Stripe, a global financial infrastructure company based in San Francisco, has had its application for a Merchant Acquirer Limited Purpose Bank (MALPB) charter accepted by the state of Georgia’s Department of Banking and Finance, moving the firm a step closer to directly accessing payment card networks.

In an exclusive with PYMNTS, Stripe revealed that the MALPB charter will enable the company to expand its payment processing offerings.

Specifically, it will grant Stripe direct membership in the U.S. with Visa and Mastercard, allowing it to process payments without the need for a sponsoring bank (also known as a BIN sponsor).

Stripe’s membership with the card networks will complement its existing processing and settlement activities, and will not replace its current banking relationships or acquiring BIN sponsorships.

Additionally, the MALPB does not signal that Stripe intends to expand into more traditional banking services.

The scope of the charter is restricted to merchant acquiring and does not cover deposit taking or similar banking activities.

As outlined in the charter/application, it requires payment volume capital and various capital requirements, which are partly based on traditional banking standards and also on “capital standards applicable to similar entities currently operating as merchant acquirer members of card networks in the European Union (EU) under the framework established in the Payment Services Directive (PSD).”

This is a precursor to Stripe’s membership in the United States, as the platform is already a direct member in nine global markets, including the United Kingdom.

A Stripe spokesperson told PYMNTS,

“Over the past few years, as Stripe’s business has grown, we’ve significantly expanded the number of banking and other partners we work with,”

adding that the Georgia MALPB is a “step in this strategic direction.”

In terms of the mechanics of the membership, acquirers who are members of the card networks directly process and settle transactions with Visa, Mastercard, and BIN sponsors.

This can result in faster payouts and lower transaction fees for the acquirer, while also increasing merchant loyalty as costs are reduced for both parties.

Direct relationships with the payment networks simplify the steps involved in debit/credit card transactions, eliminating intermediary relationships.

In these cases, payment processors send transactions to the networks, which are routed through BIN sponsors, and approvals are sent back via the processor before funds are released.

Featured image credit: edited from freepik