If you wish to provide electronic money payment services in the UK, you will need to be registered or authorised by the the FCA. Depending upon the activities you want to conduct, you will need to become a payment institution (SPI/API) or an electronic money institution (EMI).
If you intend to provide open banking payment services you will need to apply to the FCA to become an Account Information Service Provider (AISP) or a Payment Initiation Service Provider (PISP).
API, SPI, SEMI and EMI - what is the difference?
- Authorised Payment Institution (API) - An API is allowed to process payments. An API allows other companies to receive payments from their customers. Typical APIs include credit card processors, payment account operators, remittance operators and foreign exchange businesses. You will need a minimum capital of 125,000 euros.
- Small Payment Institution (SPI). If your business has an average payment turnover of up to €3 million per month, you can choose to be registered as a SPI instead of an API. The FCA application process is slighter easier to complete as it is a FCA registration rather than an authorisation. However, SPIs are unable to provide payment services into other European Economic Area (EEA) member states.
- Electronic Money Institution (EMI) - An EMI has all the permissions available to an API. In addition, an EMI can hold client funds and issue e-money to customers which they can store on electronic devices as a prepaid card. An EMI can offer many of the same services provided by a Bank without having the need to obtain a Banking License. However, an EMI cannot pay interest on balances or lend out money and earn interest on the money it holds. You will need a minimum capital of 350,000 euros.
- Small Money Institution (SEMI) - If your business has an average payment turnover of up to €3 million per month, you can choose to be registered as a SEMI instead. The FCA application is slighter easier to complete as it is a FCA registration rather than authorisation. . However, SEMIs are unable to provide payment services into other EEA member states.
Open Banking Service Providers
There are two main types of open banking service providers which need to be registered by the FCA:
- Account Information Service Providers (AISP) - These firms aggregate a customer's current account data. An AISP can help a customer to analyse their spending habits and inform them of suitable products and services. Some firms also seek AISP permissions to support their core business activities such as lending, credit broking and money management.
- Payment Initiation Service Providers (PISP) - These firms enable customers to make payments to merchants and other service providers. They do not receive or pass funds as such. Instead a PISP provides the IT infrastructure to enable a customer to make a direct payment from their bank account to the merchant/service provider without using their debit card.
How we can help you
- We have an experienced team which understand the specific requirements relating to payment services regulations and we will be able to prepare the FCA application for you.
- We have relevant policies and procedures to support your FCA application such as a Security Policy Document, Security Handling Incident Procedure, Business Continuity Processes etc.
- We can also provide a fixed fee review service for an application which you may have prepared yourself. We can check your application before you submit it to the FCA.
Useful links:
Payment and E-Money Services: FCA Authorisation Guide