How to Obtain a PSO and PSP License in Bangladesh: A Comprehensive Guide

 

Introduction

In the rapidly evolving landscape of digital payments, securing a Payment System Operator (PSO) or Payment Service Provider (PSP) license in Bangladesh is critical for businesses looking to provide secure and efficient payment services. The Bangladesh Bank has established detailed guidelines to ensure the safety and security of payment systems, promoting financial stability and inclusion.

At LegalSeba, we offer expert assistance to navigate the complex regulatory framework and streamline the application process for obtaining PSO and PSP licenses.

Understanding PSO and PSP

Payment System Operator (PSO)

A PSO is a legal entity licensed by Bangladesh Bank to operate a settlement system for payment activities among participants, with the principal participant being a scheduled bank maintaining accounts with the Bangladesh Bank for meeting Cash Reserve Requirements. Examples of PSOs include Google Pay, Amazon Pay, and Paytm.

Characteristics of a PSO:

  • Licensed by Bangladesh Bank.
  • Provides approved payment services.
  • Does not issue e-money or payment instruments.
  • Transactions must be settled through a scheduled commercial bank.

Payment Service Provider (PSP)

A PSP is a legal entity that provides payment services to its participants or to a payment system, facilitating payments and settling transactions through a designated bank or financial institution. Examples include E-wallets and Mobile Wallets.

Characteristics of a PSP:

  • Licensed by Bangladesh Bank.
  • Provides approved payment services.
  • May issue e-money or payment instruments under specific terms.
  • Maintains a ‘Trust Cum Settlement Account’ with a scheduled commercial bank.

Eligibility Criteria

For PSO:

  • Company Incorporation: Must be registered under the Companies Act of 1994.
  • Paid-up Capital: Minimum of BDT 5,000,000 (Five Million). This amount may be adjusted based on services and business exposure.
  • Experience: Key personnel must have at least three years of experience in the relevant industry.

For PSP:

  • Company Incorporation: Must be registered under the Companies Act of 1994.
  • Paid-up Capital: Minimum of BDT 200,000,000 (Two Hundred Million). This amount may be adjusted based on services and business exposure.
  • Experience: Key personnel must have at least three years of experience in the relevant industry.
  • Infrastructure: Must maintain appropriate technology infrastructure within Bangladesh.

Application Procedure

Step 1: Preparation

  • Incorporate the Company: Ensure the company is registered under the Companies Act of 1994.
  • Gather Required Documents: Collect all necessary documents as listed in Annexure-B (detailed below).

Step 2: Submission

  • Application Form: Complete the application in the prescribed format (Annexure-A).
  • Application Fee: Include a non-refundable demand draft of BDT 25,000 made payable to the General Manager, Payment Systems Department.
  • Submit Application: Submit the application along with the required documents to Bangladesh Bank.

Required Documents (Annexure-B):

  • Company Documents:
    • Memorandum and Articles of Association
    • Certificate of Incorporation
    • Form-XII
    • Trade License
    • e-TIN Certificate
    • Corporate profile
    • CIB clearance of Directors and Key personnel
    • CV and declaration of Directors and Key personnel
  • Business Documents:
    • List of proposed services
    • Business case analysis (market analysis, execution plan, etc.)
    • Business process flow description
    • Business projection for the next 5 years
    • Organizational structure
    • Financial settlement process
    • Policies and guidelines
  • Technical Documents:
    • Technical process flow description
    • Overview of proposed infrastructure (hardware, software, network communication, etc.)

Approval Procedure

The approval process is conducted in two phases:

Phase 1: Issuance of No Objection Certificate (NOC)

  • Preliminary Scrutiny:
    • The Payment Systems Department (PSD) conducts an initial review of the submitted documents.
    • If necessary, PSD may request revised or additional documents.
    • If documents are inconsistent with proposed services, the application may be rejected with a written notice.
    • If satisfactory, the documents are forwarded to the evaluation committee(s).
  • Evaluation:
    • The evaluation committee(s) review the documents and submit reports.
    • Based on the evaluation report, Bangladesh Bank decides whether to issue the NOC and communicates the decision to the applicant.

Phase 2: Final Approval

  • System Deployment:
    • The applicant who received the NOC must submit a declaration (Annexure-C) regarding the readiness of the proposed infrastructure.
  • Onsite Inspection:
    • An onsite inspection team evaluates the readiness of the system.
  • Final Decision:
    • Approval is granted based on a satisfactory inspection report and if all NOC requirements are met properly.

Fees and Payment Method

  • Application Fee: A non-refundable pay order/demand draft of BDT 25,000 must be submitted with the application.
  • License Fee: Upon final approval, a non-refundable pay order/demand draft of BDT 100,000 is required.

How LegalSeba Can Help

At LegalSeba, we provide comprehensive support to help you secure a PSO or PSP license. Our services include:

  • Consultation: We offer expert consultation to understand your business needs and guide you through the eligibility criteria.
  • Document Preparation: We assist in gathering and preparing all necessary documents to ensure they meet Bangladesh Bank’s requirements.
  • Application Submission: We manage the entire application process, from initial submission to final approval.
  • Follow-up: Our team stays in constant contact with Bangladesh Bank to track the status of your application and address any queries or additional requirements.
  • Inspection Preparation: We help you prepare for the onsite inspection to ensure your infrastructure meets all regulatory standards.
  • Lobbing with the Authority: We can help communicating with the Govt. Authorities till obtaining the license.

By partnering with LegalSeba, you can navigate the complex regulatory landscape with confidence and focus on growing your business.

Conclusion

Obtaining a PSO or PSP license in Bangladesh is a multi-step process that requires careful preparation and adherence to regulatory standards. LegalSeba is here to guide you through every step, ensuring a smooth and successful application process. Contact us today to get started on your journey towards becoming a licensed PSO or PSP in Bangladesh.

Feel free to reach out to LegalSeba for more information or to book a consultation for personalized assistance with your PSO or PSP license application.

This guide provides a thorough overview of the process and how LegalSeba can assist, ensuring clients understand each step and the support available to them