Introduction
If you're searching for a "Small Payment Institution licence," you're using the everyday shorthand. The formal UK status is FCA registration as a Small Payment Institution (SPI) under the Payment Services Regulations 2017.
Founders, fintechs, remittance providers, payment processors and money service businesses often face the same bind: full PI or EMI authorisation can be heavy for an early model, yet operating without the right FCA status is not viable. This guide helps you test whether the SPI route fits.
We'll cover eligibility, permitted services, the FCA application pack, costs and timing, ongoing obligations, restrictions, and alternatives such as API or EMI authorisation.
A note before you start: FCA fees, thresholds and procedures change. Treat the figures here as a starting point and verify current requirements directly against FCA and UK legislation sources before you submit anything.
Key Takeaways
- SPI registration is for smaller UK payment businesses, not banking, e-money, or unrestricted financial services
- The statutory threshold caps average monthly payment transactions, not revenue or customer funds held
- Payment initiation, account information, and e-money services are not automatic with SPI registration
- Registration marks the start of compliance obligations, not the finish line
- Businesses expecting rapid growth should weigh API, EMI, or RAISP routes before applying
What Is a Small Payment Institution in the UK?
An SPI is a UK payment business that has registered (not authorised) with the FCA to provide specific payment services, subject to staying under a transaction-volume ceiling. That distinction between registration and authorisation matters. The FCA's own applicant guidance treats API status as authorisation and SPI status as registration: two separate statutory routes with different regulatory scope and prudential expectations.
The governing rules are set out in the Payment Services Regulations 2017 (PSRs), particularly regulations 13–15 and Schedule 1. HM Treasury's explanatory memorandum confirms these regulations originally transposed PSD2 into UK law. Post-Brexit, the PSRs remain domestic UK legislation, amended by the 2018 EU Exit instrument and later 2019/2020 changes. An SPI therefore operates under UK law as it currently stands, not an EU-wide framework.
Who Typically Applies
Businesses that commonly consider the SPI route include:
- Remittance providers sending money across borders
- Payment processors executing transactions on behalf of merchants
- Merchant settlement firms
- Certain money transfer businesses with modest transaction volumes
Eligibility Conditions
To register as an SPI, a business generally needs:
- Average monthly payment transactions below the statutory ceiling (see below)
- A UK office or genuine operational presence
- Fit and proper management
- Clear ownership and beneficial-owner information
- Capacity for effective supervision
- Adequate financial-crime controls
The ceiling is transaction value processed, not revenue or capital. Under regulation 14 of the Payment Services Regulations 2017, eligibility requires average payment transactions of no more than €3 million a month, measured over the 12 months before application and including transactions carried out by UK agents.
Firms with no trading history can use a 12-month projection instead. The figure tracks the value of transactions processed, not revenue, profit, or customer balances held.
SPI vs API vs Small EMI vs Authorised EMI vs RAISP
| Status | Route | E-money issuance? | PIS / AIS? | Volume limit | Safeguarding |
|---|---|---|---|---|---|
| SPI | Registration | No | No / No | Payments ≤ €3m avg/month | Voluntary |
| API | Authorisation | No | Yes / Yes | None | Mandatory |
| Small EMI | Registration | Yes | No / No | E-money float ≤ €5m; unrelated payments ≤ €3m avg/month | Mandatory above thresholds |
| Authorised EMI | Authorisation | Yes | Yes / Yes | None | Mandatory |
| RAISP | Registration | No | No / AIS only | Not applicable | Not applicable |
An SPI's €3 million ceiling measures payment transactions. A small EMI's €5 million ceiling measures outstanding e-money. They test different things, so one limit does not map onto the other.
Which Payment Services Can an SPI Provide?
The FCA looks at the actual regulated activity your business performs, not the commercial name you've given it. Calling something a "wallet," "gateway," or "money transfer platform" tells the regulator nothing about which permission applies.
Under PSR 2017, Schedule 1, an SPI can register to provide services such as:
- Placing cash into, or withdrawing cash from, a payment account
- Executing payment transactions, including direct debits, card payments, and credit transfers
- Issuing payment instruments or acquiring payment transactions
- Money remittance
What's Excluded
Two activities sit outside SPI scope entirely:
- Payment initiation services (PIS) and account information services (AIS) — both are expressly excluded from SPI registration under regulation 14(4).
- E-money issuance — a PI registration, including SPI status, does not include permission to issue e-money. That needs a separate small or authorised EMI assessment.
PIS needs an authorised route; an AIS-only business can instead register as a RAISP.
Two Contrasting Examples
- A remittance business that collects customer funds and pays out recipients abroad is likely performing money remittance — a core SPI-eligible activity.
- A technical payment gateway that routes transaction data without ever holding customer funds may sit in a different position entirely, depending on exactly what it does.
Neither example is a definitive perimeter opinion for your business. The exact facts decide the classification.
A caution on newer models: crypto, stablecoin, credit products, acquiring, and complex marketplace structures all need separate perimeter analysis. Don't assume any of these automatically fit inside an SPI registration.
Before choosing a licence category, map out:
- Your customer journey and the flow of funds
- Every entity, agent, and outsourcing provider involved
- The permissions you will actually need
How to Apply for an SPI Registration Through the FCA
Applications run through the FCA Connect portal, and the journey typically looks like this:
- Review the regulatory perimeter — confirm SPI is genuinely the right status for your model
- Select the business-model category on FCA Connect
- Prepare UK entity and governance structures
- Compile supporting documents
- Submit the application
- Respond to FCA queries as they arise
- Receive a decision and begin post-registration implementation
Core Documents to Prepare
Your application pack should cover:
- Corporate information — registered office, head-office details, group structure, ownership chart, beneficial owners
- Programme of operations — services offered, customer types, geography, payment flows, settlement, and any agents or outsourcers
- Financial forecasts — transaction-volume projections, revenue model, funding evidence, and proof the business can sustain its operations
- Management information — director and senior-manager CVs, responsibilities, governance, conflicts procedures, and outsourcing oversight
- Financial-crime controls — AML/CTF, sanctions screening, CDD, transaction monitoring, complaints handling, continuity, and incident management
What makes an application credible? Consistency. Your business plan, payment-flow diagrams, financial forecasts, compliance policies, and even your website copy all need to tell the same story about what you actually do.
Common Weaknesses That Slow Things Down
- Misclassifying the business as SPI when API is more accurate (or vice versa)
- Unrealistic transaction-volume projections
- Unclear or incomplete ownership information
- Generic, copy-paste compliance policies that don't reflect the actual business
- Thin UK substance (weak local presence or governance)
- Unexplained banking arrangements
- Incomplete controls over agents or outsourcing partners
The FCA will often come back with clarification requests or ask for further documents — that's normal, not a red flag. No adviser, however experienced, can guarantee approval.
This is where preparation support earns its keep. VJM Global works with UK businesses on the financial documentation, accounting coordination, and compliance-readiness work that feeds into an SPI application — organising forecasts, structuring records, and tidying up the paper trail. That's distinct from FCA decision-making or legal advice, which sits with the regulator and your legal counsel.
SPI Costs, Fees and Application Timeline
The FCA application fee is only a fraction of what it costs to become fully operational.
The FCA places SPI registration in fee category 3, currently £1,130. Always check the FCA's authorisation and registration fees page for the current figure before budgeting, since fee schedules are updated periodically.
Wider Costs to Plan For
Beyond the application fee, expect costs across:
- Company formation and UK office arrangements
- Directors and compliance personnel
- Legal or regulatory advisory support
- AML and transaction-monitoring tools
- Technology infrastructure
- Banking and settlement arrangements
- Insurance
- Ongoing accounting and reporting
No minimum capital does not mean no money is needed. SPI status carries lighter prudential requirements than API authorisation, but you still need credible funding, operational resources, and the capacity to run the business you have described.
Timeline
Preparation time is yours to control; FCA review time isn't. Under regulation 15 (which applies regulation 9 to SPI registration), the FCA must decide within 3 months of receiving a complete application, or within 12 months if the application was incomplete on submission. These are statutory deadlines, not a guarantee of how long the FCA will take or of a particular outcome.
Readiness Checklist
Before submitting, confirm you have:
- A clearly defined service scope
- Realistic financial forecasts
- Named, responsible managers
- A tailored (not generic) compliance framework
- A workable banking plan
- Technology and security controls
- A wind-down approach
What Happens After Registration?
Registration starts a continuing set of compliance obligations that apply for as long as the SPI operates.
Staying Within Scope and Compliance Duties
You need to continuously monitor your transaction volumes against the €3 million threshold and keep operating only within the services your registration actually covers.
Ongoing compliance duties include:
- AML/CTF and sanctions screening
- Fraud prevention and customer due diligence
- Complaints handling and recordkeeping
- Operational resilience
- Regulatory reporting and notification duties
Safeguarding and Outsourcing Responsibility
Safeguarding is not automatically mandatory for an SPI. Under regulation 23, an SPI can elect to safeguard relevant funds voluntarily. Once it does, the full safeguarding rules apply as though it were an authorised PI, under FCA Handbook CASS 15.1.
Confirm the current rules directly with the FCA before deciding your approach, since this is an area firms frequently get wrong.
Delegating operational work to agents or outsourcing providers doesn't transfer responsibility, either. The SPI remains accountable for oversight, controls, customer outcomes, and regulatory compliance, regardless of who performs the work.
The Cost of Non-Compliance and When to Scale
In January 2025, the FCA cancelled the SPI registration of Easy Exchange Limited, citing the absence of required HMRC money-laundering supervision and failure to submit statutory returns across three years despite repeated requests.
This was a registration and ongoing-compliance failure, not a safeguarding breach, but it illustrates a simple point: inactivity or poor reporting discipline can cost you the registration itself.
Growth, cross-border expansion, PIS/AIS ambitions, e-money plans, higher volumes, or a more complex product set are all signals that an API, EMI, or another regulatory route may suit the business better than staying an SPI.
How to Choose Between an SPI, API or EMI Route
Work through five questions before committing to a licence category:
- What services will you actually offer?
- Will you issue e-money, or purely execute payment transactions?
- What are your realistic transaction volumes (not best-case projections)?
- Is cross-border expansion planned, and into which markets?
- Does your model need PIS, AIS, agents, or complex account functionality?
Your answers should point clearly to one of three paths: SPI, API, or EMI.
Why Start With SPI
SPI registration offers a narrower scope and a simpler application. The trade-off: if you grow past the €3 million threshold or need broader permissions, you'll face a conversion process later. Factor that into your planning now rather than treating it as a future problem.
When API Makes More Sense
Consider authorisation from the outset if you:
- Expect threshold pressure soon
- Need PIS or AIS permissions
- Run a complex operational structure
- Work with banks or partners that require full API status
When You Need an EMI Assessment
If your business will create, distribute, or redeem electronic money — rather than simply executing payment transactions — you need a small or authorised EMI assessment, not an SPI registration.
Passporting and Cross-Border Limits
UK-EEA passporting ended at 11pm on 31 December 2020, as confirmed in the FCA's guidance for firms after the transition period. A UK SPI registration grants no EEA passporting rights. Any cross-border service model needs separate jurisdictional analysis in each market you plan to serve.
Action Plan
- Map your business model end to end
- Confirm the regulatory perimeter for each service
- Select the appropriate status
- Prepare the supporting evidence
- Validate your compliance framework
- Get specialist advice before you submit
Frequently Asked Questions
How do I get an FCA licence?
Identify the correct FCA permission first, then prepare your business, ownership, management, financial, and compliance information before submitting through FCA Connect. SPI status is registered rather than authorised, so the process and evidentiary bar differ from API applications.
Does PSD2 apply to the UK?
PSD2 was the EU directive that originally shaped the UK's Payment Services Regulations 2017. Post-Brexit, the UK runs its own domestic framework (the PSRs as amended) rather than being bound by the EU directive. Always check current FCA guidance for the latest position.
What's the difference between an SPI and an API in the UK?
An SPI is registered and capped at roughly €3 million in average monthly transactions; an API is authorised, faces no such ceiling, and can offer PIS/AIS where permitted. API status also carries mandatory capital and safeguarding requirements that SPI status doesn't.
How long does it take to register as an SPI?
The FCA must decide within 3 months for a complete application, or 12 months if incomplete. Actual timing depends heavily on preparation quality and how quickly you respond to information requests.
Can a Small Payment Institution issue electronic money?
No. SPI registration doesn't include e-money issuance permission. Businesses planning to issue e-money need a separate small or authorised EMI assessment.
What ongoing obligations apply after SPI registration?
You must stay within your registered scope, monitor transaction volumes, maintain AML/CTF and operational controls, meet reporting duties, oversee any agents or outsourcing, and manage safeguarding arrangements appropriately.
