Knowledge Centre

 - Authorised Payment Institution

          Definition of an Authorised Payment Institution

The Financial Conduct Authority defines an authorised payment institution as a person authorised as a payment institution and included by the FCA in the Financial Services Register as an authorised payment institution as per regulation 4(1)(a) of the Payment Services Regulations.


          Definition of an API licence

An API license is short for the authorised payment institution license, issued by European regulators, such as the Financial Conduct Authority in the UK. The license holder can provide payment services including providing payment accounts, money remittance, issuing payment instruments, acquiring payment transactions, and providing payment and account initiation services.


          How to become an Authorised Payment Institution

In order to become an authorised payment institution, you must prepare and apply for authorisation as a payment institution to the financial regulator. You must include information including your business plan, programme of operations, compliance and governance arrangements, business continuity arrangements, security policy and a money laundering policy. You will also be required to meet regulatory conditions, such as possessing adequate and minimum capital, operational presence and appropriate systems.


          Payment Services under an Authorised Payment Institution licence

Under an authorised payment institution, you can provide payment services including payment accounts, money remittance, issuing payment instruments, payment processing, acquiring payment transactions, payment initiation and account initiation services.


          Time frame to obtain the Authorised Payment Institution licence

The financial regulator is required to assess an application and decide within 3 months, where an application is deemed as being complete. Where a regulator asks further questions concerning an application, this three-month period will be extended. Accordingly, it can take 4-5 months for your application to be assessed.


          How to prepare a strong Authorised Payment Institution application

In order to prepare a strong authorised payment institution license application, you should ensure that you have:

  1. Completed the application form in its entirety. An incomplete application will delay your application with the regulator.

  2. Completed and attach individual forms and have provided any personal documents, such as ID and CV.

  3. Provided details of your safeguarding arrangements. You are required to safeguard your client funds. You may do this by segregating clients into a separate client account or having an insurance policy place protecting your client funds for example, in the event of an insolvency.

  4. Provided evidence such as a bank statement to meet the initial capital requirements.

  5. Provided in-depth information for all the application form sections including, the business plan, programme of operations, security policy, compliance and governance, and money laundering policy.


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