Payment Institution Licence UK services

 

A Payment Institution Licence in the UK enables the licence holder to offer the following:

​

1. services enabling cash to be placed on a payment account and all of the operations required for operating a payment account;

2. services enabling cash withdrawals from a payment account and all of the operations required for operating a payment account;

3. the execution of payment transactions, including transfers of funds on a payment account with the user’s payment service provider or with another payment service provider, including, execution of direct debits, including one-off direct debits; execution of payment transactions through a payment card or a similar device; execution of credit transfers, including standing orders;

4. the execution of payment transactions where the funds are covered by a credit line for a payment service user, including the execution of direct debits, including one-off direct debits; execution of payment transactions through a payment card or a similar device; (iii)execution of credit transfers, including standing orders;

5. issuing payment instruments or acquiring payment transactions;

6. money remittance;

7. payment initiation services;

8. account information services.

 

​

​

Definition of a payment service provider in the UK

​

In accordance with regulation 2(1) of the Payment Services Regulations any of the following persons when they carry out a payment service:

​

(a) an authorised payment institution;

(b) a small payment institution;

(b.ii) a registered account information service provider;

(c) an EEA authorised payment institution;

(c.ii) an EEA registered account information service provider,

(d) a credit institution;

(e) an electronic money issuer;

(f) the Post Office Limited;

(g) the Bank of England, the European Central Bank and the national central banks of the EEA States other than the United Kingdom, other than when acting in their capacity as a monetary authority or carrying out other functions of a public nature and;

(h) government departments and local authorities, other than when carrying out functions of a public nature.

 

​

​

Payment Institution UK regulator 

​

The Financial Conduct Authority is the UK's regulator for financial services, including, Payment Institutions, also known as Authorised Payment Institutions. The Financial Conduct Authority is the regulator for 59,000 financial services firms and financial markets in the UK.

​

If you wish to provide payment services in the UK, you will require a Payment Institution, also known as the Authorised Payment Institution and the API licence from the Financial Conduct Authority, in the UK.

​

​

​

UK Payment Institution laws & regulations

​

The Payment Service Directive 2 or PSD2 for short, is an EU Directive (Directive 2015/2366) that sets requirements for businesses wishing to provide payment services. It applies to banks, building societies, payment institutions, e-money institutions and their customers. The PSD2 directive came into force on 13 January 2018.

​

PSD2, or the Payment Service Directive 2, is an EU Directive (Directive 2015/2366) that sets requirements, including for UK Payment Institutions, also known as the Authorised Payment Institution and the API Licence. 

​​

The following regulations are also applicable to payment institutions:

 

- Revised Payment Services Directive (PSD2)

- Payment Accounts Directive

- Credit transfers and direct debits in euros (SEPA)

- The Payments in Euro (Credit Transfers and Direct Debits) Regulations 2012

- Data Protection Act 2018

- Guide to the UK General Data Protection Regulation (UK GDPR)

- Proceeds of Crime Act 2002 (POCA)

- Terrorism Act 2000

- Money Laundering, Terrorist Financing and Transfer of Funds 2017

- Regulation on interchange fees for card-based payment transactions (EU) 2015/751

- The Money Laundering and Terrorist Financing Regulations 2019

 

​

​

Reasons for choosing the UK for the Payment Institution (API) Licence

​

- world’s fifth-largest economy

- low corporation tax

- low business costs

- business tax relief of up to 230% on research and development

- access to a highly-skilled workforce

- strong fintech growth and investment

- strong reputation in financial services

 

​

 

Key requirements to obtain the Payment Institution (API) Licence in the UK

​

- meet the initial capital requirement; a minimum capital requirement of €20,000 to establish a Payment Institution

- the requirement to safeguard client funds either with a segregated client bank account or with an insurance policy.

- the management body of the payment institution must be of good repute and possess the relevant qualifications and experience to perform their duties.

- the shareholders must be fit and proper.

​

 

​

​

Documents required for the UK Payment Institution (API) licence

​

As part of a Payment Institution (API) licence application, the following information must be prepared and provided to the regulator:

​

- company identification details 

- programme of operations 

- business plan and financial forecasts 

- a description of your business’s organisation structure 

- evidence of your initial capital 

- measures to safeguard the funds of your users 

- compliance & governance arrangements and internal controls 

- procedure for monitoring, handling, and following up on security incidents and security-related customer complaints 

- processes for filing, monitoring, tracking and restricting access to sensitive payment data 

- business continuity measures 

- the principles and definitions applicable to the collection of statistical data on performance, transaction and fraud 

- security policy 

- internal control mechanisms to comply with obligations in relation to money laundering and terrorist financing (AML/CTF) obligations.

 

​

​