The True Cost of Getting a Fintech License From Scratch vs. Buying One

Introduction

One of the biggest decisions facing fintech entrepreneurs is whether to apply for a new license from scratch or acquire a company that already holds one. Both paths lead to the same destination — a licensed, operational fintech business — but the journey could not be more different in terms of time, cost, and risk.

In this article, we compare the two approaches across multiple dimensions so you can make an informed decision that fits your budget, timeline, and risk tolerance.

The Cost of Applying for a License From Scratch

Applying for a fintech license is a rigorous and resource-intensive process. While the exact costs depend on the license type and jurisdiction, here is what you can typically expect:

• Application fees: Ranging from a few thousand to over fifty thousand dollars depending on the regulator.
• Legal and consulting fees: Preparing the application, drafting compliance policies, and navigating regulatory requirements typically costs between fifty thousand and two hundred thousand dollars.
• Capital requirements: Most licenses require you to maintain minimum capital reserves. For an EMI license in Europe, this can be three hundred fifty thousand euros or more. MSB bonds in the US vary by state.
• Compliance infrastructure: You will need to build out AML/KYC systems, appoint compliance officers, and establish internal controls before the regulator will approve your application.
• Time cost: The application process can take anywhere from six months to two years. During this period, you cannot operate, which means delayed revenue and ongoing burn rate.

All told, the total cost of obtaining a new license from scratch — including direct costs, opportunity costs, and the cost of capital — can easily exceed five hundred thousand dollars for a European EMI or a multi-state MSB in the United States.

The Cost of Buying a Pre-Licensed Company

Acquiring a pre-licensed entity involves a different cost structure:

• Purchase price: This is the primary cost and varies widely based on license type, jurisdiction, and scope. Prices can range from under one hundred thousand dollars for a basic VASP registration to over one million dollars for a fully operational EMI with banking relationships.
• Legal and due diligence fees: You will still need lawyers and possibly accountants to review the target company. Budget twenty to fifty thousand dollars for a thorough due diligence process.
• Transfer and regulatory costs: Some jurisdictions charge fees for change-of-ownership approvals. There may also be costs to update compliance documentation and notify the regulator.
• Ongoing capital requirements: These remain the same as for a new license — you will need to maintain the minimum capital reserves required by the regulator.

The key advantage is speed. While the approval of a change of ownership can take a few months, it is almost always faster than a new application. And during this transfer period, the company's license typically remains active, meaning you can begin operational planning immediately.

Time Comparison

Time is often the deciding factor for entrepreneurs evaluating these two paths. Here is a realistic comparison:

• New license application: 6 to 24 months, depending on the jurisdiction and license type. Some jurisdictions like Lithuania are faster; others like the UK or Germany can take significantly longer.
• Acquiring a pre-licensed company: 1 to 4 months for due diligence and regulatory approval of the ownership change. In some cases, you can begin operating within weeks of closing the deal.

Risk Comparison

Both approaches carry risk, but the nature of that risk differs:

• New application risk: There is no guarantee your application will be approved. Regulators can reject applications, request additional information (further delaying the process), or impose conditions that limit the scope of your license.
• Acquisition risk: The main risks are hidden liabilities, compliance issues in the target company, or license conditions that do not match your business plan. However, these risks can be mitigated through thorough due diligence and proper legal structuring.

In practice, buying a pre-licensed company is often lower risk because the hardest part — obtaining regulatory approval — has already been accomplished. Your due diligence process is focused on verifying what already exists rather than hoping for a favorable outcome from a regulator.

When to Apply From Scratch vs. When to Buy

There is no one-size-fits-all answer. Here are some guidelines:

1. Apply from scratch if you have a very specific or novel business model that requires a custom license scope, if you have ample runway and can afford to wait, or if you want full control over the compliance framework from day one.
2. Buy a pre-licensed entity if speed to market is a priority, if the available licenses match your business needs, if you want to reduce the risk of regulatory rejection, or if you need to demonstrate to investors or partners that you are already licensed.

Conclusion

Both paths can lead to a successful fintech business, but for most entrepreneurs, acquiring a pre-licensed company offers a better balance of cost, speed, and risk. The total cost may be comparable to or even lower than applying from scratch when you factor in legal fees, opportunity costs, and the value of getting to market faster. Marketplaces like Dealable24 make it easy to explore available options and find a licensed entity that matches your business strategy.