Obtain a EMI/PSP License in South Africa

Entrepreneurs who open an electronic money institution or a payment service provider platform must obtain an EMI/PSP license in South Africa. Our South African lawyers describe the main types of activities and the licenses required, and can help investors during the licensing process. You can read our article to find out more about this license.

What services does an EMI/PSP company offer?

An electronic money institution, referred to as an EMI, is involved in providing clients with financial services related to e-wallets and digital currencies (electronic money). It can also offer options to manage multi-currency accounts and store e-money.

A payment service provider, the PSP, offers some solutions that overlap with the ones provided by the EMI, however, not in their entirety. Both can offer a payment gateway and the processing of payments. At the same time, the PSP will also implement adequate compliance and security measures to ensure that its clients can make safe transactions.

Both types of activities are regulated, and companies obtain an EMI/PSP license in South Africa. Licensing is possible once the business is set up, meaning that company formation in South Africa is the first step for those who want to launch this type of business.

What agencies issue the EMI/PSP license in South Africa?

Companies that offer payment processing services, as well as those that engage in transactions with or offer services related to e-money, are subject to licensing and supervision.

The Financial Sector Conduct Authority (FSCA) and the South African Reserve Bank (SARB) are the two authorities that license EMI and PSP companies.

The Financial Service Provider’s license issued by the FSCA can be seen as an EMI license in South Africa, as it covers most of the activities that can be undertaken by an e-money company. Key requirements revolve around having the business plan approved and showing that the company will meet the requirements concerning qualifications, insurance, audit, and compliance, among others.

The equivalent of the PSP license in South Africa can be the third-party payment provider’s license, issued by the Payment Association of South Africa, under the National Payment System, as supervised by the SARB. Another type of license issued by the PASA is the system operator’s license, required when a company processes payment instructions for two or more clients.

How can you open an EMI/PSP company in South Africa?

Company registration in South Africa involves a series of key steps, which are the same for an EMI or PSP company. Our team lists these below:

1. Choose the business form: this can be a public company or a private company;
2. See if the business name is available for use: this can be checked, subject to a fee (see below);
3. Prepare the company’s documents – you can register a private company with or without a customized Memorandum of Incorporation;
4. Pay the due fees: our team lists some of these below; however, these can be subject to change;
5. Submit your application to register the company with the Companies and Intellectual Property Commission.

Foreign nationals can open an EMI/PSP company in South Africa without having a residence permit in South Africa.

Some of the fees that  apply when you register a private company that will offer EMI and/or PSP services include:

• R50 for the name reservation;
• R125 for the registration of a private company with a standard Memorandum;
• R425 for the registration of a private company with a custom Memorandum.

Understanding the regulatory regime and following the steps to obtain an EMI/PSP license in South Africa once the business is registered is important. The team of experts at our South African law firm can help those interested understand the specific requirements.

Contact us for more information about the EMI/PSP license and for complete assistance when making the submission for this license with the South African authorities.