What the fee is called cannot replace the characterization of the business
Business review first looks at what service the customer is purchasing, what commitments the platform makes, and who executes key instructions. A company may charge monthly fees and still be continuously operating a payment service on behalf of customers; a company may charge per transaction and may genuinely be providing only software. The fee model can be part of the facts, but it cannot independently answer the market-access question. A contract may be written as "technical services," yet if it in substance promises to convert the customer's stablecoins and pay them into a designated account, the corresponding business still needs to be reviewed.
Not touching funds is not the only criterion either
The UK FCA's PERG payment regulatory guidance explains that software or technical services that merely support payments may fall within a specific exclusion, but payment initiation services do not fall within that technical-services exclusion. In other words, under the UK framework, not holding funds and not providing regulated payment services are not the same proposition.
In Singapore, MAS's explanation of the scope of payment services likewise covers certain token-transfer and exchange-facilitation activities that do not involve holding funds or tokens. These rules do not mean that all interfaces require a license; rather, they remind teams to break down the order, authorization and execution process for analysis, and then determine whether a specific definition or exclusion is engaged.
Comparing two products that both charge monthly fees
Assume A provides order-management software to merchants; the merchants themselves contract with payment institutions, confirm conversions and make payments, and A only transmits business data. B also charges a monthly software fee, but B accepts payment requests, arranges conversions, selects the payout institution and is responsible for funds arriving. The two price lists can be completely identical, yet the legal relationships are different. B cannot directly rely on the pure-software conclusion applicable to A, and A should also confirm that its actual functions have not crossed the established boundaries.
It is also necessary to check who charges whom, whether fees are deducted directly from customer assets, and whether fees are tied to quotations. Renaming an exchange spread as an interface fee, if the fund handling and customer commitments have not changed, generally does not resolve the original problem and may instead create an inconsistency between the accounts and the substance of the business.
First make the contract, the system and the finance function say the same thing
It is advisable to map each fee to a clearly defined service and list, item by item, the provider, customer authorization, delivery standards and failure handling. Then check whether the system logs are consistent with the contract: who receives instructions, who can modify the payee, and who has authority to deduct fees and issue refunds. If the genuine intention is to operate only a technical business, the permissions, contracts and customer experience should be genuinely adjusted, rather than merely changing the name on the invoice; the specific structure must still be verified against the target market.
Recommended actions
- Use a process diagram to identify the entities responsible for receiving instructions, conversion, asset control and commitments regarding funds arriving.
- Match each fee item to the actual service on an item-by-item basis and verify the authority to deduct fees.
- Test the technology-service exclusion against the target jurisdiction and do not describe it as a global exemption.
- Re-review after any change in functionality or contract, and retain the version and the basis for the conclusion.
Information note: This article provides general information and does not replace legal advice based on specific facts.
References
- PERG 15: Guidance on the scope of the Payment Services Regulations, Q39 and Appendix 3 — UK Financial Conduct Authority (FCA)
- MAS expands the scope of regulated payment services — Monetary Authority of Singapore (MAS)
