What Was Payza?
Payza was an internet-based payment service that allowed individuals and businesses to send and receive funds using bank transfers as well as via bitcoin.
In 2018, a federal grand jury indicted Payza's founders and operators, brothers Firoz and Ferhan Patel. The indictment alleged the brothers operated an internet-based unlicensed money service business that processed more than $250 million in transactions.
The indictment followed civil litigation and allegations of financial improprieties, leading to investigations by Homeland Security and the Financial Crimes Task Force. On July 17, 2020, the brothers pled guilty to conspiring to launder money and operating an internet-based unlicensed money service business.
- Payza was an online and mobile payments service that allowed users to transact in both fiat money as well as cryptocurrency.
- In 2013, Payza suddenly barred U.S. account holders from its platform. Though it said U.S. customers could withdraw funds, it also said such withdrawal requests were pending until further notice.
- In 2020, the company's founders pled guilty to conspiring to launder money and operating an internet-based unlicensed money service business.
The Patel brothers, both Canadian citizens, founded Payza in 2012 and incorporated the company in the United Kingdom as MH Pillars. Though not as widely used as rivals such as PayPal, Payza became a relatively popular way of sending remittance payments, especially using cryptocurrency. Users could access Payza services via an application on their smartphones.
Payza enabled account holders to deposit funds and keep balances in an e-wallet. Depending on their location, users could deposit and withdraw funds via wire transfer, bank transfers, credit and prepaid cards, and bitcoin.
Payza also supported payments for businesses. It offered a snippet of code that could be added to an e-commerce website to create a "Buy Now" button and integrate with online shopping carts supported by third parties. Customers who already had a Payza account could pay for goods and services using their e-wallet, or else use a credit or prepaid card, as well as other payment options available in their geographic areas.
The Payza App & Business Model
Opening a personal or business account with Payza was free. Funding an account was also free for bank transfers over $200 in the United States, but fees were charged for funding via credit card or bank wires. Users could also fund accounts using bitcoin.
Payments sent through the system did not incur a fee. Fees were instead charged to the party receiving funds, with the fees varying based on what payment method was used. Most fees included a percentage of the transaction value plus a per-transaction fee. Credit card payments tended to carry the highest percentage fee. Withdrawing funds from a Payza account was free if the eGift card option was chosen. Bank transfers incurred a flat rate, while using bitcoin incurred a mining fee.
Legal & Technical Issues
As a service provider, Payza was not regarded as highly as more well-known companies. Customers reported significant service disruptions, which often involved funds being unexpectedly frozen without explanation.
In 2013, Payza suddenly barred U.S. account holders from its platform, with the company blaming problems with a third-party provider. Though Payza said U.S. customers could withdraw funds, it also said such withdrawal requests were pending until further notice.
This led to a civil complaint and federal investigations, followed by indictment of the Patel brothers in 2018. They pled guilty to several charges on July 17, 2020. Notices were sent to affected customers on how they might be able to recover their funds.