Why local entity requirements exist
Regulators in many countries want the company accepting or moving money to be present and supervised locally. That can mean a locally incorporated business, a licence from the central bank or financial authority, and safeguards for customer funds. A PSP may be licensed in one country but still need a local entity or partner to operate in another.
- Licensing is usually issued per country by a central bank or authority.
- Some methods require a local account or local scheme participation.
- Rules differ sharply between markets, even nearby ones.
Ask whether a local entity is required
The first question is direct: 'For this country and this payment method, do I need a locally registered company, or can you onboard me through your existing licence?' The answer changes your timeline and budget, so ask before you build the integration.
- Name the exact country and method you plan to launch.
- Ask if your existing entity can be used or a new one is needed.
- Ask whether the PSP can act as the local party instead.
Ask about licensing and the contracting party
Find out who you are actually contracting with and whether that entity is licensed for the activity in the target market. A provider may serve you through a banking partner rather than its own licence. Ask for the licence type, the issuing authority, and the registration number so you can verify it yourself.
- Request the legal entity name on the agreement.
- Ask for the licence authority and registration number.
- Clarify whether a partner bank carries the licence.
Ask about settlement currency and where funds land
Local methods often settle in the local currency into a local account. Ask where your funds are held, in which currency, and how long settlement takes. If money must sit in a local account first, you need that account open before launch, which is itself an entity task.
- Confirm the settlement currency and payout schedule.
- Ask which bank holds the funds and in what jurisdiction.
- Ask who safeguards the balance if the provider fails.
Ask about onboarding documents
If a local entity is needed, the PSP will ask for incorporation proof, a registered office, ownership details, and sometimes local directors. Ask for the exact document list up front so you can prepare it. Surprise document requests are the most common cause of launch delays.
- Request the full document checklist before you start.
- Ask about beneficial-ownership and director requirements.
- Confirm whether a registered office address is enough or a local director is required.
Ask about timelines and cost
Incorporation and licensing each take time, and the two run on different clocks. Ask the PSP for a realistic sequence: entity setup first, then onboarding, then method activation. Also ask what it will cost you in local fees, not just the provider's processing rate, so the market entry budget is honest.
- Map the steps in order with expected durations.
- Separate entity cost from processing cost.
- Ask what blocks go-live if a document is missing.
Questions merchants ask
What is a local entity in payments?
It is a company legally registered in the target country, often with a licence from the local regulator, that can accept or move money there. Some markets require it before you can offer certain payment methods.
Do I always need a local company to sell cross-border?
No. Many cross-border card and wallet flows work from your existing entity. Local rails such as Pix or instant bank schemes are more likely to require a local presence or a licensed local partner.
Which markets require a local entity?
It varies. Singapore, Brazil, and several African and Gulf markets commonly expect local licensing or a local partner for direct participation in local schemes. Always confirm per country with the PSP.
Can my PSP act as the local entity for me?
Sometimes. A PSP with a local licence may onboard you under its own registration, or use a partner bank. Ask specifically whether you still need your own entity or can ride on theirs.
How long does setting up a local entity take?
Timelines differ by jurisdiction, from a few weeks for simple registration to several months where a payment licence is required. Ask the PSP for the sequence so you plan the launch realistically.
What documents does a PSP usually ask for?
Typically incorporation proof, a registered office, ownership and beneficial-owner details, and sometimes local director information. Request the full checklist before you begin to avoid delays.