Connection of card products to the payment system (PSP)

Having received a license, the payment system has the potential for further development. One of the additional functions of the payment system is the cards issue. However, the payment system is not eligible to issue. To do this, you need to perform a number of actions, primarily with Visa or MasterCard. You can read about how exactly to connect card products to your payment system in this article. 

Contents:

• The process of obtaining the right to issue cards by the payment system (PSP);
• Benefits of a payment system that issues cards.

The process of obtaining the right to issue cards by the payment system (PSP)

In order to issue Visa / MasterCard cards, you need to obtain their own "license". At the same time, Visa / MasterCard have special requirements and may carry out some procedures during the risk assessment.

There are two types of licenses offered by global payment systems:

• Principal. With such a license, the system will be able to issue cards and engage in acquiring with merchants directly. They can carry out processing operations and provide such services.
• Associate. To obtain this license, you need to obtain sponsorship from the principal. The main difference between a principal and an associate is that all associate cards are assigned to its sponsor. The sponsor is responsible for the relationship with the global payment system.

Therefore, choosing from these two licenses, a payment system that wants to issue its cards needs to obtain the first license (Principal). 

For example, Visa Principal Issuer is entitled to carry out the following activities:

• Issue cards
• Issue availability
• Engage in acquiring
• Carry out processing
• Sponsor other systems that plan to become associates
• Manage settlement risk
• Pay fees

In order to obtain a license, the payment system must meet the following three global requirements

• Compliance with local requirements of AML / CFT-legislation;
• Comply with data security requirements. In particular, fintech has its own Payment Card Industry Data Security Standards (PCI DSS) rules .
• The system will be required to transfer funds received from cardholders directly to Visa / MasterCard. In addition, the global payment system will have access to your financial records, corporate structure, list of beneficiaries, brand and reputation history. The last points are especially important, since the cards are co-branded: they have the logo of your payment system, as well as the logo of Visa / MasterCard or the system from which you receive a license.

The process of obtaining a "license" consists of the following steps: 

• Application submission;
• Submission of documents, including a payment system license and an independent assessment of financial performance over the past three years;
• Country- specific documents. This includes, for example, confirmation of compliance with AML regulations.
• Approval. 

Benefits of a payment system that issues cards

With the ability to issue cards, you win in the following ways:

• Brand. Now you can directly interact with clients;
• Support for growth. By choosing a Principal license, you can sponsor other systems;
• Creating an even more convenient system for your clients:
  • Issue of cards with customer designs;
  • Increasing the security of your systems and offering to personalize the settings, for example, what services will be available to the user if the card is lost;
  • The use of cards all over the world, which will make your payment system even more widespread. 

Thus, the ability to issue cards expands the users of the payment system. At the same time, to connect card products, you need to complete a number of procedures. First, you must double-check all licenses and compliance with user data processing and AML / CFT regulations. Secondly, the main stage of connection is the ability to obtain permission to issue from global systems, for example, Visa or MasterCard. Third, you must foresee the functions of your system, which will now handle the release. If you have any questions or need help in supporting the connection of card products, please contact A4 Law Firm lawyers.