How EMI works? Can We build business such as luepay??`

Discussion in 'Business Discussion' started by james David, Jun 24, 2018.

  1. james David

    james David Building Trust Entrepreneur

    Dear All,
    We do have clients they are looking to build a competitive EMI .
    how EMI and other digital IBAN services work?
    What kind of licenses?
    which is the best jurisdiction?

    Thank you
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  2. Martin Everson

    Martin Everson Offshore Consultant Business Angel

    EMI space is already highly competitive with some giving away services for free and working at a loss in order to gain market share. To be successful and profitable you need to offer more than just receiving and sending money at rock bottom rates otherwise you need huge volumes of business. You ideally need a niche i.e crypto EMI or high risk

    How EMI's work varies. You simply apply for a license and fulfil the criteria required. It is nothing difficult at all to setup once licensed. Some EMI's are simply licensed entities with a corporate account at a bank that allows them to accept third party funds and make payments. Others are a bit more complex and use bank services that allow them to create individual iban's, better straight through processing etc. The most advanced have direct payment access to SEPA. Hence all EMI license jurisdictions are not really equal but all are pass-portable in EU ;-)

    Best jurisdiction for euro based EMI is Lithuania as you can get direct SEPA access i.e Mistertango, Satchelpay etc. Other EMI licenses in EU you need to nest inside the services provided by a bank and at any moment the bank could terminate your relationship. i.e Transferwise nests at Handelsbank and LHV for euro payments. Either of those banks that Transferwise uses could close their account for whatever reason they choose and without due process :-(

    If you are looking to build an EMI get a direct currency clearing relationship otherwise don't bother. Also ensure you know which currencies you want to offer and then try and get as direct as you can relationship to process payments in those currencies. Then most importantly find your niche.
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  3. Milky Moon

    Milky Moon Offshore Research & Development. Business Angel

    LT, UK and CH are the probably in 'regulatory light' area's.

    Depending on your target market you can choose any of them.

    Brexit might withdraw EU passport rights, so I would not recommend UK for now.

    To get up an running (legallly/regulatory) (and have a real bank instead of an EMI) in LT will costs you arround 1 mio EUR.
    To get up and running (legally/regulatory)(and be self regulated EMI) in CH will costs you also 800,000 CHF.

    To this you need to add:
    - banking software (you can outsource this to fi.,
    - compliance (you can outsource this, but when asking here you might want to this yourself to get an 'advantage'.)
    - fraudhandling (you need outsourced resources for this, this is a key area! You can loose a lot of money easily!)
    - contract with MasterCard, Visa.

    - if you outsource you core, they will provide IBAN, SWIFT etc.
    - Card handling can be outsourced too (WaveCrest ;), or others, but you want to take this in your own hand asap.)

    If you want to develop a niche, you might consider setting up an EMI in CH, and issue UnionPay cards, and accept crypto.
    W4rhol likes this.
  4. Anabasi

    Anabasi New Member

    Hi James,
    the only way to be competitive in the EMI industry is related with the possibility to solve the problem everybody is looking for at the present: provide for a real fiat/crypto exchange and funds transfer.
    Should your client be able to put together such a PSP, they'll definitely be in the position to make the difference.
    At the present, the only jurisdiction where you can obtain a PSP license with full ability to exchange, trade and even issue new crypto, is Georgia.
  5. Martin Everson

    Martin Everson Offshore Consultant Business Angel

    Switzerland is not EU member . Switzerland is useless for offering financial services in EU as swiss financial services have NO ACCESS to offer or market financial services in EU. The Swiss are forced to open subsidiaries in the EU to offer financial services. There is NO passporting of Swiss financial services to EU.

    UK as you say with Brexit might lose its passporting so is best avoided until after November when we see the final brexit deal. This leaves only LT to be realistic. The SEPA aspect of LT cannot be beaten and I am no fan of Eastern Europe but they clearly have a competitive advantage.
    W4rhol likes this.
  6. Milky Moon

    Milky Moon Offshore Research & Development. Business Angel

    Swiss financial services have 4 ways to access the EU: passporting from an EU subsidiary, equivalence recognition, cross-border services and reverse solicitation.

    Passporting rights: via an EU subsidiary.

    Equivalence recognition: only for professionals, not for retail clients (your main stay).

    Cross-border services: You can still access the EU the old-fashioned way: by following the relevant member state’s rules. Before concepts such as passporting and equivalence came about, this was the primary route for cross-border banking.

    Among Switzerland’s key EU markets, Germany and Luxembourg are the easiest to access, while Austria is quite liberal and Italy a little less so. Belgium is very restrictive, and France notoriously difficult. For Swiss bankers to know what they can do in any given country is a tricky and often time-consuming task. Compliance departments consult hefty cross-border manuals to ensure they do not violate local rules. It is understood that the Swiss Financial Market Supervisory Authority (Finma) encourages smaller banks to limit themselves to a handful of foreign markets, to maximise the possibility of them being fully compliant. Finma declined to comment on this point.

    Reverse solicitation: Swiss banks can sidestep EU and member state rules completely if the customer simply comes to them. The long-standing, Europe-wide principle of ‘passive freedom of services’ essentially means that if a Swiss bank does not proactively solicit business overseas but is approached by an EU individual, corporate or institutional investor, it can do business as if the client were Swiss.

    If you are an Swiss EMI, you cater to crypto clients and you issue a china, UnionPay card; you are enough a niche market to succesfuly solicit customers based on "reverse solicitation'.
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  7. Martin Everson

    Martin Everson Offshore Consultant Business Angel

    Thanks Milky Moon for breaking it down.

    Like I said Swiss financial services are a waste of time for use if you intend to market to clients in EU. You can try your luck using it for other countries outside the EU. Just don't step foot in those countries if you do so as it is most likely they will arrest you if you have not done your homework on local laws.
  8. Milky Moon

    Milky Moon Offshore Research & Development. Business Angel

    If you want to setup a 'general' EMI, I fully agree with you. However that space is quite crowded and finding a niche there is difficult.

    One niche, which has not be catered to by too many EMI's is crypto. As you know Swiss EMI's can self regulate, and Switzerland is relatively OK with crypto's. If you then want to bypass the MasterCard/VISA hegemony and start issueing UnionPay cards (which fall outside US control) you have a unique offering that will not require much advertising: customers will come to you. In that case, option 4 is feasible. (also EU might not be your biggest market there ..)
  9. james David

    james David Building Trust Entrepreneur

    so the approximate cost is 800K to 1 million Euro ?????

    if we choose Lithuania? how the approximate cost?
  10. Milky Moon

    Milky Moon Offshore Research & Development. Business Angel

  11. Anabasi

    Anabasi New Member

    James, evey time you'll step into EU jurisdiction you'll end up facing those figures. BTW, the required minimum capitalization it's only 125K. Problem is that you'll be asked to show some additional capitalization/structure that's why at the should probably take into account approx 3x to 4x to start your job.
    However, there are other jurisdiction where you can set up your ops at a fraction.
  12. David97255

    David97255 Banned User Business Angel BANNED MEMBER

    The set up of an EMI is quite easy. I will not hide that I made that with LT. Was fast and easy.
    But I m not agree, the plus point is not the niche at my eyes.
    I would prefer say that after my personal experience with some EMI, what I read on this forum or other, the plus you can offer is a good client support fast and professional. And the last but not least is to be right and honest. I was in a similar business few years ago, a lot of competitors and easy acquiring licenses. At the end we was a few.
    Hope you understand my meaning
  13. james David

    james David Building Trust Entrepreneur

    OK Guys,
    all those information very very useful, but really we have tried many services offering EMI. 80% they are sucks.
    very bad service and bad reputation. if there are many such companies thats mean it is easy to make and build.

    we want to work on something very advanced. Thats why it would be great if you share your ideas here or personal massage?

    Please tell us about high risk market?

    Thank you
  14. David97255

    David97255 Banned User Business Angel BANNED MEMBER

    Actually offering services like leupay or others ( I don't see why leupay is still a reference because there is way better emi's) is not worth.
    All emi's are working without profit to acquire a maximum of customers and make a strong exit by selling the company.
    So if tommorow you get the license Wich is not difficult, will you be ok to work at 0 margin or minus?
    I see on different forum guys crying when they pay 3 Euros for a wire transfer .
    Actually it s not worth , let those emi's make their exit or bankruptcy ,when the market will be more serious as more serious guys will offer emi's with good services but at a normal price.
    In every business when you don't eat, or you bankruptcy or you F**k guys.
    james David likes this.
  15. james David

    james David Building Trust Entrepreneur

    Dear All,
    is there a white lable solution?
  16. negon

    negon hannibal the cannibal Mentor Group Business Angel

    do your homework before you say this is not difficult! not to speak about the costs, staff and all other you have to bring to the table in order to get that thing started! ouch ja334¤¤#ja334¤¤#

    I believe there is a platform which is distributed but it will require a license and I'm not even sure that it's made for EMI providers. Euro Pacific Bank platform is a whitelabel banking solution.