Speak to an expert consultant now

Payment Services (PSD2)

Most Payment Service Providers (“PSPs”) are required to be authorised or registered by the Financial Conduct Authority (“FCA”) under the Payment Service Regulations 2017 (“PSRs”) and to comply with certain rules when providing payment services. PSPs are also captured within the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“MLRs”).

There are eight payment services in total, including account information services, money remittance, payment initiation services and the execution of payment transactions. Any firm conducting these activities will be classed as a PSP and must adhere to the PSRs 2017.

When seeking authorisation, proposed PSPs need to determine whether they will be an ‘authorised payment institution’ (“API”), ‘small payment institution’ (“SPI”) (collectively PIs), or a ‘registered account information service provider’ (“RAISP”), unless it is already another type of PSP or is exempt or excluded. For those seeking to be either an API or SPI, this will depend upon a firm’s monthly average payment transaction turnover. Depending on the activity you wish to engage in, you may be subject to safeguarding, capital resource and professional indemnity insurance requirements.

PSPs seeking FCA authorisation or registration require a coherent compliance monitoring framework and must be able to demonstrate that the business model is one that meets the FCA’s requirements. Those in control or who will have management responsibilities within the firm must also be suitable and appropriate and will be approved as PSD Individuals.

Electronic Money

Electronic Money Institutions (“EMIs”) are authorised or registered by the FCA to issue e-money and are subject to the Electronic Money Regulations 2011 (“EMRs”). EMIs are also captured within the MLRs.

Electronic money is a monetary value represented by a claim on the issuer (an EMI) that is stored electronically or magnetically, is issued on receipt of funds for the purpose of making payment transactions, is accepted as a means of payment by persons other than the issuer and is not subject to an exclusion e.g., the limited network exclusion.

There are two forms of EMIs, namely Authorised Electronic Money Institutions (“AEMI”) and (registered) Small Electronic Money Institutions (“SEMIs”). Classification as an AEMI or SEMI depends upon the average monthly payment value (preceding an application or projected post-application) and the services that you wish to provide.

Capital resource requirements for those strictly acting as an AEMI or SEMI differ depending upon the classification. Professional indemnity insurance is not required for EMIs unless you are an AEMI that also intends to provide certain payment services. Whether acting as an AEMI or SEMI, there are also safeguarding requirements for funds exchanged for e-money. Directors and those who are responsible for the management of an EMI must be approved as EMD Individuals.

EMIs may provide payment services that are related or unrelated to the issuance of e-money and will also be considered as PSPs. However, SEMIs cannot provide unrelated payment services in the form of account information services and payment initiation services and are only able to provide other unrelated payment services if the average monthly total of payment transactions does not exceed €3 million on a rolling 12-month basis.

Agents & Distributors

PIs, RAISPs and EMIs may opt to use an agent to act on its behalf and to varying degrees. The PI, RAISP or EMI that utilises an agent is therefore known as the ‘Principal’ who accepts responsibility for the acts and omissions of its agents. The Principal must apply for the agent to be registered on the Financial Services Register before providing services, having regard for various requirements including considerations relevant to the MLRs.

EMIs may engage ‘distributors’ to distribute and redeem e-money but are not permitted to issue e-money. A distributor cannot provide payment services and does not have to be registered by the FCA. An EMI is responsible for anything done or omitted by a distributor.

How can Scott Robert Help?

If you are considering becoming a payment service provider and/or electronic money institution, Scott Robert has the knowledge and expertise to guide and support you. We can provide advice, assistance and support to help guide you through the application process and bolster your chances of success.

In summary, examples of how can we can help include:

  • Determining whether you are an SPI or API, RAISP, EMI or AEMI.
  • Determining what capital resource, safeguarding and PII requirements you may be subject to
  • Assisting with the application for authorisation or registration
  • Identifying which reporting requirements you are subject to once authorised or registered, including how and when to submit
  • Determining to what extent an agent or distributor may act on your behalf
  • Advising on the requirements associated with the appointment of agents


If you would like to find out more, speak to one of our experts today by calling 0161 413 2796.

You can find out more about Payment Services (PSD2) by downloading our free factsheet from the “Access our factsheet” section below.

Related News

Payment Services (PSD2)