FCA licensing

How we can help you and what the service includes

The obtaining of an EMI or PI license is obligatory for e-banking services to stay compliant with enforceable norms and regulations. FCA is liable for licensing in the United Kingdom

  • Business plan preparation, financial projection;
  • Company incorporation;
  • Communication with FCA;
  • Provision of required staffing;
  • Provision of the required software;
  • Full, turnkey support;

What is a payment license regulated by the FCA?

Payment institutions (PI) and E-money institutions (EMI) in UK operate with electronic money. E-money relates to the stored monetary value of virtual assets. The EMI issues e-money grounded on the money deposited by clients in equal amounts to the monetary value provided. Such a form of payments is recognized as valid by organizations. The EMI and PIs are entities that allows services with funds to be executed worldwide, practically blurring the boundaries.

EMIs and PIs are nonbanking entities, they are different in respect of the forms or their operations and the regulations they are put under the remit. Such undertakings are legal entities that conduct their operations grounding on an authorization permitting them to deal with e-forms of funds.

Holders of the license are eligible to issue e-funds and deliver services for conducting payments and other options that include IBAN accounts. The license also grants accessibility to SEPA, giving clients the possibility to obtain payments in EUR at reduced fees and on the same conditions across all of the EU.

Who requires an EMI or PI license?

Given the adoption of new 3D Secure 2 compliance regulations and the rising fees established by gateways like MasterCard and VISA, many organizations look for alternative options to their payment solutions in nontraditional banks. A BaaS authorized by an EMI or PI license will permit acceptance of quick and safe money transferring among other offerings.

The P2P structure for lending applied by many BaaS solutions also spurs the application of virtual currencies as a form of deposits and loans, hence delivering financial leverage and collateral in payment operations.

It must be mentioned that EMI or PI license necessitates the adoption and full execution of strict obligations and supervision over the security of clients. Under the license the implementation of the Know Your Customer standard is mandatory, so the underlying KYC will minimize fraud, and enhance transparency, attracting new clientele and retaining the existing client base.

FCA licensing

Other practice areas

Frequently asked questions

  • This is any of the below-mentioned legal entities carrying out payment activities and related operations:

    • Authοrized payment institutions (AEMI);
    • Small payment institutions (SPI);
    • Credit unions;
    • E-money institutions (EMI);
    • Retail post office company in the United Kingdom;
    • The Bank of England; and
    • Government organizations, other than when doing public functions.
  • After being approved by any EU Financial Authority, PI can provide the range of belowlisted operations:

    • Placement made by cash or electronic transfer;
    • Converting the account holdings into cash;
    • Payments, including crossborder bank-to-bank funds transfers;
    • Payments in which funds are included in LOC: direct debit, payments carried out a payment card or a similar tool; credit transferring, etc.;
    • Remittances, etc.
  • The main contrast between these approvals is that only E-Money Institutions can provide digital currency or e-wallet or other device. EMI can deliver all the services an API is authorized to offer. 

  • Though there are some similar features between virtual currency and electronic funds, crypto assets are not deemed electronic funds. While e-funds are applied for operations with government-issued and regulated monetary units such as USD and EUR, cryptocurrency is a virtual currency that has no fiat equivalent. If you wish to offer cryptocurrency exchange and cryptowallets, you may be mindful of acquiring a separate authorization.

  • You can become a SPI license holder, if you meet the following criteria:

    • Overall payments as per month in the previous year must not be over 3,000,000 EUR.
    • If you have not been offering services of transactional nature, or have been delivering them for less than one year, forecasted total monthly payment transactions must not be over 3,000,000 EUR.
    • Employees must not have been accused of illegitimate turnover of funds and the transfer of funds to terrorists;
  • The main difference between an API and SPI license is an average monthly turnover in payments.

    If it is under 3,000,000EUR, you can start operation as a SPI. If it exceeds this amount, then you will have to apply as an API.

  • You can acquire a SEMI license, if you meet the following criteria:

    • Proof that when you launch your business, your e-funds business will generate a median number of liabilities regarding e-funds of lesser than 5,000,000EUR.
    • Proof that, in one year preceding the application, the average of payments as per one month was not over 5,000,000EUR.
    • An overlook of how you will safeguard the funds of clientele.
    • Capital obligations must be fulfilled.
    • The max. storage sum on the client payment platform where the e-money is stored must not be over 250EUR.
    • When the business operations of the EMI bring average οutstanding e-funds less than 1,000,000EUR, it shall hold holdings (as a contributed capital) of at min. 50,000EUR. If the sum is over, the institution shall hold initial capital of at least 100,000EUR.
  • The main contrast between these approvals is a volume of payments circulation.

    If your monthly turnover transactions are less than 5,000,000 EUR, you can become a small electronic money institution. If your monthly transaction amount exceeds this, then you will have to apply as an EMI.