Small Payment Institution (SPI)
A small payment institution is a UK registration for a payment firm whose payment transactions average no more than EUR 3 million a month. It is registered rather than authorized, carries no ongoing capital requirement, and cannot be used to provide account information or payment initiation services, or to issue electronic money.
Also called: small payment institution
A small payment institution is registered by the Financial Conduct Authority rather than authorized. The test is volume: the monthly average of the payment transactions the firm executed over the preceding twelve months, including those executed by its agents in the United Kingdom, must not exceed EUR 3 million — a projected figure for a firm that has not yet started, and stated in euro in the UK rules rather than in pounds. Registration brings a lighter assessment and no ongoing capital requirement, but conduct-of-business obligations still apply and customers still reach the Financial Ombudsman Service. An SPI may not provide account information or payment initiation services.
Because the status is a national registration and not an authorization, it carries no passporting right — though no UK firm of any status has held one since the end of 2020, so that is not a feature of being small.
The European Union has no single equivalent. PSD2 lets each member state operate its own exemption for small providers, capped at a monthly average that may not exceed EUR 3 million and may be set lower; not every state offers one. A person exempted under it is treated as a payment institution apart from the passporting provisions, and has thirty days to apply for authorization once it stops meeting the conditions. Anti-money-laundering obligations apply throughout.
In the United Kingdom, exceeding the limit means applying for full authorization as a payment institution — a new application on the full standard, not an upgrade of the registration. The FCA can also cancel or vary a registration where the conditions are no longer met, so the firm is expected to watch the number itself and to notify a major change in its circumstances.
In practice
An SPI is registered rather than authorized: no ongoing capital requirement, no account information or payment initiation services, and no passport — though since the end of 2020 no UK firm of any status has one. Exceeding the EUR 3 million monthly average means applying for full authorization on the full standard, which the FCA can refuse, and the regulator can cancel or vary the registration in the meantime. Banks and counterparties read “registered” and “authorized” differently, so describing an SPI as licensed will be corrected during diligence.
Commonly confused with
| Term | How it differs |
|---|---|
| Payment Institution | An authorized payment institution has no volume cap and can passport where the regime allows; an SPI is capped and confined to its own market. |
| Small Electronic Money Institution | A small EMI may issue electronic money; an SPI may not. |
See also
- Payment InstitutionA payment institution is a firm authorized in the United Kingdom or a European Union member state to provide payment services — transfers, acquiring, remittance, payment initiation — but not to issue electronic money. It may hold customer funds in payment accounts used only for payment transactions; those funds are neither deposits nor e-money.
- PassportingPassporting is the mechanism by which a firm authorized in one EEA state may provide its services in the other EEA states without seeking separate authorization in each one. The home state regulator continues to supervise the firm throughout.
- Small Electronic Money InstitutionA small electronic money institution is a UK firm registered by the FCA to issue electronic money below a set limit, rather than authorized. It is a separate status from an authorized EMI, not a smaller version of one: lighter prudential requirements, a cap on outstanding e-money, and narrower permissions.
- Financial Conduct AuthorityThe Financial Conduct Authority is the United Kingdom’s conduct regulator for financial services. It decides whether a payments or e-money firm may operate in the UK, authorizes or registers it, and supervises how it behaves afterwards.