BSP Merchant Acquisition License: What Fintech Companies Need to Know

The Philippine fintech landscape continues to evolve rapidly, with digital payment solutions becoming increasingly essential for businesses and consumers alike. For Operators of Payment Systems (OPS) seeking to expand into merchant acquisition activities, obtaining a Merchant Acquisition License (MAL) from the Bangko Sentral ng Pilipinas (BSP) is a critical regulatory requirement.

What is a Merchant Acquisition License?

A Merchant Acquisition License is granted by the BSP to an Operator of Payment Systems, allowing the OPS to engage in merchant acquisition activities. These activities include:

• Onboarding of merchants
• Acceptance and processing of payment transactions on behalf of merchants
• Settlement of funds to merchants

The license serves as a badge of credibility, ensuring that only authorized entities may perform merchant acquisition. This safeguards the integrity, efficiency, and reliability of the national payment system while protecting merchants and consumers. Companies like GCash, Maya, DragonPay, and PayMongo are examples of entities with MAL authorization.

Regulatory Framework

The MAL requirements are governed by several BSP issuances, primarily:

• BSP Circular No. 1191, Series of 2024 (Manual of Regulations for Payment Systems - MORPS)
• BSP Circular No. 1198, Series of 2024 (Regulatory Framework for Merchant Payment Acceptance Activities)
• BSP Memorandum No. M-2025-002 (Guidelines on Application for Merchant Acquisition License)

Note: This guide assumes the applicant is already registered as an OPS with the BSP under Republic Act No. 11127 and Rule 502 of the MORPS.

Minimum Capital Requirements

The minimum required capital for an OPS-MAL is based on the expected average monthly value of collected funds transferred to merchants:

Important: This capital requirement must be complied with on the date of application.

Documentary Requirements

Basic Application Documents

1. Application for Registration as OPS and/or MAL signed by the president, CEO, or senior officer holding an equivalent position
2. Notarized Special Power of Attorney (SPA) or Board Resolution authorizing a person/firm other than the applicant to apply for the MAL
3. Notarized Secretary's Certificate (or equivalent document for foreign applicants) attesting that the Board of Directors has approved the application

For Existing Corporations

1. Proposed amended Articles of Incorporation (AOI)
2. Current AOI certified by the SEC
3. Proposed amended By-laws
4. Current By-laws certified by the SEC
5. Notarized Secretary's Certificate on approval of amendments to AOI and By-laws
6. General Information Sheet as of the date of meeting when amendments were approved
7. Notarized Secretary's Certificate attesting the corporation has no pending intra-corporate disputes

Business Plan Requirements

A comprehensive business plan must include:

• Company overview, business model, and operational network
• Profile of target clientele
• Proposed products or services with complete descriptions of:
  • Features and transactions/processes
  • Security controls and measures
• Information on whether proposed products/services are bundled with other offerings
• System configuration diagram showing host systems, network infrastructure, security tools, and disaster recovery setup
• Detailed narrative of funds flow/channels, including:
  • Merchant onboarding/KYC and due diligence processes
  • Description of typical transactions from start to end
  • Acceptable sources of funds
  • Interactions between end users/customers and the applicant
  • Timelines for payment and settlement cycles
  • Service level agreements with third parties
  • Involvement of third parties (payment service providers, banks, intermediaries)
• Pricing mechanism and schedule of fees for merchants and end-users
• Implementation plans and target milestones
• Other BSP-regulated activities the applicant conducts or intends to conduct (e.g., electronic money, money service businesses)

Additional Required Documents

1. Copy of valid business license/permit showing line of business from the LGU with territorial jurisdiction
2. Proof of financial capacity: Latest Audited Financial Statement and Latest Interim Balance Sheet signed by Owner/Managing Partner/President
3. Compliance with fitness and proprietary requirements for officers:
   • Personal Data and Authorization Form
   • NBI Clearance valid at least six (6) months from application date
4. Organizational structure
5. Risk management policies and procedures covering:
   • Information technology
   • Information security
   • Business continuity
   • Operational risk management
6. Merchant management policies and procedures (due diligence, approval criteria, onboarding, monitoring)
7. Document/information on merchant protection, particularly redress mechanism
8. Expected average monthly value of collected funds to be transferred to merchants
9. Templates of agreements/contracts with merchants, settlement banks, third-party providers

Designated Account Requirement

An OPS-MAL must maintain a designated account with a BSP-Supervised Financial Institution (BSFI) where funds received or collected on behalf of merchants are held separate from the OPS-MAL's own funds.

Application Process

Step 1: Confirm Eligibility and Prepare Capitalization

Ensure compliance with minimum capital requirements before application.

Step 2: Gather All Documents

Warning: Applications with incomplete documentation will be returned. A new, completed application may only be submitted after six (6) months from the date of denial/withdrawal, subject to applicable fees.

Step 3: Electronic Filing

Submit all MAL applications electronically to the BSP Payments Supervision and Licensing Department (PSLD) at PSLD-Applications@bsp.gov.ph with the following subject line format:

OPS-MAL_APPLICATION_<APPLICANT NAME>_<NEW/REGISTERED OPS>_<APPLICATION DATE (DD MM YYY)>

All documents must be submitted in PDF format.

Filing Fees (Non-refundable)

Step 4: BSP Evaluation

The BSP will process the application and may request additional documents or information during evaluation. Failure to comply within the prescribed period will result in the return of the application.

Note: Filing an MAL application grants the BSP authority to conduct onsite verification of documents and representations.

Step 5: Grant of License

Upon approval, pay the licensing fee:

Post-License Compliance Obligations

Commencement Deadline

An OPS granted a MAL must commence merchant acquisition within six (6) months from the date of license issuance, unless a longer period has been approved by the BSP. Failure to commence within this period will result in license revocation.

Ongoing Reporting Requirements

OPS-MAL entities must submit to the BSP:

1. Annual audited financial statements
2. Quarterly statistics on MPAA (Merchant Payment Acceptance Activities)
3. Notices of any material changes, including changes in ownership, directors, or capital

Continuous Compliance

OPS-MAL entities must continuously comply with operational standards and requirements under Section 503 of the MORPS, including anti-money laundering and risk management standards.

Key Takeaways for Applicants

1. Plan ahead - Gather all documents before applying; incomplete applications will be returned with a 6-month waiting period
2. Meet capital requirements upfront - Compliance is checked at application date
3. Prepare comprehensive policies - Risk management, merchant management, and IT security policies are essential
4. Establish banking relationships - A designated account with a BSFI is mandatory
5. Budget for fees - Total fees range from PhP35,000 (Category A) to PhP80,000 (Category B)
6. Prepare for ongoing compliance - Regular reporting and adherence to operational standards are required post-license

The MAL application process reflects the BSP's commitment to maintaining a robust and secure payment ecosystem. While the requirements are comprehensive, they ensure that only qualified entities can engage in merchant acquisition activities, ultimately protecting all stakeholders in the Philippine digital payments landscape.