So, you want to get into the EMI game? Then you’ve probably heard that getting a Money Services Business (MSB) license in Canada is a good idea. But is it really? Here are some pros and cons you should consider before deciding to get a Canadian MSB license for sale.
Pros of Canadian MSB License
First things first: let’s talk about the benefits! The truth is that Canadian MSB license offers a pool of them: you can only feel safe when you have it.
- Playing by the rules: Canada has a system led by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). It’s AML and CTF rules are pretty easy to understand. These clear-cut guidelines will keep you out of trouble with financial regulators, investors, partners and customers.
- Market access: Once you have an MSB license in hand, one of the most developed markets in the world becomes yours for the taking. You can offer money transfers, currency exchange services and issue electronic funds – all legally.
- Financial partnerships: In finance, connections matter. An MSB license shows that your brand has at least some level of legitimacy. So when you approach banks, payment processors or other more regulated players as an EMI holding an MSB license they could be more willing to work with you because they see how serious your compliance efforts are.
- Futureproofing: Snagging this kind of license means setting up solid systems for compliance and record-keeping. If your grand plan is to expand your operation – whether geographically or through products – these systems will make scaling easier.
- Differentiating: In fintech, standing out is key. Having a Canadian MSB license could give your fintech a unique selling point (USP) in a market where everyone else is worrying about staying squeaky clean.
As you can see, having an MSB license saves you lots of nerves.
Cons of Canadian MSB License
Of course, there are drawbacks too. Here they are:
- Time-consuming and expensive: The process isn’t quick or cheap – getting that license will require spending serious money on legal help and application fees plus months waiting for the green light.
- Compliance nightmare: Money laundering is not fun. You’ll have to keep an eye on transactions and report anything you think is suspicious. And you’ll also want to keep track of the rules in order to provide your customers with the best possible experience – but doing so will come at a cost (in time and money).
- Hitting the ceiling: MSBs are quite limited when it comes to transacting amounts. You won’t be able to do much, which may actually restrict your plans and make it hard for you to shake up the market.
- Intense competition: Canada’s financial industry has some big sharks swimming around, from banks to tech startups. So if you decide to go in as a newbie armed only with an MSB license, you’ll have your work cut out for you. You’ll need a killer pitch and marketing skills to get far enough ahead that people will notice you and hear what you have to say.
- Facing uncertainties: Financial rules are always changing, and that can be bad news when they change against you. There’s no telling when they may strike again with new regulations that force your whole operation into a knot. But hey, business has risks, right?
Things to Consider
Before diving into MSB licensing, here are a few things to consider:
- Know your market: What do Canadians want and how can you give it to them? Don’t break any rules, but don’t hold back.
- Cost-benefit analysis: How much will the license cost? How much will you make from it?
- Risk management: What could go wrong? Prepare for everything from rule complications to operational or market-based obstacles.
- Think long-term: Will the license help you grow something big in Canada? Make sure the journey is worth it by accounting for your big-picture plans now.
All in all, getting an MSB license in Canada is no easy task. But if you’re smart about it, it’s definitely possible. Research, stay focused and take experts’ advice. Use tech to stay compliant and put your customers first.
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