Definition of a Small Payment Institution

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A small payment institution is a person registered as a small payment institution with the FCA to provide regulated payment services, such as money remittance, payment accounts, and merchant acquiring services as per regulation 14 of the Payment Services Regulations. The small payment institution is also included in the FCA’s financial services register.

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          Definition of an SPI license

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An SPI license is a license issued by the Financial Conduct Authority. It enables the license holder to provide regulated payment services, such as payment accounts, money remittance, and merchant acquiring services. In order to obtain an SPI license, you must become regulated by the FCA and register with HMRC for money laundering supervision.

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          Becoming a Small Payment Institution

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In order to become a small payment institution and provide payment services such as money remittance, you must carry out the following steps:

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1. Form a limited company

2. Register with HMRC for money laundering supervision

3. Apply to the FCA to register as a small payment institution

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          Benefits of becoming a Small Payment Institution

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Below are some of the benefits of becoming a small payment institution:

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1. No initial capital requirement

2. A quicker license registration process

3. Optional to safeguard client funds

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          Capital requirements for a Small Payment Institution

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Small payment institutions are not subjected to any initial capital requirements.

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          How to become a Small Payment Institution

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In order to become a small payment institution and provide payment services such as money remittance, you must:

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1. Register with HMRC for money laundering supervision

2. Apply to the FCA to register as a small payment institution

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          Time frame to obtain the Small Payment Institution license

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You should expect between 3-4 months from the date of submitting your application for the regulator to assess and decide on the outcome of your small payment institution registration application.

To help minimise this timeframe you should ensure that you have:

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• Submitted a completed application

• Provided all the required documents and procedural information

• Provided all individual forms

• Registered with HMRC for money laundering regulations

• Provided all individual documents such as personal ID, CVs and financial statements.

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          How to prepare a strong small payment institution license application

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

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1. Completed the application form in its entirety and thoroughly

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

3. Registered with HMRC for money laundering supervision

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          Conditions for a Small Payment Institution

The following are the conditions applicable in order to become a small payment institution:

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1. Directors and managers must of good repute and have appropriate skills, knowledge and experience to provide payment services

2. The monthly payment transactions cannot exceed €3m

3. Managers must not have been convicted of financial crimes, such as money laundering

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          Restrictions with a Small Payment Institution

The following is a list of the restrictions that apply to small payment institutions:

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1. The monthly payment transactions cannot exceed €3m

2. You cannot provide AIS (account initiation service) or PIS (payment initiation service)

3. You cannot passport into Europe

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