EMI, API or SPI: which FCA payments licence does a UK fintech need?

A UK fintech that issues e-money, such as a stored balance customers can spend later, needs to be an electronic money institution (EMI) under the Electronic Money Regulations 2011. A fintech that provides payment services without issuing e-money needs to be a payment institution under the Payment Services Regulations 2017: an authorised payment institution (API) or, if its average monthly payment transactions stay at or below €3 million and it offers neither account information nor payment initiation, a registered small payment institution (SPI). Small EMIs follow a similar pattern, with a €5 million cap on average outstanding e-money. The FCA authorises or registers all of them. FCA: apply to become an e-money or payment institution

What is the difference between an EMI, an API and an SPI?

The difference starts with what the firm does with customer money.

• An EMI issues e-money. Customers hand over funds and receive a balance they can use for payments later. EMIs can also provide payment services. They are authorised (AEMI) or, below the size thresholds, registered as small EMIs (SEMI).
• An API provides payment services without issuing e-money. The services are listed in Schedule 1 of the PSRs 2017 and include money remittance and payment initiation.
• An SPI provides payment services on a small scale. It is registered rather than authorised, with lighter conditions but tight limits on size and services.

Authorisation and registration are different statuses. Authorised firms must meet capital and safeguarding conditions; registered small firms face fewer conditions but must stay within their limits and monitor them. FCA: Payment Services and Electronic Money approach document

EMI vs API vs SPI: how do the licences compare?

Sources: FCA: apply to become an e-money or payment institution, FCA approach document, PSRs 2017, Schedule 3, FCA: PS25/12 safeguarding, FCA: application fees.

Do you need an e-money licence or a payment institution licence?

Map the money flow first. If customer funds sit with you as a balance customers can spend or withdraw later, the activity probably looks like e-money issuance and points to an EMI. If funds pass through only to execute a payment the customer instructed, a payment institution licence is more likely to fit. Treat that as a starting judgement for counsel; do you need a money transmitter licence? applies the same method in the US.

Another route is to start on a licensed partner's permissions, for example as an agent or distributor where the regulations allow it. FCA Handbook: PERG 3A.4 Banking as a service vs open banking vs embedded finance explains who owns the licence in each model.

When is a small payment institution or small EMI enough?

Registration is enough only while the business stays small and simple.

• SPI. Average monthly payment transactions, including those carried out by agents on its behalf, must not exceed €3 million, and an SPI must not provide account information or payment initiation services. Applicants self-certify that they will meet the €3 million condition, and the FCA expects a process for tracking it so the firm knows when it must apply for authorisation.
• Small EMI. A firm that projects average outstanding e-money above €5 million must apply for authorisation instead. A small EMI's average monthly payment transactions over 12 months must not exceed €3 million, it cannot provide account information or payment initiation, and it must be a body corporate with a UK head office or registered office.

Source: FCA: apply to become an e-money or payment institution. If you expect to outgrow these limits soon, weigh the cost of applying twice against seeking authorisation from the start.

How much capital does each licence need?

For an authorised EMI, the initial capital requirement is €350,000, with no extra initial capital for unrelated payment services. FCA approach document

For an authorised payment institution, Schedule 3 of the PSRs 2017 sets initial capital by service, and the highest applicable figure applies:

Sources: PSRs 2017, Schedule 3, FCA approach document. After authorisation, an API's own funds must stay at or above the greater of its initial capital and the Part 2 calculation, so capital planning has to follow volume.

How long does FCA authorisation take, and what does it cost?

Under regulation 9 of the PSRs 2017, the FCA must decide a complete application within three months of receiving it, and any application within 12 months. PSRs 2017: authorisation as a payment institution The FCA treats an application as complete only when it holds all the information and evidence it needs, so the three months can start well after you first submit. FCA approach document

Application fees follow the FCA's fee categories: Category 3 for a small PI, small EMI or RAISP, Category 4 or 5 for an authorised PI, and Category 5 for an authorised EMI. The FCA updates the amounts each year, and its 2026/27 policy statement raised them in line with its costs, so take the current figure from the FCA fees page rather than a consultancy's summary. FCA: PS26/14 regulated fees and levies

How do the 2026 safeguarding rules change the choice?

The FCA's new safeguarding rules have applied since 7 May 2026. They cover authorised payment institutions (except those providing only payment initiation or account information), authorised EMIs, small EMIs and credit unions issuing e-money. Small payment institutions may opt in. FCA: PS25/12

In-scope firms must:

• reconcile safeguarded funds at least once each reconciliation day;
• keep a resolution pack that would help return funds quickly if the firm entered insolvency;
• send a monthly safeguarding return to the FCA;
• arrange an annual safeguarding audit, unless they have not had to safeguard more than £100,000 at any time over at least 53 weeks;
• if they safeguard through insurance, have a contingency plan at least three months before the policy expires.

Source: FCA: safeguarding requirements. These need finance, operations and engineering time from day one. For what safeguarding means to customers, see is my money safe in a fintech app?.

What if you only offer account information or payment initiation?

A firm whose only payment service is account information can register as a registered account information service provider (RAISP). It needs professional indemnity insurance or a comparable guarantee, but no initial capital. If it adds any other payment service, including payment initiation, it must apply to be an authorised payment institution. FCA: RAISP applicants · FCA: account information and payment initiation services

Open banking product architecture covers consent, access and payment state for those roles, and Faster Payments, Bacs and CHAPS explains the UK rails your payments will run on.

FAQ

What is the difference between an EMI and an API?

An EMI can issue e-money, meaning balances customers hold and spend later, under the EMRs 2011; an API provides payment services without issuing e-money, under the PSRs 2017.

What is the small payment institution limit?

Average monthly payment transactions must not exceed €3 million, and an SPI cannot provide account information or payment initiation services.

How much capital does a UK EMI need?

An authorised EMI needs initial capital of €350,000 at authorisation. Check the EMRs 2011 for the ongoing own funds calculation, which is separate from the initial figure.

How long does an FCA payments licence take?

The FCA must decide a complete application within three months, and any application within 12 months.

Do small payment institutions have to safeguard customer funds?

Not under the FCA's 2026 safeguarding rules, though an SPI may opt in. Authorised PIs, authorised EMIs and small EMIs must safeguard.