Buying a readymade EMI licenses in EU and UK have become excessively expensive with prices starting at 1.8 million GBP or 2 million Euros for licenses without client bases or any other features. Starting an EMI license from start has become too time consuming with delay above 18 months for a new UK license or above 12 months for a EU license. In such context we believe that the Swiss Payment Gateway and Crypto Exchange (“SPGCE”) is an interesting alternative to the EMI business model. Do not hesitate to contact us at connect@fintechsetup.com for more information on this matter
SPGCE is not an end in itself but it is less costly to set up or operate for a new entrant in the EMI business than a full EMI. Later on, if the business is successful then the client can apply for the Swiss light fintech bank license and operate like a full EMI + crypto exchange business
SPGCE Customers would be onboarded via a service provider that owns an innovative all-in-one platform to verify customers from 200 countries identity and KYC documents. The platform is already integrated through API to SPGCE proposed software. It will verify customer data and conduct an AML audit as part of the KYC process.
As such the platform can handle the KYC for any activities the company is involved in. Another benefit of SPGCE platform is that whenever an account needs to be opened with a third-party provider, this can be done through a link within SPGCE platform and once the account with third party provider is open, the client can access and operate this account trough SPGCE platform without having to go through several websites and logging. One platform rule them all.
What activities can it provide?
SPGCE could provide services as follows
4.1 Crypto Exchange
SPGCE will allow customers to trade cryptocurrencies via its platform. SPGCE will use transfer accounts at its Bank to forward customers’ FIAT currency to third-party exchanges/crypto liquidity providers (hereinafter “CLP”). These accounts would only be used to match incoming payments from a customer with a purchase order from the same customer and forward them to the Exchange account or to transfer funds back to the customer’s account. The funds would usually only remain in the transfer account for a few minutes but could remain longer.
A purchase of cryptocurrencies would work as follows: Customers would transfer fiat currency directly to the SPGCE transfer account at Bank Frick. From there, the fiat currency is forwarded to the CLP. The purchased cryptocurrencies would then be transferred from the CLP to the customer’s wallet via a hot wallet from SPGCE. The purpose of stopping the cryptocurrencies on the SPGCE hot wallet is a necessary KYT screening. However, this process usually only takes a few seconds, at most minutes.
If cryptocurrencies were sold, the cryptocurrencies would be transferred from the customer’s wallet via SPGCE’s hot wallet to the If cryptocurrencies were sold, the cryptocurrencies would be transferred from the customer’s wallet via SPGCE’s hot wallet to the CLP transferred. After the change at the CLP, the fiat currency is transferred to the SPGCE transfer account at SPGCE Bank and from there to the customer’s bank account.
Offering a wallet: SPGCE may offer wallets for storing cryptocurrencies. These are non-custody wallets, since only the customers can have the private keys.
4.2 Precious metal trading:
SPGCE Clients would be able to trade precious metals (particularly gold, silver and platinum).
This trade would take place through SPGCE Bank. The users would acquire a claim against the Bank for the physical delivery of precious metals, but would not receive any property rights to precious metals in the form of bars. When buying precious metal, fiat currency is forwarded to the trading desk at SPGCE Bank via SPGCE transfer account. In the case of a sale, the transfer account is used for processing, i.e. the fiat currency is transferred from the trading desk to the customer account via SPGCE transfer account.
Businesses operated through third parties’ providers
4.3 Forex trading:
In Switzerland only, banks can offer forex trading account to their client. A company like SPGCE can offer exchange services stricto sensu, or exchange services during money remittance operation.
SPGCE may however give customers access to foreign exchange trading with third-party providers and plans to work together with several third-party based on an introducer agreement. The customers would contact one of the third-party providers via an API and would have to open a customer account with them. The activity of SMW is limited to establishing the connection between the user and the third party. The request does not indicate whether customers can initiate trading orders via the platform
SPGCE will receive commission for the activity, but has no right to act on behalf of the third parties or to use their companies.
4.4 Applications for IBAN accounts: Customers could apply for a payment account with an appropriately approved/licensed third party via the SPGCE platform via an API Clients’ funds would at all times be held by the third party in an account in the client’s name.
SPGCE would not hold or have access to any funds.
The SPGCE software platform is used to forward customers to third-party providers. By clicking on a link on the SPGCE platform, an IBAN account can be opened fully automatically with the third-party provider with whom SPGCE has and introducer agreement.
Note that once the account is opened with the third-party provider the Client can operate, or keep updated on the status of its account with third party provider directly from SPGCE platform. One platform rule them all, if I may say so.
4.5 Applications for Mastercard Prepaid Cards: Via the SPGCE platform, users could apply for Mastercard prepaid cards from SPGCE partner. The relationship between SPGCE and its card introducer would be regulated in an Introducer Agreement. According to the Introducer Agreement, SPGCE will be commissioned by Card Partner on a non-exclusive basis to provide customers who participate in the services of card providers.
Here again the link for the card provider would be in SPGCE platform.
In order to operate this business model, you will need.
5.1 Legal set up
In terms of timing
If you use a ready-made SRO you legal set up would be 1 to 2 months.
If you use the option shelf ready to file it would take around 3 to 4 months for you to be in business.
If you want a full from scratch set up it would take around 6 to 7 months.
The cost for purchasing a license for the SPGCE Platform would be around 200k CHF. The customization to client logo would takes a few weeks, not more than a month.
Integration with third party provider would be done with the help of the platform provider.
Additional set up cost may be required for the prepaid card provider of around 25k to 35k chf.
This post cover added expenses resulting from additional client requirement or unexpected circumstances. It is a buffer account that may never need to be spent. We include it in the budget based on the concept plan for the worst hope for the best. In general, this post represents 5 to 10% of the total budget so from up to 62,000 chf.
Total set up costs: (without miscellaneous expenses) as described above would run at
Far below what it would cost to start an EMI
Running Expenses: Running expenses for a SP are half of what it would be for an EMI at around 20 to 25k chf per month vs 45k to 45k Euros for an EMI
If you have any questions about this matter do not hesitate to contact me at connect@fintechsetup.com
