Authorized Payment Institution (API)

An authorized payment institution (API) is a type of financial institution that is authorized to provide payment services in the European Union (EU) and in the United Kingdom. Payment services are activities that allow individuals and businesses to send and receive payments, such as money transfers, direct debits, and credit and debit card payments. APIs are regulated by the EU’s Payment Services Directive (PSD2), which sets out the rules that APIs must follow in order to operate in the EU. In the United Kingdom, they are regulated by the Financial Conduct Authority (FCA).

In the EU, to be authorized as an API, a company must apply to the financial regulator in the EU country where it is based and meet certain requirements, including having sufficient capital and financial resources and demonstrating that it is capable of providing payment services in a safe and secure manner. Once authorized, an API can carry out a range of payment-related business activities within the EU, including:

  • Providing payment services to individuals and businesses, such as facilitating online payments, money transfers, and direct debits
  • Issuing and acquiring payment instruments, such as credit and debit cards
  • Providing services related to the operation of payment systems, such as participating in the clearing and settlement of payment transactions
  • Providing foreign exchange services

APIs are subject to ongoing supervision and regulation by the financial regulator in the EU country where they are based. They must also comply with relevant EU laws and regulations, including those related to consumer protection, anti-money laundering, and data protection.

For the UK, pretty much the same is applicable with the exception that the application has to be through FCA (Financial Conduct Authority) and also registration with HMRC (His Majesty’s Revenue & Customs).

API License UK

API License EU (European Union)

This page was last updated on June 1, 2023.

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