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Posted22 days ago
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You could make a self-hostable solution, but the rest of the financial network would basically either refuse to accept your packets without sufficient proof of regulatory compliance in order to preserve their own good standing with regulators. It's a pretty jealously guarded sector, because it sorta has to be to make fiscal crime tractable.
I mean... Go for it if you want. Just be aware, your resulting impl cannot be legally employed without a money transmitter license.
The angle I’m exploring isn’t to bypass regulation, but whether a non-custodial, self-hosted orchestration layer can exist that never holds funds and only works on rails that already support direct settlement. The model is closer to paying a shop directly than paying through an intermediary....the software is never a counterparty, never pools funds, and the regulated entities remain the banks or processors on both ends.
In a US scenario, the idea would be that the merchant runs the software themselves, and onboarding doesn’t abstract compliance away but explicitly guides them through what they need in place to legally accept payments, linking out to the appropriate providers and only working once those are set up. My question is whether, in your view, that meaningfully changes the regulatory posture, or if simply being part of the payment initiation path still makes MSB treatment unavoidable.
Appreciate you calling this out....it’s exactly the constraint I’m trying to understand.
The only real choice left is to accept a minimalized compliance system that just squeaks by mister to be accepted by the big guys, (which still leaves the risks of the rest of the system eventually locking you out), and places a significant burden on you, the business owner to learn a lot of financial minutiae that has nada to do with your business other than integrating into the financial system), or just stick with a payment processor who already exists (not solving your problem).
Absolutely sucks, but that's what our system has evolved to.
Sending e-transfers to businesses to pay for things is legal, unless I am mistaken. Please enlighten me.
The idea isn’t to change that, but to provide a self-hosted, non-custodial orchestration layer around those rails. The software wouldn’t hold funds or act as a counterparty....it would just help merchants initiate and observe transfers using their own bank relationships, with clear settlement and no payout abstraction.
Where things get tricky is cards, which are a very different model. But for bank rails, I agree the legal foundation already exists, and the question is more about how much orchestration you can provide before it’s considered intermediation.
Happy to be corrected if I’m missing something.
1. https://plaid.com/products/transfer/
2. https://www.flinks.com/products/pay
3. https://paytm.com/online-payments
OpenSpend should be open-source and free, unlike the companies mentioned above.
The idea is not only to provide the software but also legal templates like cancellation policy, refund policy, dispute resolution, etc., for different jurisdictions.
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