Legal Framework and Regulatory Authority
Distinction between PSP and PSO
Under the BPSSR 2014, a Payment Service Provider (PSP) facilitates payment applications and e-wallets (e.g., iPay, D Money), whereas a Payment System Operator (PSO) operates the infrastructure for processing and clearing transactions (e.g., ITCL, SSL Commerz).
| Requirement | Payment Service Provider (PSP) | Payment System Operator (PSO) |
|---|---|---|
| Minimum Paid-up Capital | BDT 200 Million | BDT 500 Million (Variable) |
| Security Deposit | BDT 20 Million | BDT 50 Million |
| Primary Regulator | PSD, Bangladesh Bank | PSD, Bangladesh Bank |
| Governing Regulation | BPSSR 2014, Reg. 4 | BPSSR 2014, Reg. 5 |
The Licensing Roadmap
Mandatory Compliance Procedures
- Company Formation: The entity must be a public or private limited company incorporated under the Companies Act, 1994 with specific objects in the Memorandum of Association (MoA).
- Application for NOC: Submission of a detailed business plan, technical architecture, and security protocols to the Payment Systems Department (PSD) of Bangladesh Bank.
- Capital Adequacy: Demonstration of the required paid-up capital as per PSD Circular No. 01/2017.
- Security Audit: A comprehensive Information System (IS) audit by a BB-empanelled auditor to ensure compliance with the ICT Act, 2006.
- Escrow Management: PSPs must maintain a trust cum settlement account as per Section 18 of the BPSSR 2014 to safeguard customer funds.
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Schedule a Legal ConsultationFrequently Asked Questions
What is the statutory basis for Bangladesh Bank's authority over PSPs?
The authority is derived from Section 7A(e) of the Bangladesh Bank Order, 1972, which mandates the central bank to promote and maintain a sound payment system, read with the Bangladesh Payment and Settlement Systems Regulations 2014.
Can a foreign entity own a PSP or PSO in Bangladesh?
Yes, foreign investment is permitted under the Foreign Exchange Regulation Act, 1947. However, the entity must be locally incorporated under the Companies Act, 1994, and specific equity caps may be imposed by Bangladesh Bank during the NOC stage.
What are the AML/CFT obligations for licensed PSOs?
Under Section 2(v) of the Money Laundering Prevention Act, 2012, PSOs are classified as 'Reporting Agencies' and must comply with KYC/CDD requirements and report suspicious transactions (STRs) to the BFIU.
◆ Related Statutory Guides & Practice Insights
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<a href="/en/dividend-repatriation-fera-1947-bangladesh/" style="color:#C5A059; font-weight:600; text-decoration:none; font-size:14px; display:inline-block; transition:color 0.2s;">• Dividend Repatriation under FERA 1947: Bank Due Diligence Guide</a>
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<a href="/en/mfs-regulations-interoperability-trust-fund-audits/" style="color:#C5A059; font-weight:600; text-decoration:none; font-size:14px; display:inline-block; transition:color 0.2s;">• MFS Regulations: Statutory Interoperability and Trust Fund Audits</a>
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<a href="/en/aml-cft-bfiu-reporting-fintech-compliance/" style="color:#C5A059; font-weight:600; text-decoration:none; font-size:14px; display:inline-block; transition:color 0.2s;">• AML/CFT Directives: BFIU Reporting and FinTech Compliance Guide</a>
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