A fintech payment business is built through a series of connected decisions. The licence matters, but it cannot be considered separately from the product, customers, technology and financial infrastructure that will eventually make the business work.
A company may have a strong idea for a digital wallet, remittance service or payment platform, but the regulatory model will depend on exactly how money moves through that product. The same applies to technology: software should support the company’s regulatory and operational requirements rather than dictate them.
For founders preparing to launch a fintech company, the process can be divided into four practical stages: defining the business model, establishing the appropriate regulatory structure, selecting the technology and building the banking and payment infrastructure.
Start with the business model, not the licence
One of the first mistakes a founder can make is choosing a jurisdiction simply because a particular registration or licence appears attractive.
The better starting point is to define what the company actually intends to do.
That requires more than writing down a broad idea such as “digital banking” or “international payments”. Founders should identify their customer segment, analyse competitors and understand what problem the proposed product solves.
For example, a company might focus on international businesses that struggle to receive payments in several currencies. Another may provide remittance services between specific countries. A third could offer a digital wallet combining fiat payments with digital assets.
Each model creates different requirements.
Founders should map the complete customer journey: how users register, how KYC or KYB is completed, how accounts or wallets are opened, how funds enter the system, where those funds are held, how customers send or receive money and how withdrawals are processed.
The geographic model is equally important. Which countries will the company serve? Which currencies will it support? Will it serve consumers, businesses or both? Will customers hold balances, or will funds simply pass through the platform?
These decisions should feed into an initial business plan and financial model covering expected transaction volumes, revenue, provider fees, compliance costs, technology expenditure, personnel and required capital.
Only then does it make sense to decide which regulatory framework fits the business.
Choose the regulatory route that matches the product
There is no universal fintech licence covering every payment model.
A remittance business, an e-money wallet and a merchant payment provider can all move money, but the legal and regulatory requirements surrounding them may be very different.
Jurisdiction should therefore be selected by looking at the company’s activities, customer locations and long-term expansion plans rather than licensing cost alone.
Canada: MSB registration and the additional PSP question
Canada is one possible starting point for businesses involved in money transmission, foreign exchange and certain other financial activities.
Companies carrying out relevant activities may need to register with FINTRAC as a Money Services Business, or MSB license. These activities can include remitting or transmitting funds, foreign exchange dealing and dealing in virtual currency, among other services covered by the Canadian AML framework.
MSB registration is particularly relevant to companies building remittance, FX, payment or certain crypto-fiat business models.
However, FINTRAC registration should not be confused with a full operational launch.
An MSB still needs an appropriate compliance programme, customer verification procedures, transaction monitoring, reporting processes and other controls. It also needs the banking relationships, software and payment infrastructure required to provide the service commercially.
There is now another important regulatory question for payment companies entering Canada.
A company that performs retail payment activities may also fall within the scope of the Retail Payment Activities Act (RPAA). In that case, registration as a Payment Service Provider (PSP) with the Bank of Canada may be required.
This means that MSB registration with FINTRAC and PSP registration with the Bank of Canada are not interchangeable. They relate to different regulatory frameworks, and depending on its activities, a company may need to consider both.
The practical lesson is that founders should analyse the complete operating model before assuming that obtaining one registration settles the regulatory question.
Europe: Malta and the United Kingdom as two different examples
Europe provides several possible regulatory routes for payment and electronic money businesses, but the appropriate structure depends heavily on where the company intends to operate.
Malta and the United Kingdom illustrate two different approaches.
Malta: Payment Institution and Electronic Money Institution licences
Malta is an EU member state where the Malta Financial Services Authority (MFSA) authorises Payment Institutions (PIs) and Electronic Money Institutions (EMIs).
A Payment Institution can provide regulated payment services within the scope of its authorisation. An Electronic Money Institution can issue electronic money as well as provide permitted payment services.
The distinction becomes particularly important for products where users maintain monetary balances.
Obtaining such a Payment Institution or E-money Institution license involves considerably more than forming a company and submitting an application. Depending on the model, the regulator will consider areas including governance, capital, safeguarding arrangements, compliance, risk management, technology, outsourcing and the company’s operational substance.
For businesses targeting European customers, Malta can therefore be one possible jurisdiction to assess, but the decision should be based on the company’s wider European strategy and planned services.
United Kingdom: payment and e-money authorisation
The United Kingdom has its own regulatory framework supervised by the Financial Conduct Authority (FCA).
Depending on the product and scale of the business, firms providing payment services or issuing electronic money may need FCA authorisation or registration under the applicable UK payment services and electronic money regimes.
As with Malta, understanding the difference between making payments and issuing e-money is important.
A company simply facilitating particular payment transactions may have a different regulatory structure from a wallet provider that accepts customer funds and issues electronically stored value that customers can later spend.
Founders targeting both the UK and EU markets should also remember that these are now separate regulatory markets. A UK authorisation does not simply replace the need to assess EU regulatory requirements, and an EU licence does not automatically solve the regulatory position in the UK.
The decision should therefore follow the company’s actual geographic strategy.
Select software around the operating model
Once the business model and regulatory structure are sufficiently clear, technology becomes the next major decision.
Different fintech products require different software.
A business offering accounts, balances and payments may require core banking software capable of maintaining customer ledgers, transaction histories, fees and operational workflows.
A fintech combining traditional currencies and digital assets may require crypto-fiat wallet software.
An acquiring business may need technology designed around merchants, payment acceptance, settlements and reconciliation.
A remittance provider may instead prioritise beneficiary management, currency conversion, transfer corridors and integrations with payout networks.
The key question should not be which system has the most features. It should be which system fits the company’s regulated operating model.
Founders should assess API capabilities, external integrations, scalability, transaction monitoring support, KYC and KYB connectivity, reporting, reconciliation, security, permissions and audit trails.
The platform must also be capable of connecting to the external institutions through which money will actually move.
Build the financial infrastructure behind the product
Technology alone cannot move money.
A fintech company normally depends on several external providers to create its payment infrastructure. Depending on the model, these can include banking and account providers, safeguarding institutions, payment service providers, FX providers, card issuing partners and KYC/KYB or AML technology companies.
The business may also require access to specific payment rails.
A European product could rely on SEPA for euro payments. International transactions may involve SWIFT. A company operating in the United States may require ACH connectivity, while Canadian products may need relevant EFT capabilities.
Businesses offering payment cards need card issuing and programme infrastructure. Crypto-related models may additionally require on-ramp, off-ramp, liquidity or custody relationships.
Very few fintech companies obtain everything from one provider.
A business may use one institution for customer funds, another for payment connectivity, another for FX and a separate technology provider for card issuing. Each provider then has to be integrated into the operating and compliance model.
This is also why infrastructure should be investigated early in the project.
A company can theoretically meet the requirements for a registration or licence while later discovering that suitable banks or payment partners are unwilling to support its customer type, geographic exposure or transaction flows.
In practice, securing the right financial infrastructure can be as challenging as obtaining the regulatory status itself.
Plan licensing, technology and infrastructure together
The most effective way to approach a fintech launch is not as a sequence of isolated tasks.
The four elements are interconnected:
business model → regulation → software → banking and payment infrastructure.
Changing one can change the others.
Adding customer balances may alter the regulatory analysis. Entering another country can require new licences or payment partners. Introducing digital assets can affect compliance requirements and banking relationships. Changing the way customer money is held can require both software and safeguarding changes.
Founders should therefore design these elements together from the beginning.
The objective is not simply to obtain a fintech licence. It is to build an operating model in which the regulatory permissions, technology and payment infrastructure all support the same product.
