If you want to run a payment business in Britain, the first move is to get on the register of the Financial Conduct Authority (FCA). There are two doors to enter through: authorisation, aimed at larger-scale operators, and registration, a simplified route for companies with a smaller turnover. Both options let you legally handle transactions or issue e-money in the UK.
The FCA doesn’t just wave you in. A firm has to prove it has enough capital to stay afloat, sensible risk controls, and a system that keeps clients’ funds protected. The heavier your business model, the tougher the bar. That’s why established players go through full authorisation, while compact startups often take the registration route. When we talk about a “payment license in the UK,” we mean either path — whichever suits the business.
The Rules Behind UK Payment Licensing and FCA Oversight
The UK approach to payment licensing rests on a solid legal framework shaped by national financial law. At its core stands the Payment Services Regulations 2017 (PSR), which lay out the full list of activities considered payment services — from handling transactions to processing customer payments — and spell out the conditions for becoming either a registered or an authorised provider.
Working alongside it are the Electronic Money Regulations 2011 (EMR). These rules cover the issuance of digital money used for settlements, define the legal status of e-money issuers, regulate how electronic funds circulate, and set the procedure for redeeming them at the holder’s request.
In practice, these laws are applied through detailed guidance issued by the Financial Conduct Authority (FCA). The most recent version, updated in 2024, explains key requirements, shows how to file an application for a UK payment license, and outlines what the regulator expects from licensed firms.
The FCA’s role doesn’t end at the point of registration. It reviews applications, checks a company’s internal structure, assesses the competence of its management team, and makes sure client funds are properly protected. Once a license is granted, the FCA continues its oversight through reporting checks, monitoring of compliance, and occasional inspections.
What makes the FCA’s model stand out is its focus on proportionality, operational resilience, and transparency. Requirements are tailored to each category of market participant, and supervision is adapted to the scale and nature of their business. This approach helps keep the payment ecosystem stable while safeguarding the interests of customers who rely on financial services.
Authorisation vs Registration: Spotting the Real Divide
In the UK, getting permission to run payment services or issue electronic money comes in two flavours: full authorisation or simplified registration. The two paths are not equal — each is built for companies of different size, structure, and ambition. Your choice directly affects your legal standing, the services you’re allowed to offer, and the internal rules you must live by.
Here’s a side-by-side look at how they compare:
|
Format |
What It Means |
Legal Effect |
|
Authorisation |
The full entry route, reserved for firms whose operations go beyond the regulator’s limits. It demands proof that your business model is sound, capital reserves are sufficient, and governance structures are in place. |
Unlocks the full spectrum of rights: provide all payment services, issue e-money without restriction, work with agents and distributors, join settlement systems, and apply client-fund safeguarding schemes. |
|
Registration |
A lighter process for small institutions with capped turnover. Available if annual transactions stay below EUR 3 million for payment institutions or EUR 5 million for small e-money issuers (SEMI). |
Lets you offer basic services within those limits. It comes with fewer capital and governance demands, but also limits your functionality and market partnerships. |
Before applying for a UK payment license, you need a sober look at your future scale, expected transaction volumes, and your ability to meet regulatory standards. Misjudging at this stage can mean hitting a ceiling you didn’t plan for — or worse, getting turned down altogether.
Who Actually Needs a Payment License in the UK?
Under UK law, any organisation that processes payments or issues electronic money must go through the FCA’s admission process — either registration or full authorisation. What matters is not the label on your business card but the substance of your activity. The rules apply broadly, cutting across models, legal forms, and ownership structures.
Whether you need a UK license depends entirely on the services you provide, the way transactions are handled, and your interaction with end-users and other players in the payment infrastructure.
Categories of organisations that require licensing
- Payment Institutions (PI).Covered when they execute transactions — from taking deposits and withdrawals to transferring money between users or processing payments on behalf of third parties.
- Electronic Money Issuers (EMI).Must register or seek authorisation if they issue digital funds accepted for payments with outside counterparties and guarantee redemption of that money. The rules apply both to full EMIs and small e-money issuers.
- Account Access Service Providers (AISP & PISP).Need a license when they gather data from client accounts or initiate transfers on the user’s behalf, even without direct access to the funds.
- Fintech companies in acquiring, money transfers, mobile payments, or hybrid solutions.If the business involves technical or legal processing of payment instructions, it falls under PSR 2017 or EMR 2011.
Limited exceptions
The only carve-outs are tightly defined in law. A classic example is the limited network exclusion: activity confined to a closed network where payments circulate only among a specific group of suppliers and customers, or where the payment function is secondary to a non-financial service. In such cases, the operator must notify the FCA but does not need a license.
Cross the line, however, and the exception disappears. The firm then has to undergo the full registration or authorisation procedure.
Contact our experts and get answers to your questions.
What It Really Takes to Secure a UK Payment License
Getting licensed in the UK isn’t just about filling forms. Whether you’re applying for registration or going all in for full authorisation, the FCA expects proof that your company can stand on solid ground — not just financially, but operationally and ethically too.
Competence and reputation at the top
The regulator starts with people, not numbers. Directors and decision-makers have to bring real experience, sector know-how, and a spotless reputation. If there are skeletons in the corporate closet — bankruptcies, dodgy past behaviour, or regulatory breaches — your application may not survive the first review. And if your leadership team looks unqualified on paper, don’t expect FCA approval.
Capital that matches your ambition
Money talks. The starting capital requirement shifts depending on what services you offer:
- Money transfer firms: no fixed minimum
- Account info providers: at least €20,000
- Payment initiators: €50,000
- Full-service institutions (accounts, instruments, deposits, withdrawals, etc.): €125,000
- E-money issuers: €350,000
That’s just your ticket in. After licensing, additional ongoing own-fund rules kick in.
Protecting client funds
No firm gets licensed unless it can prove that customer money is ring-fenced. You either park it in a segregated bank account or back it with insurance/guarantee cover. The choice must suit your business model — and the FCA wants real evidence that the safeguard is already working, not a promise on paper.
Risk management that works under stress
The FCA expects you to think about the “what ifs.” Business continuity plans, crisis response playbooks, and an internal audit function all have to be in place. Digital platforms face even tougher scrutiny: IT resilience and cloud security are under the microscope.
Fighting dirty money
A full AML (anti-money laundering) framework is mandatory. That means customer checks, suspicious-transaction monitoring, source-of-funds verification, and behaviour analysis. One person — the MLRO — must own this role, with the authority and resources to enforce it. It can’t be a box-ticking exercise; it has to run daily.
Rules depend on the license type
Small PIs and Small EMIs enjoy lighter requirements — no minimum capital and easier reporting. But they pay with limits: no more than £3m in monthly transactions for PIs, or €5m in average e-money for SEMIs. Break those limits, and you’re forced into full authorisation. It’s how the FCA keeps the rules proportionate to real risk.
Paperwork That Opens the Door: Documents for a UK Payment License
Getting licensed to run payment services in the UK is not just a matter of ticking boxes. The FCA expects a complete, consistent dossier that shows both your business strategy and the mechanics of how you’ll run operations. The file must prove more than technical compliance — it has to demonstrate that the company is operationally mature and transparent in its internal processes.
While details vary depending on license type and business model, there’s a core set of documents without which the FCA won’t even look at your application.
Core documents required for a UK payment license
- Detailed business plan with financial models.It should cover your market strategy, the services you intend to provide, target customers, cost structure, and revenue sources. Forecasts for transaction volumes, operating margin, and break-even point are expected for at least three years.
- Proof of capital origin.Evidence of where the funds for your share capital and operating costs come from. Corporations typically submit investor corporate papers, while individuals provide bank statements, declarations, or other proof of lawful fund sources.
- Diagram and description of the corporate structure.The FCA demands a clear map of the ownership chain, including intermediaries, holding companies, and trusts. Every company and individual with direct or indirect stakes must be disclosed, along with the nature of their control and management role.
- Internal policies and procedures.Applicants must include formally adopted rules on risk management, client interaction, conflict of interest prevention, data protection, and suspicious-transaction monitoring. Separate documents must cover client fund safeguarding and business continuity plans in case of system failures.
- Information on beneficial owners and key managers.A full dossier is prepared for directors, managers, controllers, and major shareholders. Each must pass a “fit and proper” test, which looks at reputation, professional experience, and past projects.
Variations by license type
Payment institutions (PI) and electronic money issuers (EMI) face slightly different requirements. EMIs, for example, must provide specific details on own funds and a plan for redeeming e-money. Authorised payment institutions need to justify their capital level against the type of services offered, with a clear calculation method.
Small institutions benefit from a simplified application format with fewer documents, but they are still required to prove operational readiness and compliance with the FCA’s minimum standards.
Getting a UK Payment License: Step by Step
Applying for a payment license in the UK isn’t rocket science, but it does follow a strict path set by the FCA. The exact journey depends on whether you go for registration (the lighter option) or authorisation (the heavy-duty version). Either way, you’ll be dealing with forms, checks, and plenty of back-and-forth with the regulator. The trick is not just filing the paperwork — it’s being ready to respond quickly at every stage.
First stop: FCA’s Connect system
It all begins online. You set up an account on the FCA’s platform, Connect, and that becomes your main channel for everything that follows. Once your company details are confirmed, the system unlocks the application forms. If you’re applying for authorisation, expect more questions and more attachments — risk assessments, governance details, the works.
Building your application
Next comes the big pack of information: who you are, how the company is set up, what services you plan to offer, how you’re funded, and what internal rules you already have. Everything has to fit FCA’s format and be uploaded through Connect. If anything’s missing, inconsistent, or poorly explained, don’t be surprised if the review drags on — or your file gets bounced back.
The FCA takes a closer look
Once submitted, the regulator starts digging. They’ll check that your services fall under PSR 2017 or EMR 2011, review ownership and control, and look hard at how you plan to keep client money safe. They also want to see that your business model is solid and your managers know what they’re doing. For full authorisation, the checks go deeper — scenarios for redeeming e-money, stress tests, and more detailed risk reviews.
Expect questions
It’s normal for the FCA to come back with clarifications. Often, it’s about vague descriptions of services, policies that look thin, or missing proof about management experience. You’ll need to reply quickly, with updated documents. Delay too long or give half-baked answers, and your application stalls.
The final word and the public register
If everything checks out, the FCA issues the license. Your company’s details — category, date, and permitted services — are published in the public register. That’s the official stamp saying you’re allowed to operate in the UK.
How long it takes
Timing depends on the route. Registration is usually 3–6 months. Authorisation can stretch to 6–12 months, especially if you’re offering something new or using funds from higher-risk places. And if your application is messy or incomplete, expect even longer.
Life After Approval: Duties of a Licensed Payment Firm in the UK
Getting your license is only the beginning. Once a company is officially on the FCA register, it enters a regime of ongoing supervision. The goal is simple: stay financially stable, keep operations transparent, and follow the rules you signed up for. Meeting these obligations is the price of keeping your license — slip up, and you risk losing it.
Keep capital levels and pay your taxes
The firm has to maintain its own funds at or above the minimum required when the license was issued. This figure is monitored continuously, and any shortfall must be fixed immediately. On top of that, taxes have to be handled on time and in full. In the UK, the standard corporate tax (CIT) and capital gains tax (CGT) are both 25%, VAT is 20%. Dividend tax is 0%, while interest and royalties are generally taxed at 20%. Complying with these obligations signals that the company is financially sound and can meet its responsibilities to both clients and the state.
Reporting to the FCA
At least once a year, the firm must submit a full report to the regulator. This includes financial statements, proof of meeting capital requirements, details on client fund safeguarding, and key operating metrics. If the FCA spots warning signs, it can demand interim reports or extra clarifications. The format is standardised — any deviation from the set template is not accepted.
Informing about major changes
If the company changes ownership, leadership, service types, or client fund protection methods, the FCA has to be told in advance. Updates are filed electronically and must be backed with supporting documents. Failing to notify on time counts as a breach of license terms and may trigger administrative sanctions.
Wrapping It Up
Getting through the FCA licensing process isn’t about luck — it’s about precision. Every document has to line up, every procedure has to match the regulator’s standards, and the business model has to hold water. Slip on any of these points and the answer may be “no.”
That’s why having seasoned legal experts involved makes a real difference. They not only speed up the path to a UK payment license but also cut down the risk of regulatory headaches later on. In a market where mistakes are costly, that support can be the edge between approval and rejection.
