Payment Provider Authorisation: Which Permission Covers What

A crypto payment provider may hold several authorisations, or one, or none of the relevant ones. The distinctions determine what protections apply to funds held on your behalf. Providers that adapted, such as a crypto payment gateway with fiat settlement, now publish things they previously did not have to.

The permissions involved

Crypto asset service provider authorisation covers activities in crypto: exchange, custody, transfer, execution. Separate permissions within it.

Payment institution authorisation covers executing payment transactions in ordinary money and holding funds for that purpose. Carries safeguarding obligations for relevant funds.

Electronic money institution authorisation covers issuing electronic money and holding balances. Also carries safeguarding obligations.

A provider that accepts crypto, converts it and settles fiat to merchants is performing activities spanning more than one of these.

Why it matters to a merchant

Between a customer paying and your settlement, the provider holds funds.

If those funds are safeguarded under a payment or electronic money authorisation, they are protected on insolvency and returned to merchants ahead of general creditors.

If the provider holds no such authorisation, the balance is an unsecured claim.

That distinction applies to your unsettled balance, which for weekly settlement is roughly a week of revenue.

The questions

Which entity holds funds between payment and settlement.

Is that entity authorised, by which authority, under which permission.

Are merchant funds safeguarded, by which method, and is there independent assurance.

Ask in writing. Answers that describe security measures rather than naming a permission are not answers.

The group structure issue

Providers frequently operate through several entities: one holding the crypto authorisation, another the payment authorisation, a third contracting with merchants. The property corridor surfaces this differently, and ecommerce payment solutions with crypto settlement operates there.

The safeguarding obligation attaches to the authorised entity holding the funds. If that is not the entity in your agreement, the position needs explaining.

What to verify yourself

The register entry, on the authority’s own site. Entity name matching your contract exactly. Permissions covering the activity. No restrictions.

Five minutes, and it is the only part of provider diligence that cannot be replaced by reading marketing material.

The practical control regardless

Settle daily where available and cap the unsettled balance. Authorisation determines what happens in a failure; settlement frequency determines how much is exposed when it happens. Compare any provider you are considering against a support channel with a named contact on these specific points.

The second is entirely within your control and most merchants never negotiate it.