Payment Institution Licence - United Kingdom
FCA authorisation under the Payment Services Regulations 2017, the two permission tiers, safeguarding, and what changes after authorisation.
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The short answer
Payment services in the United Kingdom are regulated by the Financial Conduct Authority under the Payment Services Regulations 2017. There are two permission tiers. A small payment institution is registered where average monthly payment transactions over the preceding 12 months do not exceed EUR 3 million and the firm does not provide account information or payment initiation services. An authorised payment institution has no volume ceiling and can provide the full range of payment services.
There is no European passporting from a UK authorisation. A UK permission covers the United Kingdom only, and firms serving EEA customers need a separate authorisation from an EEA national competent authority.
Safeguarding is the single largest source of supervisory failure in this sector. From 7 May 2026 the FCA safeguarding rules for payment and e-money firms sit in CASS 15, replacing the interim regime, and bring a materially higher standard of records, reconciliations, resolution packs and audit.
Key facts
Which UK permission applies to your model?
The first decision is between small payment institution registration and full authorisation. Registration is faster and carries no initial capital requirement, but it caps volume at an average of EUR 3 million a month, excludes account information and payment initiation services, and confers no cross-border rights.
Firms that expect to exceed the threshold within their first two years, that need account information or payment initiation permissions, or that need institutional counterparties comfortable with a full authorisation, should apply for authorised payment institution status from the outset. Converting later is a fresh application, not an upgrade.
- •Small payment institution: no initial capital, volume capped, no AIS or PIS, no passporting
- •Authorised payment institution: initial capital of EUR 20,000, EUR 50,000 or EUR 125,000 by service, own funds calculated under Method A, B or C, full service range
- •Electronic money issuance is a separate permission and requires an e-money institution authorisation, not a payment institution authorisation
Money transmission in the UK: there is no single "MSB licence"
Firms searching for a UK money services business licence are usually looking at two separate regimes that are commonly conflated. Money remittance is a payment service under the PSRs 2017 and requires FCA registration or authorisation. Money service business supervision for anti-money laundering purposes sits with HMRC for currency exchange offices, cheque cashers and money transmitters that are not otherwise FCA supervised.
A firm authorised or registered by the FCA for money remittance is supervised by the FCA for money laundering purposes and does not separately register with HMRC for the same activity. A bureau de change with no payment services permission registers with HMRC instead. Getting this wrong produces either an unnecessary application or an unregistered business.
Cryptoasset firms
A firm carrying on cryptoasset exchange or custodian wallet activity by way of business in the United Kingdom must be registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. This is an anti-money laundering registration, not a prudential licence, and the FCA has historically refused or withdrawn a high proportion of applications on the quality of the financial crime framework.
HM Treasury has legislated to bring a wider set of cryptoasset activities into the regulated perimeter under the Financial Services and Markets Act 2000. Firms planning UK activity should test their model against both the current registration requirement and the shape of the incoming authorisation regime before committing to a structure.
What changes after authorisation
- •Safeguarding records, internal reconciliations, external reconciliations and, from 7 May 2026, the CASS 15 resolution pack and annual safeguarding audit
- •Regulatory reporting through RegData, including payment services returns and, for safeguarding firms, the monthly regulatory return
- •Notifications of material changes, changes in control under Part 12 FSMA where applicable, and appointment or removal of directors and senior managers
- •Agent and distributor registration, with the principal remaining responsible for the conduct of its agents
- •Annual financial crime framework review, wind-down planning and adequate resources assessment
Definitive guides for this market
UK Small Payment Institution registration
The EUR 3 million threshold route: eligibility, FCA fee, documents and timeline.
UK Authorised Payment Institution licence
Full authorisation: capital tiers, own funds methods, safeguarding and governance.
UK Electronic Money Institution licence
Where the business issues e-money rather than only executing payments.
UK Cryptoasset AML registration
MLRs registration for exchange and custodian wallet providers.
Ongoing compliance support
Safeguarding, reporting, monitoring and regulator engagement after authorisation.
Primary sources
- Payment Services Regulations 2017 (SI 2017/752)
- FCA: payment services and electronic money approach document
- FCA PS25/12: safeguarding rules for payment and e-money firms (CASS 15)
- Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017
Last reviewed by the Regulatory Counsel team on 28 August 2026.
Frequently Asked Questions
No. Since the end of the transition period a UK authorisation covers the United Kingdom only. Firms that need EEA coverage obtain a separate payment institution or e-money institution authorisation from an EEA national competent authority and run the two permissions in parallel.
Regulation 9 of the Payment Services Regulations 2017 requires the FCA to determine a complete application within three months, and sets a longstop of 12 months for an application that is incomplete when submitted. In practice the determination clock is affected by information requests, so the real project timeline is driven by the quality of the submission.
A small payment institution is not subject to the mandatory safeguarding requirement in the same way as an authorised payment institution, but where it holds relevant funds the FCA expects arrangements consistent with the regime and many banking partners require them contractually. From 7 May 2026 the CASS 15 rules define the standard the FCA supervises against.
Money remittance is a payment service supervised by the FCA under the PSRs 2017. HMRC supervises money service businesses for anti-money laundering purposes where they are not FCA supervised, which typically means currency exchange offices and cheque cashers. A firm is not usually supervised by both for the same activity.
The FCA expects the head office and the mind and management of the business to be in the United Kingdom. That normally means UK-resident directors and senior managers with genuine decision-making authority, not a registered address and offshore control.