Authorized Payment Institution API: Full UK Payment Services Authorization
An Authorized Payment Institution API is the full-tier regulatory authorization issued by the UK's Financial Conduct Authority to companies providing payment services without volume limits, with the ability to appoint agents and operate at institutional scale. If you are building a serious UK payment business, processing significant transaction volumes, or need to appoint a network of sub-agents, an Authorized Payment Institution API authorization is your target. Faisal Khan LLC advises on the API application process, connects businesses to authorized APIs willing to take on agents, and sources licensed API entities available for acquisition.
What Is an Authorized Payment Institution
An Authorized Payment Institution is a company authorized by the FCA under the UK Payment Services Regulations 2017 to provide one or more payment services. Unlike a Small Payment Institution (SPI), an API has no transaction volume ceiling. It can appoint authorized agents to expand its reach, and it carries the full weight of FCA authorization rather than the lighter-touch SPI registration.
API authorization covers:
Execution of payment transactions (credit transfers, direct debits)
Payment initiation services
Account information services
Issuing payment instruments (cards, payment accounts)
Acquiring payment transactions
Money remittance
An API cannot issue electronic money. If your business model requires e-money issuance (digital wallets, stored value, prepaid accounts), you need an Electronic Money Institution (EMI) authorization instead. The API and EMI licenses serve related but distinct purposes.
API vs. SPI: When You Need Full Authorization
The SPI registration is the entry-level route. The API authorization is the full-scale version. You need API authorization rather than SPI registration if any of the following apply:
Your monthly average payment transaction volumes exceed GBP 3 million
You plan to appoint a significant number of authorized agents
Your business needs the credibility and standing of full FCA authorization for institutional counterparties, banking relationships, or commercial partnerships
You are building a payment business that is core to your commercial model rather than an ancillary feature
Many businesses start with SPI registration and upgrade to API authorization as they scale. The upgrade path exists, but it requires a new full application. Planning for API authorization from the start, if volume growth is expected, avoids the cost and disruption of upgrading later.
The Three Ways to Access API Authorization
Path 1: Apply for Your Own API Authorization
API authorization requires a comprehensive application demonstrating to the FCA that your business has the governance, capital, compliance infrastructure, and operational readiness to provide payment services at scale.
Core requirements for FCA API authorization:
Minimum initial capital: EUR 20,000 (money remittance only) to EUR 125,000 (other payment services including acquiring)
Ongoing capital requirements: calculated as a percentage of payment volumes or fixed amount, whichever is greater
Formal governance structure with clearly defined senior management responsibilities
A designated compliance officer and a written AML/KYC policy
Safeguarding arrangements for customer funds (segregated accounts at credit institutions)
Operational resilience and business continuity plans
Fit and proper assessments on all directors, managers, and shareholders with significant influence
Detailed business plan with flow of funds documentation
The FCA's review process involves an assessment of your business model, a fit and proper review of your leadership, and an assessment of your compliance infrastructure. The FCA will ask questions and may request further information. Applications with gaps or inconsistencies take significantly longer.
Timeframe: 6 to 18 months, depending on application quality and FCA caseload.
We help clients build the governance framework, AML policy, and application documentation to maximize the chances of a smooth, efficient authorization process.
Path 2: Become an Authorized Agent of an Existing API or EMI
An Authorized Payment Institution can appoint your company as an authorized agent. As an agent, you provide payment services within the API's or EMI's regulatory perimeter. The principal institution registers you with the FCA as their agent and carries the regulatory responsibility for your compliance.
This is the fastest legally compliant route to providing payment services in the UK without your own authorization.
Agent-based (in the flow of funds): You handle customer interactions, onboard clients, initiate transactions, and in some structures collect or hold funds temporarily. You are embedded in the payment flow. The API is your regulatory umbrella.
Non-agent-based (not in the flow of funds): You provide technology, software, or referral services on top of the API's infrastructure. Funds do not touch your business. You are a service layer, not a payment operator.
Many businesses use the agent route while their own API application progresses. Once their authorization is granted, they transition to operating under their own license. Running both in parallel, operating as an agent today while your application runs in the background, is a sound strategy that keeps you compliant and operational from day one.
We connect businesses to APIs and EMIs willing to take on authorized agents and help structure the commercial and compliance terms of the arrangement.
Path 3: Acquire a Company That Holds API Authorization
Acquiring a company that already holds FCA API authorization gives you immediate access to the license, subject to regulatory approval of the change of control. This route bypasses the 6 to 18 month application period for businesses where speed is critical and a suitable acquisition target exists.
What this involves:
Sourcing an API-authorized entity available for acquisition
Regulatory due diligence covering the license, compliance history, enforcement history, and outstanding regulatory matters
Structuring the acquisition with appropriate regulatory conditions precedent
Filing the FCA change of control notification and waiting for FCA approval before the transaction completes
FCA change of control assessments generally run 60 to 90 working days. The FCA will assess the incoming owners for fit and proper status, which requires its own documentation and disclosure.
We source API-licensed entities available for acquisition, advise on regulatory due diligence, and connect you to M&A counsel with specific FCA change of control experience.
Safeguarding and Banking for APIs
Like all payment institutions that hold customer funds in transit, APIs must maintain compliant safeguarding arrangements. This requires segregated accounts at credit institutions with appropriate documentation. Finding a bank willing to open these accounts for a payment institution is its own challenge.
APIs also need operational banking for their own expenses: staff, suppliers, infrastructure. Many banks are reluctant to serve licensed payment companies even when those companies hold FCA authorization.
We advise on safeguarding structure and connect clients to banking solutions appropriate for authorized payment institutions at both the safeguarding and operating account level.
Frequently Asked Questions
What payment services can an API provide that an SPI cannot?
An API can provide the same payment service categories as an SPI, but with no volume ceiling. The practical differences are scale, agent capacity, and the credibility of full FCA authorization vs. lighter SPI registration.
Does an API authorization allow passporting into EU countries?
Post-Brexit, UK FCA API authorization does not automatically passport into EU member states. EU passporting for UK firms ended on 31 December 2020. To provide regulated payment services in EU member states, a separate EU authorization from an EU national competent authority is required.
What is the difference between an API and an EMI?
An API provides payment services. An EMI provides payment services AND issues electronic money. If your product involves e-money wallets, stored-value products, or prepaid accounts, you need an EMI. If you only process and execute payments without holding funds in e-money form, an API is appropriate.
Can an API appoint agents outside the UK?
UK API authorization covers services provided in the UK. Appointing agents who serve UK customers is within scope. For EU-based operations, a separate EU authorization is required regardless of the API's agent appointment powers.
Get Your Authorized Payment Institution API Authorization, Agent Access, or Acquisition Done
An Authorized Payment Institution API authorization is the gold standard for UK payment services operations. Whether you want to apply for your own authorization, operate as an authorized agent under an existing API or EMI while your application runs in parallel, or acquire a licensed entity and get to market faster, Faisal Khan LLC advises on all three routes. We do not hold or issue licenses. We advise, connect, and introduce, so you reach the right solution with the right support.