Procedure to obtain an Authorised Payment Institution license



In this article, we discuss how to obtain the authorised payment institution license. Across all EEA (European Economic Area) countries, the regulations are the same with regards to becoming an API, or formally, an authorised payment institution.

If you wish to offer payment services, such as online or in-store payment processing, money transfer, offer payment accounts or offer account or payment initiation services, then you must apply

and become an authorised or a small payment institution (API or SPI).

In the UK, you can apply and become an authorised payment institution (API) or a small payment institution (SPI) with the Financial Conduct Authority. Below, we will discuss the differences between the two options.

1. Choose the license

Option 1 - Become an Authorised Payment Institution (API)

Under this option, when your business becomes authorised, it means that you can offer payment services and provide them across all EEA (European Economic Area) countries, even though your license is obtained in a single EEA state e.g. the UK. For example, if you were to obtain an authorised payment institution (API) license in the UK, you can then provide your e-money and payment services to people in countries such as Spain, France, Italy and Ireland.

Initial Capital Requirement: the initial capital required under this option varies from EUR 20,000 to 125,000 depending on the payment activity you wish to offer. For money remittance businesses the amount will be EUR20,000 whereas for businesses wishing to offer merchant acquiring services the amount will be EUR125,000. You need to show this money in a bank account with the submission of your license application. You are not required to 'freeze' this money with a bank or the regulator. In fact, you can use this money as you wish - the key is to show to the regulator that you have a balance equalling to this amount.

Other Requirements:

- Obtain a physical office in the UK or in the European country of application

Companies wishing to operate in the UK must demonstrate to the regulator that their mind and management is in the UK. Accordingly, you must establish a physical office in the UK. Please note that a virtual or 'e-office' will not be sufficient. The physical does not need to be a specific or minimum size. You are not required to buy or necessarily lease an office. You may rent a serviced office instead and this option is more flexible than a lease. We are able to advise you on all the options available and best suited to your business.

- Hire people in the UK or in the European country of application

The Financial Conduct Authority has not specified a minimum number of in terms of the number of people you should as a minimum for your UK e-money business. For an authorised payment institution, you should demonstrate that you have a sufficient number of suitable people to manage your key business functions, such as compliance, AML, operations, customer services and security. The Financial Conduct Authority would expect to see at least a small team in place to adequately manage the e-money business. We are able to able to manage your hiring in the UK and advise on hiring the best-suited employees based on your business model and requirements.

You may outsource functions of your business either to a third-party service provider or to your overseas office or head office for example in Hong Kong, where this is applicable.

- Buy or build IT systems

You will be expected to show that you have adequate systems and controls in place to manage your e-money business. As part of this, you will require systems and IT in place to manage key areas, such as a core system for customers to manage their account, money laundering compliance software, transaction monitoring, 2-factor authentication, a website and financial reporting. You can either build these systems internally yourself or purchase ready-made systems. There are now a number of vendors in this space who offer flexible pricing, for example, a monthly payable software solution instead of a large upfront amount. We work with most leading vendors and can help choose the right systems.

- Form a company

Other things you need to take care of include forming a company in the UK. This is a fairly straight forward process and companies can be formed in a matter of hours.

Option 2 - Become a Small Payment Institution (SPI)

Under this option, your business is able to apply and register as a small payment institution. This license registration enables your business to offer payment services in the UK only and not across the EEA.

Initial Capital Requirement: Under the small payment institution (SPI) you are not required or subjected to an initial capital requirement. The small payment institution (SPI) can represent a good option for some businesses who wish to start off with a single country and then expand internationally, or where the initial capital requirement of the authorised payment institution is an issue.

- Rent a physical office in the UK

As above, you will be required to have in place a physical office in the UK. You may rent a serviced office instead and this option is more flexible than a lease. We are able to advise you on all the options available and best suited to your business.

- Hire people in the UK

The requirement is the same as above with the authorised payment institution application. However, a smaller team or number of people will be required as a minimum in comparison to the authorised payment institution application.

You may outsource functions of your business either to a third-party service provider or to your overseas office or head office as above.

- Buy or build IT systems

As with an authorised payment institution application, you will be expected to show that you have adequate systems and control in place to manage your e-money business. You can either build these systems internally yourself or purchase ready-made systems. We work with most leading vendors and can help choose the right systems.

- Form a company

Other things you need to take care of include forming a company in the UK. This is a fairly straight forward process and companies can be formed in a matter of hours.

2. Preparing your application

In order to apply in becoming a small or authorised payment institution, you are required to prepare and submit an application to the regulator. The application consists of a core application form within which you must prepare your policies and procedures for areas including programme of operations, business plan, organisation structure, compliance and governance arrangement, business continuity arrangements, security, incident and complaint reporting, Anti-money laundering and countering terrorist financing policy, access to sensitive payment information and more. You are also required to complete additional forms for shareholders, directors and people with significant influence. As part of the application, you will be required to submit financial forecasts for your business.

After you have submitted your application you will be assigned a case officer at the Financial Conduct Authority. They will introduce themselves and will assess your application. As part of this assessment process, they are likely to ask you questions with regards to your business, its policies, procedures, organisation and structure.

You will need to show to the regulator that the policies and procedures have been carefully thought-though and are specific to your business. Generic or template-based documents will not be sufficient.

As part of our application preparation service, we spend time with you to understand your business and the payment services you wish to offer. We spend time to ensure that you meet the above conditions such as suitable IT and team and prepare all policy and procedural documents from the beginning, reflecting your actual business, its procedures and processes.

We will manage the entire process on an end-to-end basis to ensure that you have adequate support and expertise throughout the process.

For more information, visit our website on www.buckinghamcapitalconsulting.com



#API #authoriedpaymentinstitution #authorisedpi #paymentlicense #paymentprocessinglicense #FCAlicense #moneyremittanc #moneytransfer

 Contact Us
Email: info@buckinghamcapitalconsulting.co.uk
 
Telephone: 0207 866 2512 
International: 442078662512
Skype: BCC54321 
  • Facebook
  • Twitter
  • YouTube
  • Pinterest
  • Instagram

Buckingham Capital Consulting Ltd  |   One Kingdom Street, London, W2 6BD  |  Telephone: 0800 689 0501  |   Email: Info@buckinghamcapitalconsulting.co.uk

Registered in England and Wales registration number: 08744241

 

Copyright 2013 - 2020 Buckingham Capital Consulting Ltd