Payment Institution UK

What is a Payment Institution (PI) in the UK?

Simply put, a Payment Institution (PI) is an organisation that has obtained a relevant license and is thus allowed to provide different types of payment services in that particular country or region, in this case the UK. Depending on the type of license they have obtained, a firm may be allowed to provide some or all of the services mentioned below:

• Execution of Payment Transactions
• Issuance and/or acquisition of Payment Instruments
• Remittance of monetary funds
• Granting credit for up to 12 months
• Ancillary services 
• Payment Initiation
• Account Information
• Placement and Withdrawal of cash from payment accounts

Types of Payment Institutions

There are various types of payment institutions in the UK as listed below and your firm can apply to be one of them by applying for the relevant license. The license application has to be made to the Financial Conduct Authority (FCA) of the UK. We can assist you with the licensing process and answer any questions you may have. 

Authorised Payment Institutions (API)

Authorised Payment Institutions (API) are those institutions that have been designated by license to provide payment services, including those mentioned above, in the UK. Any institution that is eager to join the UK’s financial market on a large scale must obtain the UK API License. In order to do so, the institution must meet the key requirements laid down by the FCA, including measures that meet the client fund safety requirements and the minimum initial capital requirement of £20,000. 

Small Payment Institutions (SPI)

A Small Payment Institution (SPI) is an institution that has just entered the UK’s financial market to offer payment services. It is a compulsory license that every firm must have in order to be able to conduct a money transfer business in the UK. For an institution to obtain the UK SPI License, it must provide evidence that average monthly payment transactions in the preceding 12 months have not exceeded €3 m. Compared to other licenses, the UK SPI License is easier, cheaper, and faster to obtain, being the ideal choice for financial institutions that are just starting out.

Since these institutions have a lot in common with each other, one may be confused about the technical differences between them. Thus, for your convenience, we have outlined the key differences below:

The major difference between Payment Institutions (PI) and Electronic Money Institutions (EMI) is that PI can only offer Payment Services outlined by the PSD2 while EMI can offer the Payment Services outlined by the PSD2 while issuing and redeeming electronic money (e-money).

Difference between Payment Institutions and Electronic Money Institutions

Services offered/ Requirements	Payment Institutions	Electronic Money Institutions
Placing cash in and operating a payment account	✔	✔
Withdrawing cash from payment accounts	✔	✔
Execute payment transactions funded by a payment account	✔	✔
Execute payment transactions funded by a credit line	✔	✔
Provide account information	✔	✔
Acquire payment transactions	✔	✔
Issue payment instruments	✔	✔
Money Remittance	✔	✔
E-Wallets		✔
Prepaid cards		✔
Minimum initial capital requirements	£20,000	€350,000
Average monthly turnover in payment transactions	Less than €3m for an SPI; if the average monthly turnover in payment transactions is greater than €3m then the firm must apply for an API License	Less than €3m for a SEMI; if the average monthly turnover in payment transactions is greater than €3m then the firm must apply for an EMI License

Whether you want to apply for an SPI license in the UK or an API license – we can help with both!

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This page was last updated on June 1, 2023.

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