Comprehensive Guide to Obtaining a PSO and PSP License in Bangladesh

Introduction

The Bangladesh Bank, under its regulatory framework outlined in the Bangladesh Payment and Settlement Systems Regulations, 2014 (BPSSR 2014), oversees the licensing and operation of Payment System Operators (PSOs) and Payment Service Providers (PSPs). These licenses are essential for businesses that facilitate or manage payment systems, ensuring compliance, security, and financial stability.

This detailed guide outlines the eligibility, application process, required documents, and approval procedures to obtain a PSO or PSP license in Bangladesh.

 

Objectives of the PSO/PSP Licensing Regulations

The licensing framework aims to:

1. Regulate and supervise payment systems operating in Bangladesh, including cross-border transactions.

2. Promote secure and efficient fund transfer systems and the issuance of payment instruments.

3. Establish clear guidelines for licensing Payment System Operators and Payment Service Providers.

4. Define the roles, obligations, and compliance requirements for licensed entities.

 

Understanding PSOs and PSP Licenses in Bangladesh

Payment System Operator (PSO)

According to “Bangladesh Payment and Settlement Systems Regulation-2014 (BPSSR-2014)” Payment Systems Department (PSD) issues license in two broad criteria- Payment Service Provider (PSP) and Payment System Operator (PSO).

It gives PSP license to the company who facilitates payment(s) or payment processes directly to the customers and settling their transactions through a scheduled bank or financial institution; for example E-wallet, Mobile Wallet etc. Besides, PSD gives PSO license to the company who operates a settlement system for payment activities between/among participants of which the principal participant must be a scheduled bank or financial institution; such as payment gateway, payment aggregator etc. PSD reviews the market demand, business rational, regulatory requirements, risk management systems, settlement systems, eligibility criteria and others according to BPSSR-2014 for considering the application of license of PSP or PSO.

    List of Authorized PSO and PSP:
  • IT Consultants Ltd (PSO)
  • Software Shop Limited (PSO)
  • ShurjoMukhi Ltd (PSO)
  • Portonics Limited (PSO)
  • Soft Tech Innovation Limited(PSO)
  • iPay Systems Ltd (PSP)
  • D Money Bangladesh Ltd (PSP)
  • Recursion FinTech Ltd (PSP)
  • Green & Red Technologies Ltd (PSP)
  • Progoti Systems Ltd. (PSP)
  • Optimum Solution & Services Limited (PSO)
  • Service Hub Limited(PSO)
  • ABG Technologies Limited(PSP)
  • Digital payments Limited(PSP)
  • Fingerprint Information Technology Limited(PSO)
  • DGepay Services Limited(PSO)
  • Sheba Fintech Limited(PSP)
  • Paperless Limited(PSO)

 

Key Features of PSOs in Bangladesh:

•Must be licensed by the Bangladesh Bank.

•Provides only the services approved under the license.

•Prohibited from issuing e-money or payment instruments.

•Transactions must be settled through scheduled commercial banks.

 

Payment Service Provider (PSP) License in Bangladesh

A PSP facilitates payment services, including issuing e-money and settling transactions through a scheduled bank. PSPs often cater to retail and digital platforms, enhancing the ease of payments.

Key Features of PSPs:

•Licensed by the Bangladesh Bank.

•Can issue e-money and payment instruments under regulated terms.

•Must maintain a ‘Trust Cum Settlement Account’ with a scheduled commercial bank.

Eligibility Criteria for Licensing

 

For PSOs:

  1. Company Incorporation: Must be registered under the Companies Act, 1994.

2. Paid-Up Capital: Minimum BDT 5,000,000 (Five Million), subject to adjustments by the Bangladesh Bank.

3. Experience: Key personnel must have at least three years of relevant industry experience.

 

For PSPs:

  1. Company Incorporation: Must be registered under the Companies Act, 1994.

2. Paid-Up Capital: Minimum BDT 200,000,000 (Two Hundred Million), subject to adjustments by the Bangladesh Bank.

3. Infrastructure: Must establish robust technology infrastructure within Bangladesh.

4. Experience: Key personnel must have at least three years of experience in the payments or financial services industry.

Application Process for PSO/PSP Licenses

 

Step 1: Submission of Application for PSO & PSP License in Bangladesh

  1. Format and Documents: Submit the application in the prescribed format (Annexure-A), along with required documents (Annexure-B).

2. Application Fee: Include a non-refundable pay order/demand draft of BDT 25,000 payable to the General Manager, Payment Systems Department.

 

Step 2: Preliminary Review and Issuance of NOC

  1. Document Scrutiny:

•Bangladesh Bank reviews the application and may request additional documents if necessary.

•Applications inconsistent with proposed services may be rejected with written notification.

2. Evaluation Committee:

•The committee evaluates documents and submits a report.

•Based on the report, the Bangladesh Bank decides whether to issue a No Objection Certificate (NOC).

 

Step 3: Final Approval

  1. System Deployment and Declaration:

•Applicants must deploy the system and submit a declaration (Annexure-C) confirming its readiness.

2. Onsite Inspection:

•Bangladesh Bank conducts an onsite inspection to evaluate operational readiness and compliance.

3. Final Decision:

•Approval is granted upon a satisfactory inspection report and fulfilment of NOC requirements.

Required Documents to Apply for PSO and PSP License

For Company Incorporation:

  1. Certificate of Incorporation.

2. Memorandum and Articles of Association.

3. Trade License and e-TIN Certificate.

4. Corporate Profile and Form-XII.

5. CIB Clearance of Directors and Key Personnel.

 

For Business Operations:

  1. List of Proposed Services.

2. Business Plan (Market Analysis, Execution Plan, etc.).

3. Organizational Structure and Financial Settlement Process.

4. Business Projection for the next five years.

 

For Technical Readiness:

  1. Technical Process Flow Description.

2. Infrastructure Overview (Hardware, Software, and Network Communication).

3. Data Security and Interoperability Measures.

 

Fees and Payment Structure

  1. Application Fee: Non-refundable BDT 25,000.

2. License Fee: Non-refundable BDT 100,000 upon final approval.

 

How We Can Assist

At LegalSeba, we specialize in facilitating PSO and PSP licensing by offering:

Consultation: Tailored advice to meet your business needs.

Document Preparation: Assistance in compiling and verifying necessary documents.

egulatory Liaison: Communication with Bangladesh Bank for seamless application processing.

Inspection Preparation: Guidance for system deployment and compliance with regulatory standards.

By partnering with LegalSeba, you can focus on your core operations while we handle the complexities of the licensing process.

 

Conclusion

Securing a PSO or PSP license in Bangladesh is a rigorous but essential process for businesses aiming to participate in the digital payment ecosystem. By adhering to the guidelines outlined in the BPSSR 2014 and leveraging professional expertise, you can ensure a smooth application process and successful licensing.

Contact LegalSeba today to get started on your journey to becoming a licensed PSO or PSP in Bangladesh. Contact us today to get started on your journey to working in Bangladesh.