Alternative payment institutions (APIs)
A relatively new feature in the world of payments are alternative payment institutions (“APIs”). Of course, we could see different analogies in the history (e.g., old-fashioned version of hawala) that represented certain alternative to transaction business via banks, however, the real revolution of APIs came only at the end of the 20th century.
There are of course plenty of them. However, let’s take a look at the most popular ones which are regulated in their respective jurisdictions. Most APIs (licensed by their country) work using a largely similar system. An API is required to open an omnibus account for its clients for their deposits or withdrawals, and this ensures its functionality. Without such an omnibus account, APIs are unable to perform its basic activities.
Examples of APIs:
Electronic money institutions (EMI – European Union)
Major Payment Institution or Standard Payment Institution (MPI or SPI – Singapore)
Money Service Operator (MSO – Hong Kong)
Money Service Business (USA, Canada, Latin America)
Fund Transfer Business Operator (Japan)