Point service x money transfer business | Legal perspective from the perspective of license design
Updated: July 2025, 9
In recent years, there has been an increase in cases where smartphone apps and online platforms have introduced features for transferring money between users using points or coins, as well as payment services at external affiliated stores. These services are often set up under the name of a "points system," but depending on the scheme, they may fall under the licensing requirements of the Payment Services Act, such as "funds transfer business" or "prepaid payment instrument issuing business."
Don't be fooled by points and coins.Is the system structured so that it is evaluated as a "foreign exchange transaction"?It is extremely important to examine the following: If you operate without registering, you may be charged with violating the Payment Services Act and may be subject to administrative sanctions or orders to suspend operations.
Case: Analysis of Company A
*This case is fiction. All company names and names of personnel are pseudonyms, and it is not an actual case, but it has been constructed to give you a concrete idea of the type of support we provide.
Company A designed the "coins (1 coin = 1 yen)" sold on its app to be freely sent between users, and also to be used for payments at some external affiliated stores. Initially, this was positioned as simply a "prepaid payment instrument" and it was determined that a funds transfer business license was not required. However, prior consultations with the Financial Services Agency pointed out that there was a high possibility that this business would be considered a "fund transfer business" for the following reasons.
Coins can be used at affiliated stores outside the app (third-party type)
The ability to freely transfer money between users was provided.
Refunds to users were being provided in some cases.
These are not "simple means of payment" and may be considered as "transfer of funds = foreign exchange transactions," and therefore there is a high possibility that registration as a money transfer business will be deemed necessary (Article 2, Paragraph 2 of the Payment Services Act). However, there are cases where prepaid payment instruments may be transferable. Please contact us for more information.
What is the classification turning point?
The applicable license varies depending on the service provided. It is classified as follows:
If the service is used only within a company (within a company group or a closed ecosystem), it falls under the category of "prepaid payment instruments (self-operated)" and, in principle, is subject to a notification system.
If points or coins can be used at external affiliated stores, a registration system will be applied as a "prepaid payment method (third-party type)."
If it is possible for users to transfer money between each other (e.g. sending points to a friend), the system will be considered to be a foreign exchange transaction and will require registration as a "fund transfer business."
If points are highly convertible into cash or function as the equivalent of cash, they may be regulated as a "fund transfer business" or a "cryptocurrency exchange business."
The important thing is that the criteria for judgment are not the "name" of the points, but their "function and scope of use."
Important points to note and common misunderstandings
Temporarily holding money received from users may be considered "preparation for foreign exchange transactions" in the money transfer business.
Once points are made "cashable" or "freely transferable," they may go beyond the scope of a prepaid payment instrument.
Even if the information is "used only within your company," if it is determined that a third party is actually involved, a reporting obligation will arise.
In order to accurately evaluate these points, it is essential to have knowledge of the provisions of the Payment Services Act, such as the definitional provisions, the regulations regarding prepaid payment instruments, and the registration requirements for money transfer businesses.
Our support details
We support point scheme legality checks and licensing procedures through the following process:
Advice on license classification at the concept stage (money transfer business, prepaid, cryptocurrency, etc.)
Scheme structure and license organization
Support for preparing application documents for each license
Pre-meeting and clarifying issues for advance consultation with the Financial Services Agency
