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Payment businesses starting in the UK with modest volumes register as a small payment institution to trade under FCA supervision without initial capital, then move to authorisation as they grow.
Selected engagements from more than 250 licences obtained since 2013, for payment, e-money and cryptoasset firms.
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Payment InstitutionObtained Nexpay’s FCA Authorised Payment Institution licence.
Obtained Orbital’s FCA Authorised Payment Institution licence.
Payment InstitutionObtained Oval’s FCA Authorised Payment Institution licence with open banking permissions.
The short answer
Small payment institution registration lets a UK business provide payment services, other than open banking services, while its payment transactions average no more than €3 million a month. There is no initial capital; the FCA fee is £1,130 and the annual fee £652. The FCA must decide within three months of a complete application; plan for three to four months.
Four to six months from instruction to registration for a prepared applicant.
Requirements, capital, timing, fees and common questions, drawn from the regulator’s own publications.
A business that provides payment services as a regular occupation in the UK needs FCA authorisation or registration. Registration as a small payment institution is the route for a business whose payment volumes stay within the €3 million monthly average and which does not need the open banking services or access to other markets. It suits remittance businesses, merchant payment services and payment account providers at the start of their growth, and businesses testing a payment product in the UK before committing the capital that authorisation requires.
A business that will issue stored value needs e-money authorisation or registration instead. A business that expects to pass the limit within its plan applies for authorisation as a payment institution from the outset.
Because the location condition can be met by a place of residence, an individual can register as a small payment institution, as well as a company.
Sources: Payment Services Regulations 2017, regulation 14.
| Small payment institution | Authorised payment institution | |
|---|---|---|
| Status | Registered | Authorised |
| Monthly payment transactions | Average not above €3 million over 12 months, including UK agents | No limit |
| Payment accounts, payment execution, payment instruments, card acquiring, money remittance | Permitted | Permitted |
| Payment initiation and account information | Not permitted | Permitted |
| Initial capital | None | €20,000, €50,000 or €125,000 by service |
| Application fee | £1,130, category 3 | £2,820 or £5,640 |
| Safeguarding | Voluntary | Required |
| Geography | UK only; no passporting | UK; no passporting |
The services open to a small payment institution are operating payment accounts and executing transactions on them, issuing payment instruments, acquiring card transactions and money remittance. Payment initiation and account information require authorisation.
A small payment institution may also provide operational and closely related ancillary services, including foreign exchange services connected with its payments, and may grant credit only where it is ancillary to and granted exclusively in connection with a payment transaction under services (d) or (e), and not from customer funds (regulation 32). It may not issue e-money: a balance that customers keep and spend later needs small EMI registration or EMI authorisation.
Sources: Payment Services Regulations 2017, regulation 32.
Small payment institution registration is one of five FCA routes for payment and e-money businesses. The table sets them side by side.
| Authorised PI | Small PI | Registered AISP (RAISP) | Authorised EMI | Small EMI | |
|---|---|---|---|---|---|
| Status | Authorised | Registered | Registered | Authorised | Registered |
| Services | All eight payment services | All except payment initiation and account information | Account information only | E-money and all eight payment services | E-money and payment services, except payment initiation and account information |
| Volume limit | None | Monthly average of payment transactions up to €3 million | None | None | Average outstanding e-money up to €5 million; unrelated payment transactions up to €3 million a month |
| Initial capital | €20,000, €50,000 or €125,000 by service | None | None | €350,000 | None below €500,000 of average outstanding e-money; 2% of it above |
| FCA application fee | £2,820 or £5,640 | £1,130 | £1,130 | £5,640 | £1,130 |
| Annual FCA fee, 2026/27 | From £628 | £652 flat | From £628 | From £2,691 | £1,432 flat, plus £652 if it provides payment services |
| Safeguarding | Required | Voluntary | Not applicable: holds no funds | Required | Required |
| Annual safeguarding audit | Required unless exempt | Not required | Not applicable | Required unless exempt | Required unless exempt |
| Professional indemnity insurance | For payment initiation and account information | Not applicable | Required | For payment initiation and account information | Not applicable |
| FCA decision period | 3 months from a complete application; 12 at most | 3 months; 12 at most | 3 months; 12 at most | 3 months; 12 at most | 3 months; 12 at most |
Sources: Payment Services Regulations 2017, regulations 6, 9, 14 and 18; Schedule 3; Electronic Money Regulations 2011, regulation 13 and Schedule 2; FCA application fees; FCA FEES 4 Annex 11, 2026/27 periodic fees; FCA SUP 3A.1 (safeguarding audit).
Two illustrative businesses, not clients, show where the €3 million line falls.
A UK remittance business sends about €1.8 million a month to South Asia through its own app and two UK agents, and expects to reach €2.5 million in three years. It offers no payment initiation or account information. It registers as a small payment institution: no initial capital, a £1,130 fee and a £652 annual fee. It registers with HM Revenue and Customs for money laundering supervision, chooses to safeguard because its bank requires it, and plans authorisation, with €20,000 of initial capital and a £2,820 fee, for the year its forecast passes €3 million.
A fintech offering business payment accounts with debit cards forecasts €4 million of payment transactions a month in its second year and plans to add account information features. Both facts rule out registration. It applies for authorisation as a payment institution: €125,000 of initial capital, a £5,640 fee, mandatory safeguarding with an annual safeguarding audit, and professional indemnity insurance for the account information service. Under Method B its own funds at €4 million a month would be €160,000, above the initial capital.
Regulation 14 of the Payment Services Regulations 2017 sets the conditions for registration. An applicant shows all of the following.
The FCA may refuse registration only where one of the conditions in regulation 14 is not met. They also include close links that would not prevent effective supervision, and the conviction test covers money laundering, terrorist financing, sanctions and FSMA offences. Each director and manager is a PSD Individual whose repute and experience the FCA assesses.
A small payment institution that carries on money transmission is a money service business: it registers with HM Revenue and Customs under the Money Laundering Regulations as well as with the FCA, and the two registrations must match.
Sources: Payment Services Regulations 2017, regulation 14; FCA: Payment Services and Electronic Money, Our Approach; HMRC: who needs to register under the Money Laundering Regulations.
An application is ready to submit when every item below can be evidenced.
Safeguarding under regulation 23 is voluntary for a small payment institution. Banks and customers expect it, and most small payment institutions safeguard. A firm that safeguards segregates customer funds and, by the end of the business day after receipt, places them in a separate account with an authorised credit institution or the Bank of England, or in secure liquid assets, or covers them with an insurance policy or comparable guarantee. A small payment institution that elects to safeguard follows the CASS 15 rules as if it were an authorised payment institution, but is outside the annual safeguarding audit. Our safeguarding service sets out the arrangements.
| Figure | Value | Source |
|---|---|---|
| Statutory decision period | 3 months from a complete application; 12 months maximum | Payment Services Regulations 2017, regulation 9, applied to registration by regulation 15 |
| Application preparation | 4 to 6 weeks | From instruction to submission, including banking in parallel |
| Our realistic timeline | 3 to 4 months after submission | Our own figure, from the regulator’s published data and our applications |
Regulator figures are quoted as published and converted to months. Our realistic timeline assumes a complete, well-prepared application.
The FCA allocates a case officer within a maximum of 20 working days of submission.
Sources: FCA: Apply for authorisation or registration as an e-money institution or payment institution.
The FCA reports registrations and authorisations of payment and e-money firms together.
| Measure | Figure | Period |
|---|---|---|
| Payment and e-money authorisation and registration cases closed | 38 (44 and 43 in the two previous quarters) | April to June 2026 |
| Closed within the statutory deadline | 81.6%, against a 95% target (72.7% and 72.1% in the two previous quarters) | April to June 2026 |
| Days from receipt to decision: lower quartile, median, upper quartile | 168, 219 and 268 | April to June 2026 |
| Small payment institution applications withdrawn | 180 | 2022 |
| Licences removed by the FCA | 15, of which 13 small payment institutions | 2025 |
| Small payment institutions that opted in to safeguarding under CASS 15 | 36 | 10 October 2025 |
Sources: FCA authorisations operating service metrics, 2026/27 Q1; FCA freedom of information responses FOI11369, FOI2025/01328 and FOI2025/01062, compiled in our State of Licensing 2026 report.
The regulator’s own charges and requirements for the first year, before any staff, technology or advisory costs.
| Item | Amount | Basis |
|---|---|---|
| FCA application fee | £1,130 | Pricing category 3; paid on submission and non-refundable |
| Initial capital | None | No initial capital or own funds requirement for a small payment institution |
| Annual FCA fee | £652 | Flat fee in fee-block G.4 for 2026/27; the first year is charged pro rata |
| Audit | No safeguarding audit | The annual safeguarding audit applies to authorised payment institutions and e-money institutions, not to small payment institutions, even those that safeguard voluntarily |
| Required roles | Role requirement | Directors and managers of good repute with appropriate knowledge and experience; a nominated officer (MLRO) under the Money Laundering Regulations |
| Insurance | Not required | Professional indemnity insurance applies to payment initiation and account information, which a small payment institution may not provide |
Sources: FCA application fees; FCA FEES 4 Annex 11 (2026/27); FCA SUP 3A.1; Money Laundering Regulations 2017, regulation 21; Payment Services Regulations 2017, regulation 14.
Adding payment services to the registration later costs half the category 3 fee, £565; removing services costs nothing. The Financial Ombudsman Service levy is collected alongside the FCA annual fee.
Sources: FCA: Authorisation application fees; FCA PS26/14: regulated fees and levies 2026/27.
The FCA publishes the reasons it rejects or returns applications, and they apply to registration as they do to authorisation.
Registration is kept, not just obtained. On 8 January 2025 the FCA cancelled the registration of Easy Exchange Limited (firm reference 524192), a small payment institution registered for money remittance since 13 January 2019. Its Final Notice records two failures: the firm had not submitted its annual return on form FSA057 for 2021, 2022 and 2023, and it was not registered with HM Revenue and Customs for money laundering supervision. The FCA wrote to the firm in February and May 2024, issued a Decision Notice on 1 November 2024 and cancelled the registration when the firm did not refer the matter to the Upper Tribunal.
The FCA removed 15 licences in 2025, 13 of them small payment institutions (State of Licensing 2026). Filing the annual return and keeping the money laundering registration current are the two duties that most often decide whether a registration survives.
Sources: FCA Final Notice to Easy Exchange Limited, 8 January 2025; FCA freedom of information response FOI2025/01328, compiled in our State of Licensing 2026 report.
A small payment institution applies for authorisation as a payment institution when its monthly average of payment transactions is set to pass €3 million, or when it wants to add payment initiation or account information services. Authorisation brings initial capital of €20,000, €50,000 or €125,000 by service, an application fee of £2,820 or £5,640, mandatory safeguarding and the FCA’s three-month statutory period. We plan the move against your business plan so authorisation is in place before you reach the limit.
If a small payment institution no longer meets the volume condition, or intends to provide services outside the regime, it must apply for authorisation within 30 days of becoming aware of the change if it wants to keep providing payment services in the UK (regulation 16). There is no conversion: the FCA treats a move from registered to authorised as a new application, not a variation of permission.
Sources: Payment Services Regulations 2017, regulation 16; FCA: Apply for authorisation or registration as an e-money institution or payment institution.
| Obligation | Timing |
|---|---|
| Payment Services Directive transactions return (FSA057) | Annually, covering 1 January to 31 December, by the end of the following January |
| Payments fraud report (REP017) | Annually for a small payment institution, within 2 months of the end of the reporting period |
| Operational and security risk report (REP018) | At least once each calendar year, and no more than once a quarter |
| Complaints return | New consolidated return from the reporting period 1 January to 30 June 2027, first submitted from 1 July 2027 (PS25/19) |
| Agents | Each agent is included on the FCA register before it acts, and the institution is responsible for anything its agents do (regulations 34 and 36) |
| Notifications | Changes to directors, managers, controllers, services or agents |
Sources: FCA: Payment Services and Electronic Money, Our Approach; Payment Services Regulations 2017, regulation 34; Payment Services Regulations 2017, regulation 36; FCA PS25/19: changes to complaints data reporting.
A small payment institution needs an operating account and settlement accounts in the currencies it pays out, and a separate safeguarding account where it safeguards. We open each alongside the application. See banking and payment processing.
A monthly average of payment transactions, including those of its UK agents, not above €3 million over 12 months. A new business may use its projected volumes, and a business set to pass the limit applies for authorisation as a payment institution.
The FCA application fee is £1,130 under pricing category 3, and the annual fee is a flat £652 under fee-block G.4 for 2026/27. There is no initial capital requirement.
The FCA must decide within three months of a complete application and within twelve months at most, under regulation 9 as applied to registration by regulation 15. We plan for three to four months after submission.
No. Payment initiation and account information services require authorisation as a payment institution, with €50,000 of initial capital for payment initiation, or registration as an account information service provider.
No. Safeguarding is voluntary for a small payment institution, and the annual safeguarding audit applies only to authorised payment institutions and e-money institutions. A small PI that chooses to safeguard follows CASS 15, as 36 small PIs did in October 2025.
An annual return on form FSA057, the £652 annual fee and notice of any material change. The FCA cancelled Easy Exchange Limited’s registration on 8 January 2025 after it missed three annual returns and was not registered with HM Revenue and Customs for money laundering supervision.
Its head office, registered office or place of residence must be in the UK under regulation 14(10). There is no rule that directors must be resident.
It is commonly called a licence, but legally it is a registration under the Payment Services Regulations 2017. The firm appears on the Financial Services Register and may provide the services in its registration.
Yes, where money remittance is in its registration. It registers with HM Revenue and Customs for money laundering supervision, and the UK registration gives no rights to provide services in the EEA.
No. A balance that customers keep and spend later is e-money, which needs small EMI registration or EMI authorisation.
A small payment institution that is a money service business, such as a money remitter, registers with HM Revenue and Customs under the Money Laundering Regulations as well as with the FCA, and HMRC supervises it for anti-money laundering.
There is no conversion. Moving to authorisation is a new application, which must be made within 30 days of the firm becoming aware that it no longer meets the small payment institution conditions.
Buckingham Capital Consulting opens global markets to payment, e-money and crypto businesses: the licences to enter, the banking to operate and the compliance to scale. Founded in 2013, it has obtained more than 250 licences in more than 60 countries.
This guide is general information, not legal advice. Requirements and fees change, and the regulator’s own publications take precedence.
Our realistic timeline from submission to decision.
Safeguarding, operating and settlement accounts opened alongside the application, so you trade on authorisation.
We assemble your team: directors and an MLRO.
The licence, the requirements, the cost and the timing for your business.
You will need directors and a senior manager with payments experience, and an MLRO, none of whom has a money laundering or other financial crime conviction.
One programme, from scoping to launch. Speak to an expert about this licence.
Outcome. SPI registration granted, with compliance policies and regulatory reporting in place.
The licence, your team, banking and technology, delivered as one programme.