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Payment Service Provider in Labuan

Payment Service Provider in Labuan

A payment service provider in Labuan enables businesses to accept payments from customers through multiple channels, such as credit cards, debit cards, e-wallets, and bank transfers. Its main purpose is to facilitate transactions without the use of cash. Once a company is formed in Labuan, it can leverage the Labuan Payment System to enable cashless transactions and offer convenient payment options to its customers.

The Payment System Operator License

To operate as a payment service provider in Labuan, you need to obtain a PSO license from the Labuan Financial Services Authority (Labuan FSA). The licensing applications for PSO are processed by the Labuan FSA within a period of approximately three months.

Once your application for the PSO license is approved, your Labuan entity will be legally authorized to provide brokerage services, which include:

  • transferring funds between bank accounts;
  • operating a payment instrument network;
  • facilitating the smooth processing of payment transactions.

If you are interested, you can learn more about the benefits of an electronic payment license in Labuan from one of our specialists.

Accounting and taxes for a payment service provider in Labuan

Payment service providers in Labuan are subject to corporate tax at a rate of 3% on their audited net profit earned from income sourced outside of Malaysia.

Companies are exempt from indirect taxes like VAT, sales tax, customs duties, and Goods and Services Tax (GST), as well as the withholding tax on interest.

Tax returns must be filed by the deadline of 31st March.

Labuan offshore companies can freely engage in financial activities and make necessary payments within Malaysia without any constraints related to foreign exchange controls.

Procedure for applying as a payment service provider in Labuan

To apply as a payment service provider in Labuan and obtain the PSO license, you must first respect one of these requirements:

  • If you are a regulated payment gateway or provider from another country, you need to have obtained approval from the regulatory authority in your home country. You will also need to provide a letter of consent from that authority;
  • If you are a licensed institution, including payment gateways approved under the Financial Services Act 2013 in Malaysia, you must have obtained approval from the Central Bank of Malaysia.

Additionally, if your company has been operating in the new payment system model or an existing payment system for at least three years and has a good financial track record, you may be eligible for becoming a payment service provider in Labuan. You also need to provide proof that your company has funds amounting to at least US$100,000.

Our specialists in company formation in Labuan have also prepared a short list of the essential documents you need when applying for the PSO license:

  • A detailed business plan;
  • Memorandum and Articles of Association;
  • Certificate of incorporation;
  • ID cards or passports of shareholders, directors, or members of the company and their address proof;
  • Bank statements declaring sufficient funds or capital.

Setting up a company in Labuan, including a payment service provider, is an excellent opportunity for investors, especially considering these statistics:

  • Labuan’s GDP was evaluated at 6,185 million Malaysian ringgit in 2021;
  • There has been a 17% increase in the number of newly registered companies in Labuan in 2022, compared to last year;
  • There has been a 22% growth in the number of new digital businesses or entities operating in Labuan in 2022, compared to 2021;
  • The insurance industry in Labuan expanded during 2022 with 11 new approvals granted to insurance-related entities.

If you have more questions regarding licenses, such as the electronic payment license in Labuan, as well as you need other details about company formation, please contact our team.