This guide walks through the decisions that actually matter for a UK application: whether your business provides a regulated payment service, whether it issues electronic money, which FCA route fits your model, what evidence you'll need, and how to stay compliant once approved.
A note before we start: this article is informational, not legal or regulatory advice. Payment and e-money regulation changes often, and specific applications should be checked against current FCA rules with qualified regulatory counsel.
Key Takeaways
- Confirm FCA authorisation or registration before offering regulated payment services, unless an exclusion or agent model applies.
- Choose an API for broad services or growth past small-institution limits; use an EMI route only if you issue e-money.
- Align product description, perimeter analysis, governance, safeguarding model, and forecasts before you apply.
- Treat UK and EEA authorisation as separate—UK approval gives no automatic right to serve EEA customers.
What Does a UK "Major Payment Institution" Licence Mean?
Short answer: it doesn't mean anything under UK law. MAS uses "Major Payment Institution" as one of its Singapore licence tiers.
The FCA has no equivalent category by that name. UK terminology splits into payment institution, electronic money institution, and account information service provider categories, governed by the Payment Services Regulations 2017 (PSRs) and Electronic Money Regulations 2011 (EMRs).
Which Activities Trigger FCA Oversight?
Schedule 1 of the PSRs lists eight regulated payment-service categories. If your business carries out any of these as a regular occupation, FCA oversight likely applies:
- Services enabling cash to be placed on a payment account
- Services enabling cash withdrawals from a payment account
- Execution of payment transactions, including direct debits, card payments, and credit transfers
- Execution of payment transactions where funds are covered by a credit line
- Issuing payment instruments or acquiring payment transactions
- Money remittance
- Payment initiation services (PIS)
- Account information services (AIS)
Why Your Money Flows Matter
The permission you need depends less on your product name and more on where the money actually goes. Ask these questions before anything else:
- Who receives customer funds: you, a partner bank, or a merchant?
- Who holds the contract with the payer or merchant?
- Where are funds held between transactions?
- Does a regulatory exclusion apply to your specific flow?
A marketplace that never touches customer funds sits in a completely different regulatory position than one that holds a wallet balance overnight.
Payment Institution vs Electronic Money Institution
A Payment Institution moves money. An Electronic Money Institution issues stored monetary value redeemable against a claim on the issuer.
If your product lets customers top up a balance and spend it later, you may be issuing e-money rather than (or in addition to) providing a payment service. Many EMIs also hold payment-service permissions because the two activities overlap in practice.
Operating without the right permission is a criminal offence under UK law, not a minor compliance gap. Before building a product, verify current requirements directly against the PSRs 2017, EMRs 2011, and FCA perimeter guidance in PERG 15.
Which UK Payment Permission Is Right for Your Business?
Choose your route based on services offered, transaction scale, and whether e-money is involved. Do not treat "major" as a standalone category.
| Route | Scope | Initial capital |
|---|---|---|
| Authorised PI (API) | Broad payment services, no small-institution ceiling | EUR20,000–125,000 depending on service tier |
| Small PI (SPI) | Registration only; cannot offer PIS or AIS | No fixed initial capital requirement |
| Authorised EMI | E-money issuance plus related payment services | EUR350,000 |
| Small EMI (SEMI) | Registration for smaller e-money issuers; cannot offer PIS or AIS | No fixed EMI capital floor |
The Small Payment Institution route caps monthly average transactions, including those run through UK agents, at EUR3 million over the preceding 12 months. Exceed that, or need PIS/AIS, and you're looking at full API authorisation instead.
Small EMIs face a separate test: average outstanding e-money capped at EUR5 million, plus the same EUR3 million monthly cap on unrelated payment transactions. Growing past either threshold typically means moving to full authorisation.
Alternatives to Full Authorisation
Not every business needs its own permission on day one:
- Agent model: operate under an authorised firm's permission, trading speed for reduced control and commercial dependence
- AIS registration: a lighter-touch route if account information is your only regulated activity
- Partnering with a licensed provider: faster to market, but you inherit their risk appetite and customer disclosures
Each option shifts the balance between control, speed, and oversight. Pick the option that fits your product roadmap and risk tolerance.
How to Prepare and Apply for FCA Authorisation
Treat this as a staged preparation project, not a form you fill in over a weekend.
Map your regulatory perimeter. Match every product feature and money flow to a regulated service, exclusion, or permission. Wallets, marketplaces, payment gateways, remittance products, open banking integrations, and embedded finance offerings each raise different perimeter questions . Work through them individually, not as a category.
Build your business-plan evidence. The FCA expects a programme of operations, target customer and market description, transaction-flow mapping, revenue model, three-year financial projections, and a delivery roadmap showing how the firm stays financially sound.
Assemble governance and fitness-and-propriety materials. This covers ownership structure, director and senior manager responsibilities, staffing plans, outsourcing arrangements, conflicts of interest, risk management, internal controls, and escalation procedures.
Design and evidence your safeguarding arrangements. Decide between the segregation method and the insurance/guarantee method, document reconciliation controls, define who has access to customer funds, and plan how funds are treated during wind-down.
Run a pre-submission consistency check. Your product description, financial forecasts, safeguarding model, compliance policies, and outsourcing arrangements need to tell the same story. Submit through FCA Connect using current forms and guidance . Inconsistencies between documents are a common cause of delay.
Preparing three-year financial forecasts and transaction-flow records is often where applications stall, particularly for firms without an in-house finance function.
Accounting and compliance-support professionals add practical value at this stage:
- Organising forecasts and three-year financial projections
- Reconciling historical transaction-flow records
- Keeping administrative documentation consistent across the application
VJM Global's accounting teams, for example, support firms with record-to-report processes like accounts receivable tracking that feed directly into the financial evidence an application requires. Regulatory legal advice and the FCA's actual authorisation decision remain outside that role entirely.
Costs, Timelines and UK Market Access
The FCA application fee is only one line item in a much larger budget.
| Permission | FCA application fee |
|---|---|
| API (Category 4) | £2,820 |
| API (Category 5) | £5,640 |
| Authorised EMI (Category 5) | £5,640 |
These figures come from the FCA's authorisation fees page, last updated 13 July 2026. Always confirm the current figure before budgeting, since fees change.
Beyond the application fee, expect costs across:
- Legal advice, policy drafting, and governance documentation
- Compliance personnel, training, and reporting infrastructure
- Safeguarding and banking arrangements
- Technology and security controls
- Audit and insurance
- Capital held to meet own-funds requirements
On timing, the FCA must decide a complete application within three months of receipt; an incomplete application gets up to 12 months. In practice, preparation quality, follow-up questions, and operational readiness often stretch the overall launch timeline well beyond the statutory clock.
Passporting between the UK and EEA ended on 31 December 2020. UK authorisation alone doesn't create rights to serve EEA customers. Firms with EEA ambitions typically need a separate EEA-authorised entity or a local market analysis; there's no single structure that fits every provider.
Ongoing Obligations After Authorisation
Authorisation marks the start of supervision, not the finish line.
Safeguarding, Reporting and Audit
- Internal and external safeguarding reconciliations under CASS 15, effective from 7 May 2026
- Monthly safeguarding returns due within 15 business days of month-end
- Regular audit of safeguarding arrangements
- Documented treatment of customer funds during wind-down scenarios
Operational Compliance
Day-to-day obligations extend well past safeguarding:
- Complaints handling within FCA DISP timelines
- Strong customer authentication where applicable
- Financial crime controls and ongoing monitoring
- Data protection and incident management procedures
- Outsourcing oversight
- Consumer Duty obligations for retail-facing products
When You Need to Notify the FCA
A variation of permission must be granted before you act on these changes, not after:
- Adding new payment services
- Expanding into new customer segments
- Material new outsourcing arrangements
- Changes in ownership
- Altered safeguarding arrangements
- Entering new jurisdictions
- Growing beyond small-institution thresholds
Build a recurring compliance calendar covering reporting deadlines, policy reviews, reconciliations, board oversight, audits, and staff training.
VJM Global's India-based bookkeeping teams work with UK accounting standards, including IFRS principles and HMRC-aligned reporting conventions. That keeps financial records audit-ready between FCA reviews.
The support sits alongside your licence. It does not replace the FCA's role as regulator or your own compliance function.
Frequently Asked Questions
How much does it cost to get an e-money institution (EMI) licence in the UK?
The FCA application fee is separate from capital, legal, compliance, safeguarding, technology, audit, and staffing costs. Confirm current FCA fee figures directly before budgeting, since they're updated periodically.
Is the Payment Systems Regulator (PSR) part of the FCA?
No. The PSR is a separate economic regulator overseeing designated payment systems, while the FCA authorises and supervises most payment and e-money firms under the PSRs and EMRs.
Is a Major Payment Institution licence available in the UK?
No. That's a Singapore MAS category. UK providers need to assess the API, EMI, Small Payment Institution, account-information service provider, or agent routes with the FCA instead.
How long does it take to get a UK payment institution licence?
The FCA has three months to decide a complete application, or up to 12 months for an incomplete one. Preparation quality and follow-up questions usually extend the real-world timeline.
What is the difference between an Authorised Payment Institution and a Small Payment Institution?
An API supports broader services with no transaction ceiling, while an SPI is capped at €3 million in monthly average transactions and can't offer PIS or AIS. Check current FCA rules for exact thresholds.
Do UK payment institutions need a separate licence to operate in the European Economic Area?
Generally, yes. UK authorisation no longer carries EEA passporting rights post-Brexit, so serving EEA customers usually requires a separate EEA-authorised structure.
