Small Payment Institution (SPI)
A Small Payment Institution (SPI) is a payment services firm operating under a lighter regulatory regime than a fully Authorised Payment Institution (API). The trade is simple: fewer requirements, lower cost, faster entry, in exchange for a hard cap on transaction volumes and a shorter list of permitted activities.
Where the Concept Comes From
The SPI regime originates in EU law. Article 32 of the second Payment Services Directive (PSD2) lets each member state exempt small firms from full authorisation, provided their average monthly payment transactions, including agent volumes, stay at or below 3 million euros over the preceding 12 months. Member states can set a lower cap but never a higher one, and adoption is optional. Poland runs its version at 1.5 million euros. Germany never adopted it at all, so no SPI route exists there.
The United Kingdom implemented the same concept through the Payment Services Regulations 2017 and kept it after Brexit. A UK SPI is registered with the FCA, with the same 3 million euro monthly average cap. Same parent, different roofs, and the two regimes are slowly drifting apart as UK and EU rules evolve separately.
What an SPI Can and Cannot Do
An SPI can provide the core payment services: money remittance (the most common model), executing payment transactions, operating payment accounts, and merchant acquiring. It cannot provide open banking services (Account Information or Payment Initiation Services), cannot issue e-money, and cannot exceed the volume cap. Breach the cap and the firm must upgrade to full authorisation or stop. Anti-money laundering obligations apply in full, and regulators expect the registration to be actively used. The FCA has cancelled dormant SPIs for inactivity.
SPI vs API at a Glance
SPI | API | |
|---|---|---|
Status | Registered | Authorised |
Volume limit | 3 million euros monthly average (lower in some EU states) | None |
Initial capital | None (UK); minimal in most EU states | 20,000 to 125,000 euros |
Safeguarding | Optional in most implementations | Mandatory |
Open banking (AIS/PIS) | Not permitted | Permitted |
Geographic scope | Home country only | UK-wide, or EU-wide via passporting |
The Passporting Problem
Passporting lets a firm authorised in one EU member state serve all the others from its home license. SPIs do not get it. An EU SPI serves its home market only; reaching a second member state requires full authorisation plus a passport notification, or a separate license there. Treat the EU SPI as a domestic proving ground, not a gateway to Europe.
The UK version has no passporting question at all. Since Brexit, no UK payment firm can passport into the EU. A UK SPI covers the UK, full stop.
Go Deeper
What We Do
Faisal Khan LLC does not offer SPI sponsorships, consulting, or license applications in the UK or EU. We only handle sales of existing, ready-made SPI companies, listed on our marketplace, DealHarbor.