How To Start A Credit Card Processing Company

Contents

More purchases are being made online than ever before. With the rise of digital transactions, people are swapping cash for the convenience of credit cards, choosing to tap, swipe, and go. It’s no surprise — credit cards are easy to carry, quick to use, and widely accepted.

But behind every seamless transaction is a credit card processing company. As more businesses and consumers rely on card payments, the demand for secure, reliable processing services continues to grow.

If you’re considering launching your own credit card processing company, you could be tapping into a promising market. However, the legal foundations of your business are critical. From regulatory compliance to liability protections, strong legal preparation will play a key role in your company’s success.

What Is A Credit Card Processing Company?

A credit card processing company owns and operates the technology that enables businesses to accept card payments. Most businesses rely on these companies to process payments made with credit cards, but their services often extend to debit cards, gift cards, and even digital wallets.

Credit card processing companies facilitate transactions between businesses, customers, and banks, ensuring payments are processed securely and efficiently. Rather than developing their own internal systems, most businesses depend on credit card processing companies to handle transactions. As a result, consumers are likely to interact with credit card processing software whenever they shop — as long as they are using a card.

How Do I Start My Own Credit Credit Card Processing Company?

To start your own credit card processing company, you’ll need to officially register as a company. However, before beginning this process, it’s important to have all the necessary details outlined in a comprehensive business plan.

For instance, you’ll need to determine the type of software you’ll be using, your target audience, whether you’ll operate internationally or within Australia, your pricing model, and your public-facing assets — such as your company name and logo. These decisions should be made before officially registering your company to ensure you have a clear vision of the direction you want to take.

When it comes to critical choices — such as the type of company structure you’ll be registering — having a well-thought-out plan can make all the difference. Without proper planning and preparation, it’s easy for a company to lose focus or fall off track.

What Do I Need To Register A Company?

In Australia, every company must be registered with the Australian Securities and Investments Commission (ASIC). Registering a company with ASIC involves determining the type of company you want to register, selecting the appropriate application form, filling it out, and paying the registration fee. This process can be completed online, but before reaching that stage, there are a few key details you’ll need to have prepared to ensure a smooth application process.

When planning to register your company, it’s important to have the following details sorted:

The details of all company shareholders
Who the company directors will be
How the company will be governed and whether it will have a company constitution
Administrative details, such as the company address, phone number, and email

Registering your credit card processing company is a significant step, as it forms the foundation of your business. It’s important to get it right from the start, as mistakes made during registration can be difficult — if not impossible — to correct. Seeking guidance from a legal expert during this process can help ensure everything is set up in a way that benefits your company.

For more information on company registration, check out our article: Steps To Incorporate Your Small Business.

Do I Need Any Licences And Permits To Start A Credit Card Processing Company?

Yes, as a credit card processing company, you will need to obtain some licences and permits to legally start your business.

Australian Financial Services Licence (AFSL)

Generally, any business involved with handling customer funds or financial transactions needs an AFSL. This licence is issued by ASIC (Australian Securities and Investments Commission). Before you start trading, make sure your AFSL has been approved to avoid legal complications.

Bank And Card Network Permissions

While not technically a licence, you cannot simply launch a credit card processing company without obtaining the necessary permissions from banks and card networks. You’ll need to establish partnerships with acquiring banks and gain approval from card networks such as Mastercard and Visa to process transactions.

AUSTRAC Registration

If your company is involved in handling or processing financial transactions, you may be required to register as a remittance provider under the Anti-Money Laundering and Counter-Terrorism Financing Act. AUSTRAC oversees compliance in this area, ensuring businesses prevent financial crime.

Australian Credit Licence (ACL)

If your company offers merchant cash advances, lending, or other credit services, you may need an Australian Credit Licence (ACL) from ASIC. This applies if you provide credit facilities or financial products under the National Consumer Credit Protection Act 2009.

Reserve Bank Of Australia (RBA) Authorisation

If your business operates its own payment system (rather than acting as an intermediary or reseller), you may need approval from the Reserve Bank of Australia (RBA) under the Payment Systems (Regulation) Act 1998. This is relevant if your company is creating a new payment network or settlement system.

APRA Registration

If your company will hold customer funds before transferring them, you may need to register with the Australian Prudential Regulation Authority (APRA) as an Authorised Deposit-taking Institution (ADI) or seek an exemption.

State & Local Council Permits

Before opening your credit card processing business, check whether state or local regulations require any specific permits or licences to legally operate from your chosen location. These requirements can vary depending on your state or local council laws.

Are There Any Laws My Credit Card Processing Company Will Need To Follow?

Your credit card processing company must comply with several financial and consumer protection laws in Australia. As a financial service provider, strict regulations govern how your business operates, handles transactions, protects customer data, and prevents fraud. Understanding and adhering to these regulations is essential to ensure legal compliance and avoid potential penalties.

Payment Systems (Regulation) Act 1998

The Payment Systems (Regulation) Act gives the Reserve Bank of Australia (RBA) authority to regulate payment systems and financial institutions. As a credit card processing company, you must understand your obligations under this law, which may include:

Ensuring secure and transparent transaction processing.
Complying with any RBA-issued standards or regulations related to payment systems.
Providing fair access to payment processing services.

Why it matters: This law ensures Australia’s payment systems remain stable, secure, and competitive.

AML/CTF (Anti-Money Laundering & Counter-Terrorism Financing) Act 2006

Australia has strict anti-money laundering (AML) and counter-terrorism financing (CTF) laws to prevent financial crimes. As a payment processor, you may be required to:

Register with AUSTRAC as a reporting entity.
Implement a risk-based AML/CTF program to detect and prevent fraudulent activity.
Conduct Know Your Customer (KYC) checks to verify merchant identities.
Report suspicious transactions to AUSTRAC.

Why it matters: Failure to comply with AML/CTF laws can result in severe penalties, including fines and loss of your business licence.

Data & Privacy Protection (Privacy Act 1988 & Australian Privacy Principles)

As a credit card processing company, you will have access to sensitive financial data, including customer and merchant information. Under the Privacy Act 1988, you must:

Securely collect, store, and process personal data.
Comply with the Australian Privacy Principles (APPs), which set rules on how businesses handle personal information.
Maintain a clear privacy policy outlining how customer data is used and protected.
Report data breaches to the Office of the Australian Information Commissioner (OAIC) as required under the Notifiable Data Breaches (NDB) scheme.

Additionally, while not an Australian law, compliance with the Payment Card Industry Data Security Standard (PCI DSS) is mandatory for any business handling credit card data. Non-compliance can result in:

Financial penalties from Visa, Mastercard, and other card networks.
Increased risk of data breaches and fraud.
Loss of payment processing capabilities or termination of merchant accounts.

Why it matters: Non-compliance with privacy laws and security standards can lead to heavy fines, reputational damage, and potential legal consequences.

Australian Consumer Law (ACL)

Under the Competition and Consumer Act 2010, businesses must follow Australian Consumer Law (ACL), which protects customers from misleading conduct and unfair business practices. As a credit card processing company, your obligations include:

Providing accurate pricing and fee disclosures.
Ensuring transparent and fair contracts for merchants using your services.
Offering secure and reliable payment processing to prevent financial loss.

Why it matters: Breaches of Australian Consumer Law can lead to legal action and fines from the Australian Competition and Consumer Commission (ACCC).

ePayments Code (Australian Securities and Investments Commission – ASIC)

The ePayments Code, regulated by ASIC, applies to businesses offering electronic payment services (e.g., credit card processing, online payments). It sets standards for:

Transparent fee disclosures for transactions.
Consumer protection measures (e.g., handling disputed transactions).
Clear chargeback and refund policies.

Why it matters: If your credit card processing service involves handling customer transactions directly, compliance with the ePayments Code may be required.

Note: We’ve listed a number of the key areas that are likely to apply to your credit card processing company. However, as each company is different, it’s always best to chat with a legal expert and get advice that’s tailored specifically to your situation.

Will I Need Any Legal Agreements To Start A Credit Card Processing Company?

Legal agreements help keep your company on the right track, reduce the risk of disputes, and protect your company’s rights. However, for legal agreements to work the way you intend, they need to be professionally drafted and tailored to meet your credit card processing company’s needs.

Here are a few legal agreements you may want to consider:

Ensuring your legal agreements are properly structured can save your business from future legal complications. If you need assistance, our legal experts can help draft agreements that align with your business goals and regulatory requirements.

Key Takeaways

To start a credit card processing company, there are several legal considerations you will need to adhere to. Seeking expert legal guidance can help you navigate this process with ease.

To summarise what we’ve discussed:

A credit card processing company enables businesses to accept payments via credit cards, debit cards, and digital wallets, acting as an intermediary between merchants, customers, and banks.
To start your own credit card processing company, you need a clear business plan, including software choices, target audience, pricing model, and branding, before officially registering with ASIC.
Licences and approvals are required, including an Australian Financial Services Licence (AFSL), AUSTRAC registration, bank and card network permissions, and potentially an Australian Credit Licence (ACL) or Reserve Bank of Australia (RBA) authorisation depending on your operations.
Compliance with financial regulations such as the Payment Systems Regulation Act, AML/CTF Act, Privacy Act, Australian Consumer Law, and the ePayments Code is crucial to avoid legal and financial penalties.
Data protection and security are essential; businesses must comply with the Privacy Act 1988 and PCI DSS standards to safeguard customer financial information and avoid reputational and legal risks.
Legal agreements such as a Shareholders Agreement, Privacy Policy, Website Terms & Conditions, and Employment Agreements are key to protecting business interests and ensuring smooth operations.
Given the complexity of financial regulations and legal requirements, seeking advice from legal experts can help ensure your business is set up correctly and fully compliant from the start.

If you would like a consultation on starting a credit card company, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

Sapna Goundan

Sapna has completed a Bachelor of Arts/Laws. Since graduating, she's worked primarily in the field of legal research and writing, and she now writes for Sprintlaw.

Do you need legal help?
Get in touch now!

We'll get back to you within 1 business day.