What is a funds transfer agent? How to register? Explaining the difference from banks and how it works!

Updated: July 2026, 8

What is a funds transfer agent?

What is a funds transfer agent?A business operator that engages in foreign exchange transactions as a business.It provides services that enable the transfer of funds between customers.
For example, businesses that provide services such as "●●pay" are often registered as money transfer businesses.

To carry out money transfer business,Registration with the Financial Services Agency (application to the local finance bureau or other authority having jurisdiction over the location of the principal business office) is required.

The process for registering as a money transfer service provider is very complicated and involves the submission of various documents and an examination of business operations.
Before registering, it is necessary to understand the relevant laws such as the Payment Services Act, the Criminal Proceeds Act, the Foreign Exchange Act, and the Domestic Tax Act.
These laws are primarily aimed at customer protection and establish rules and conditions that businesses must comply with.

On this page, we will explain, as clearly as possible, what a money transfer business is and how to register.

Example of funds transfer business

With the spread of cashless payments, the importance of the funds transfer industry is increasing.
There are various examples of money transfer businesses, but some of the services listed below are:

Example 1: International remittance service

A service in which funds transfer companies perform international remittances (domestic to foreign, or foreign to domestic) upon request.
For example, you can send money using a dedicated app or website without going through a bank.
In many cases, fees are lower than those charged by banks, and they are often used by foreigners living in Japan to send money back to their home countries.

Example 2: Refundable electronic money

For example, services such as "●●pay" may be considered money transfer businesses.
This is a service that allows you to charge (deposit) money in advance using your smartphone, use it to pay in stores, and also withdraw the charged amount as cash when needed.

Example 3: Digital payment of wages

It is a system in which companies pay wages (salaries) to employees using electronic money or other means.
In order to provide this service, the company must be registered as a Type II money transfer business operator and designated by the Ministry of Health, Labour and Welfare.

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Example 4: Issuing a stable coin

A stablecoin is a cryptocurrency with a stable price.
We aim to stabilize prices by linking them to legal tender currencies such as the dollar and the yen.
Type II fund transfer service providers can also issue stable coins.

Difference between funds transfer service provider and bank

Comparing money transfer businesses and banks,The biggest difference is whether or not deposit transactions are possible.
Banks use the funds deposited by their customers as loans and investments, and use the profits to pay interest.
Banking can provide a wider range of financial services and is therefore subject to stricter regulations.

On the other hand, money transfer businesses only transfer funds between customers.They are not allowed to provide deposit-oriented services like banks (deposit regulations).
We can only handle funds used for exchange transactions.

In addition, the main source of income for the funds transfer business is fee income, but banks derive their income from the difference in interest rates between deposits and loans.
Due to differences in scope of work and regulations, there are also differences in the amount of risk.

Three types - Review of the Fund Settlement Act -

There are three types (categories) of money transfer businesses.
Due to the amendment of the Payment Services Act in 2021, it has been divided into three types: Type XNUMX, Type XNUMX, and Type XNUMX.

The main difference is the "maximum transfer amount per transaction."
Type 100 has no upper limit. The upper limit is 5 million yen for the second type and XNUMX yen for the third type.
This makes it possible to develop services tailored to the business you want to carry out.

However,The higher the upper limit, the stricter the regulations become, making it more difficult to register (or license for the first type).
In particular, in the case of Type 1, funds cannot be accepted without specific remittance instructions (recharging like with ●●pay is not possible).

Furthermore, even for Type 100 funds transfer companies, they often set a lower limit than the XNUMX million yen remittance limit.
This is because each service provider sets the amount individually from a risk management perspective, and it is necessary to set the amount according to the actual situation.

As of the end of January 8, there was one business operator that was registered only as Type 5, four business operators that were registered as both Type 1 and Type 5, and 77 business operators that were registered only as Type XNUMX.
In addition, there are no businesses registered as Type 3.

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Registration requirements for funds transfer agents

When registering as a funds transfer provider, the following requirements must be met.

① It must be a joint stock company or a foreign funds transfer business operator.
② In the case of a foreign fund transfer business operator, the representative must have an address in Japan.
③ Have a financial basis deemed necessary to carry out the funds transfer business properly and reliably.
④ A system has been established to carry out the money transfer business appropriately and reliably.
⑤ Necessary systems for complying with the Payment Services Act have been established.
⑥ Not using a trade name or name that may be mistaken for another money transfer business operator
⑦ The registration of the money transfer business has not been revoked in the past.
5) You have previously been sentenced to a fine for violating the Payment Services Act, Banking Act, etc., and five years have passed since the execution of that sentence.
9) Other business activities are not contrary to the public interest
⑩ Directors and auditors are not adult wards

Regarding No. 3, the financial basis, there are no quantitative standards such as uniformly determining the amount of capital or the amount of net assets.
Depending on the content and method of the funds transfer business that the applicant for registration intends to conduct, a specific examination will be conducted to determine whether the applicant has the necessary financial base.

As for No. 4 and No. 5, in-house system development, there will be a strict examination in the registration application.
The requirements are explained in more detail in the following article.

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Internal structure required for a money transfer business operator

Regarding the internal system development required for registration requirements, a strict examination will be conducted at the time of application.
If you wish to provide services as a funds transfer agent, you must demonstrate that you are able to do so without any problems.

First, establishing an appropriate compliance system is fundamental in fund transfer operations.
This means complying with laws and regulations, including not only the Payment Services Act, but also the Act on Prevention of Transfer of Criminal Proceeds and the Act on the Protection of Personal Information.
Additionally, ensuring customer trust requires transparent service delivery and strict measures to protect personal information.

In terms of human resources, it is necessary to establish responsible departments such as sales departments and compliance departments, as well as department managers.
In particular, it may be necessary to hire personnel with knowledge and experience in foreign exchange transactions to be responsible for managing the funds transfer business.

Below we provide a brief overview of the most important regulations (there are a wide range of other regulations, including those on delay control measures, complaint handling, and system risk management).

performance bond

The money transfer business operator isWe are obligated to secure at least 100% of the funds received from users (called undelivered debt; funds that have not been transferred and are still outstanding) as a performance bond.

This amount is called the "performance guarantee amount" and is calculated by "the amount of unfulfilled obligations for each business day for each type of funds transfer business" + "the amount of expenses related to refund procedures."
Funds transfer companies must understand the "performance guarantee amount required" for each type of funds transfer business on each business day.

There are three ways to preserve a performance bond: (1) deposit, (2) security contract, and (3) trust contract.
These methods can be used in combination, so if the required performance guarantee amount is 2,000 million yen, 1,000 million yen could be deposited and the remaining 1,000 million yen could be secured by a security agreement.
Additionally, in Type 3, in addition to the above, it is also possible to manage user funds as deposits and savings, etc. that are separate from personal assets.

Verification measures at the time of transaction

The money transfer business operator isPursuant to the Act on Prevention of Transfer of Criminal Proceeds, when carrying out the following, you will be required to verify your identity, known as "verification at the time of transaction."

① Exchange transactions involving the receipt or payment of cash exceeding 10 yen
② Conclusion of a contract to conduct continuous or repeated foreign exchange transactions (= membership registration)

When verifying a transaction, we verify the customer's personal details (such as name, address, date of birth, etc.), purpose of the transaction, occupation, etc.
This is to prevent fraudulent transactions such as money laundering and terrorist financing.

User protection measures

Funds transfer service providers are required to take the following measures to protect users.

① Measures must be taken to prevent customers from mistaking these transactions for those conducted by banks, etc.
② Providing information to users, such as fees and other contract details.
③ When funds such as remittance amounts are received, a receipt must be issued.
④ Establish internal rules and provide training to employees.

Financial ADR support

Funds transfer businesses are subject to the alternative dispute resolution system (financial ADR system), so they must take the following two measures related to funds transfer businesses based on the law.

① Complaint handling measures
② Dispute resolution measures

In general, in many cases, a company joins the Japan Payment Services Association, a certified payment service association, and takes measures to handle complaints and resolve disputes by following its regulations.

If you join the Japan Payment Services Association (General Incorporated Association), you will be able to receive the following services.

① Complaints related to the money transfer business can be dealt with through the complaint resolution process carried out by the Association.
② By utilizing the agreement on the resolution of disputes related to the money transfer business concluded between the Association and three bar associations in Tokyo, it is possible to resolve disputes related to the money transfer business.

Japan Payment Services Association website
⇒　https://www.s-kessai.jp

Where to apply for registration as a fund transfer business operator

The procedure for applying for funds transfer business registration is the local finance bureau, etc. that has jurisdiction over the location of the principal business office.
Authority is delegated by the Prime Minister through the Commissioner of the Financial Services Agency.

For example, if a corporation has its head office in Tokyo, the Kanto Regional Finance Bureau comes into charge.
The Tokyo Finance Office is in charge of the procedure, and various documents will be exchanged and reviewed.

Incidentally, if you conduct money transfer business (foreign exchange transactions) without registration, you will be subject to penalties under the Banking Act as an unlicensed business operator in violation of Article 4, Paragraph 1 of the Banking Act.

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FAQ

To operate a funds transfer business, you need to register as a funds transfer business.

When applying, appropriate customer management in accordance with the Act on Prevention of Transfer of Criminal Proceeds and the establishment of an internal management system based on the Fund Transfer Business Administration Guidelines are required.

Banks can accept deposits and make loans, but funds transfer companies cannot accept deposits from customers or make loans.

The main business of a funds transfer service provider is the transfer of funds between customers.

In order to complete the registration procedure, you must notify the competent financial bureau, etc. that you wish to start the procedure.

There are a wide variety of documents required for the procedure, and it is necessary to check the draft of each document with the authorities.

The procedure takes about one or two years, and in some cases it can take longer than two years.

At the draft check stage with the authorities, you may be able to proceed as planned, but if the plan remains as planned, there is a possibility that the authorities will say that it is difficult to proceed with the review any further.

For inquiries regarding registration as a fund transfer business operator, please contact Support Administrative Scriveners Corporation

At Support Administrative Scrivener Corporation, we provide application support and consulting regarding the Fund Settlement Act for both those newly entering the funds transfer industry and existing funds transfer companies.

Funds transfer business registration is highly specialized and can be said to be one of the fields in which there are few administrative scriveners who can handle it.
We provide legal services related to the funds transfer industry based on the know-how and track record that we can accumulate because we are administrative scriveners who handle applications and negotiations with administrative agencies on behalf of companies on a daily basis.

The first consultation is free of charge.
Please contact us using the phone number or inquiry form below.

Editor of this article