Financial Services · Finding cofounders

How to build finTech product without money transfer license?

kaderjan Founder/CEO @UpFounders

March 15th, 2019


We are building a peer-2-peer lending platform which requires us to be payment facilitator, and we learned that we might need money transmitter license(which is very costly and length process to get )? anyone of you know we can jumpstart our MVP without getting this license? Thanks


morgan chan cofounder@equitybase

March 19th, 2019

you dont need to be a payfac in order to be a p2p platform, you can just piggy back of a solution provider of a bank (bbva) or 3rd party such as chargebee

Ira McKey Seasoned product development executive looking for interesting problems to solve

March 18th, 2019

Can you partner with someone who can provide the legs of the technology that may already have the license?

Paul Garcia marketing exec & business advisor

Last updated on March 18th, 2019

@Ira, typically such high-value and highly regulated licenses do not allow for partnerships, joint-ventures, and such, for liability purposes. There is rarely any kind of agency allowed.

As for how Stripe and PayPal built their MVP, they did it with ready cash. PayPal was funded by John Malloy from BlueRun Ventures right from the start. The software company that launched PayPal was already funded by the likes of Nokia Ventures and Deutsche Bank in the early stages. Stripe started at Y-Combinator which included seed funding. An early investment of $2MM and years of private testing reeled in a $18MM investment for their public launch. Stripe was funded initially in part by the founders of PayPal. I would hope that getting into this sector this would already be banked knowledge for you.

This lends credence to the axiom that it's not what you know but whom you know.

Colette Wyatt Entrepreneur, CTO, Co-founder

March 21st, 2019

Kaderjan, where are you planning to launch your peer-2-peer lending platform and have you considered launching in a market that might not require this in order to get to MVP and prove your business model?

Paul Garcia marketing exec & business advisor

March 17th, 2019

You'd either need to consult an attorney familiar with financial sector regulation, or contact the regulatory body directly for this type of answer. My guess, and it's just a guess, is that there will be no avoiding the licensing regardless of your size, before you can process your first transaction. If banking was easy, more people would be in it.

kaderjan Founder/CEO @UpFounders

March 17th, 2019

Thanks for the answer Paul! I have reached to one a few weeks ago, the answer is yes, we need a license, and this answer makes me wondering how other startups like Stripe,Paypal built their first MVP validated assumption? or Do we need different process (lean startup) of building finTech (or another other highly regulated sectors)?

kaderjan Founder/CEO @UpFounders

Last updated on March 18th, 2019

Ira McKey , that is exactly what I am looking for