to work. We will take over the burden of the preparatory procedures, collect the documentation package, and arrange it in such a way as to increase your chances of approval by the Regulator.

 

Conclusions

Everyone who wants to manage a payment system in one or another country will need an SPI license. Obtaining a license opens up many opportunities, including placing cash on a payment account, making transfers, servicing electronic wallets, etc. However, obtaining such a license requires significant time and moral investment, as each country sets its own requirements for foreign applicants. It is important to be able to understand in detail the legal framework of the jurisdiction of interest, so that the company can work in exact accordance with the current legislation. You can significantly increase your chances of successfully obtaining an SPI license by contacting Lawrange. And if you want to save time on registration and start earning as soon as possible, you can buy a ready-made company with an SPI license.

 

FAQ

How quickly is a license issued?

It depends on the country in which you intend to open a payment services company. On average, this process takes from 3 to 12 months (sometimes even more). In the Netherlands, for example, licensing usually takes up to 9 months, in Great Britain – about 3 months, in the Czech Republic – about the same, in Poland – 1-2 months. The main thing is to submit a correctly completed application with all the necessary documents.

 

What are the requirements for management?

Regardless of the chosen jurisdiction, the main requirements are that the owner and management of the company have an impeccable reputation, a sufficient level of qualification, and can also ensure the financial stability of the business.

 

What documents must be provided?

In most jurisdictions, the documentation package usually consists of company documents, information on directors, shareholders, business plan, audited financial statements, office lease agreement, etc. You can be sure that we will help you in collecting a complete package of documents.
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