Payment Institution and Electronic Money Licences

A payment institution licence is an authorisation from a named financial regulator that permits a company to provide specified payment services. It is not a document you buy, and it is not a general “financial licence”. It covers only the services it names, and it is granted to a company, not to a person.

In the United Kingdom the FCA authorises firms; it does not issue a thing called a payment licence. The buyer’s word is “licence” and the regulator’s word is “authorisation”, and this page uses both deliberately.

The FCA names five categories:

• authorised payment institution
• small payment institution
• authorised electronic money institution
• small electronic money institution
• registered account information service provider

Authorised and small payment institutions and registered account information service providers are created by the Payment Services Regulations 2017 (SI 2017/752), which transposes Directive (EU) 2015/2366 (PSD2). The two electronic money categories come from the Electronic Money Regulations 2011 (SI 2011/99). The directive and the UK regulations are separate instruments and this page keeps them apart.

One change is in progress. The Payment Systems Regulator is to be consolidated into the FCA. HM Treasury consulted on it from 8 September 2025 and says the government “will bring forward primary legislation to deliver this change when Parliamentary time allows”. It has not taken effect. The PSR remains a separate regulator today. For a wider view of what else is licensed, see our financial licences by type.

The FCA’s application fee for an authorised electronic money institution is £5,640. The initial capital that institution must hold is EUR 350,000. The fee is roughly a sixtieth of the capital, and the capital is not spent. Most cost conversations in this market are anchored on the smaller of those two numbers.

Component 2 is the line most often misread. Initial capital is not a payment to anyone. It is money the institution must hold, and it must keep holding it: own funds are maintained at the higher of the initial capital or the calculated requirement, under Directive 2009/110/EC Article 5(1). Budget it as capital you cannot spend on building the product, not as a cost you write off.

We are not publishing a first-year total. Component 4 is not fixed yet, and three quarters of a cost stack presented as a total would be a worse answer than none. Components 1 to 3 are what the government and the market require, and they do not change with who prepares your application. Our own fee will appear here and on the full licensing price list when it is set.

One detail to get right before you submit. The application fee is non-refundable, and the FCA states that it will reject your application without assessing it if you do not pay the correct fee. Paying the wrong category is an avoidable loss.

Preparation is the phase that decides your timeline, and the FCA publishes what it expects. No page in this market reproduces the list.

The FCA requires:

• Answers to every question on the form, with an explanation in your supporting documents where something is not applicable
• A main contact who is an individual at your firm, and not a third party adviser
• Your firm's complete policies and procedures, tailored to your business model and not generic templates
• The correct forms for individuals and for anyone with a qualifying holding
• Evidence that those individuals have suitable knowledge and experience in payment services or e-money
• Information on the risks to your regulated business arising from any unregulated activities you carry out
• Financial forecasts including balance sheet forecasts, and two stress-tested scenarios
• Arrangements for capital, safeguarding, wind-down and professional indemnity insurance

PSRs 2017 regulation 14 adds the fit-and-proper conditions:

• Good repute
• Appropriate knowledge and experience
• No relevant financial crime convictions
• Qualifying holders who are themselves fit and proper
• A head office in the United Kingdom

The FCA also states that it will reject a submission without assessing it if the minimum information is missing. That is the mechanism behind the two deadlines.

An authorisation granted in an EEA state passports across the EEA. A United Kingdom authorisation does not. That is the first decision, and it comes before choosing a country.

One claim in this market deserves a precise answer rather than a repetition. Competing pages advertise “one payment license for all 27 EU states”. An authorisation from an EEA regulator does passport across the EEA under PSD2. A UK authorisation has not done so since the end of the transition period, so a firm that needs both markets needs two authorisations.

To check any authorisation, including one a seller claims to hold, use the European Banking Authority’s central register of payment and e-money institutions, kept under PSD2 Article 15(1). It is free to search and downloadable in full. The EBA also states that the register “has no legal significance and confers no rights in law”, which is worth knowing before you rely on an entry. Confirm against the national regulator’s own register as well.

If your product is a token or a custody service rather than a payment service, the requirement sits in a different vertical: see virtual asset service provider licences.

This suits a firm that will hold or move customer funds and needs an authorisation before it can launch, a small payment institution outgrowing the EUR 3,000,000 ceiling, and a founder deciding between a UK and an EEA authorisation. If you know your activity and need the file built properly, this is the right page.

It does not suit everyone, and the exclusions matter more than the inclusions:

• If you need a deposit-taking authorisation, this is not the page. Taking deposits and lending against them is a different regime, with capital an order of magnitude higher, and it is covered under deposit-taking and credit institution licensing.
• If your activity is United States money transmission, you are looking at federal registration and state-by-state licensing rather than a UK or EEA authorisation. Start with money transmitter licence requirements and MSB registration in the United States.
• You may not need an authorisation at all. Some activity falls inside an exclusion or an exemption, and where it does we will tell you not to apply.
• If you want to buy a licence rather than apply for one, read the three routes below first.
• If you cannot fund the capital on top of build and operating costs, you are not ready. A firm that can pay the £5,640 fee but cannot hold EUR 350,000 spends the fee for nothing.

The FCA’s 2025 approval shares above are the honest context for all of this.

The authorisation regulates the firm. It does not change what you report as its owner. Every market below has its own reporting rules and they continue to apply.

United Kingdom

The FCA authorises the firm and supervises it. Tax is separate, and the controlled foreign company rules at Part 9A of the Taxation (International and Other Provisions) Act 2010 can attribute a foreign subsidiary’s profits to a UK parent.

United States

Two separate things. On licensing, a US business moving customer funds is generally regulated federally as a money services business and licensed as a money transmitter state by state, which is a different regime from a UK or EEA authorisation: start with money transmitter licence requirements and MSB registration in the United States. On reporting as an owner, a US person with an interest in a foreign company files Form 5471, reports foreign financial accounts on FBAR and on Form 8938, and may have income attributed under the controlled foreign corporation and GILTI rules.

United Arab Emirates

Payment activity is licensed by the Central Bank of the UAE under its own retail payment services framework, which is separate from the DIFC’s regime and from any EEA authorisation. Being UAE resident does not put you outside corporate tax: federal corporate tax runs at 9% above AED 375,000 under Federal Decree-Law No. 47 of 2022. See UAE company formation.

India

An Indian resident capitalising a company abroad stays inside the Foreign Exchange Management Act and the Reserve Bank of India’s overseas investment framework. The Liberalised Remittance Scheme sets the annual cap on what a resident individual may remit abroad, and overseas direct investment rules govern the shareholding itself. Check the current Liberalised Remittance Scheme limit with the RBI or your bank before you commit to a capital figure, because it constrains how fast you can fund EUR 350,000. On this page “EMI” means an electronic money institution, not an equated monthly instalment.

You remain responsible for reporting your interest in any foreign company to the tax authority where you are resident. The Common Reporting Standard exchanges financial account information automatically between participating jurisdictions.