Private Financial Services provides activity certification for all companies that intend to offer as part of their main activity, payment services, in the UK. We guide these companies step by step through the entire process that transforms them into authorized entities. The final goal of our company is to help you acquire the most suitable variant of PI License in the UK (Payment Institution License). There are more options for you to choose from, and our company will also guide you in choosing which certification suits you best.
As a payment services provider, if you are not an authorized bank or an e-money licensed operator in the UK, you must become a non-banking regulated entity holding one of the following licenses: MSB License, authorized Payment Institution UK License, small Payment Institution License UK and payment Initiation Service Provider License (PISP License).
The Financial Conduct Authority (FCA) is the institution assigned to both authorize and supervise the Payment Institutions from the UK. It has a very good worldwide reputation, as one of the most sympathetic organizations of this kind. Its activity focuses on transparent cooperation and on allowing all businesses to grow their payment services activities without any doubts and concerns. Thus it adopts a policy of clear communication regarding its requirements and norms. This creates a relaxed business environment, where each company knows exactly what is expected from it.
Features of PI License in the UK
As a certified Payment Institution (PI), you can provide one of all of the following services:
Services that allow customers to deposit cash in an account, together with all the other operations involved in the management of a payment account;
Services that give customers the possibility to withdraw cash from their account, together with all the other operations involved in the management of a payment account;
Funds transfers on a payment account, including either the user’s payment company or another similar payment company
Operating direct debits, one-off direct debits included;
Transactions operated with a payment card or another similar financial tool;
Credit transfers, which also include any standing orders;
Transactional operations which include funds that are obtained through a credit line, and intended for a user of a payment service;
Services which refer to the issuance of payment instruments or acquisition of transactions;
Services connected to initiation of payments;
Services connected to any information regarding the account.
In the case of a Payment Institution License UK that provides the company the right to engage in activities related to payment services, you can also benefit from the following additional services: operate payment transactions, services connected to any foreign exchange, services related to data processing and storage, payment system operations.
Benefits of PI License in the UK
There are numerous factors why a PI License in the UK is a great deal for your company:
FCA is one of the best regulators in the world. As per PSRs, FCA granted over 3500 financial services providers to activate and grow on a very strong market. FCA is experienced and its authorization process is one of the fastest and clearest worldwide. FCA specialists have good expertise in FinTech and provide the appropriate regulations, to benefit the entire market.
Advantageous tax regulations. You won’t deal with withholding tax for the dividends paid to shareholders.
The UK is a FinTech Capital, even after Brexit. The United Kingdom, and especially London, are among the global leaders of financial markets. Brexit didn’t change this fact. London is up to this day considered the world leader in investments. The government passed a series of regulations that support all innovative FinTech companies, and they are showing great results.
Starting as the Directive 2007/64/EC, it was rendered into the 2009’s Payment Services Regulations, valid at a national extent, in the UK, which became what is generically called, these days, the Payment Institution License UK (PI License UK or API License). The latest changes were brought by the Directive (EU) 2015/2366 (aka PSD2). The current norms are created according to the initial Payment Service Directive. This includes the basis of the regulatory framework applicable to all payment services providers in the UK. However, this is only the core to which several other regulations are added. The entire legal framework concerns all companies which are authorized through the Payment Institution License UK.
PFSER assists its clients by consulting and applying the specific regulations from both the EU and the UK, such as:
Data Protection Act, from 2018;
The Money Laundering, Terrorist Financing and Transfer of Funds Regulations (Information on the Payer), from 2017 with amendments;
The Payment in Euro Regulations (Credit Transfers and Direct Debits), from 2012;
Types of licenses
Because sometimes the specific terminology doesn’t clearly explain the major differences between the PI licenses, we present you the details that make clear each license type.
Usually, the license categories referred to above, include MSB, Small PI, API, PISP. Although many people consider the RAISP License as part of PI Licenses UK, we remind you that this is not the actual case.
The categories taken into account for differentiation are as follows:
Placement of cash, money withdrawals, operations through payment account;
Operating payment transactions;
Payment instruments issuance, payment transactions acquisitions;
Services connected to payment initiation;
Services connected to account information;
The initial required capital.
Here are the main PI License in the UK categories, and the important elements that define them:
MSB – Money Service Business License
In the UK, an MSB license will ensure the certification for the following activities:
Activities of a currency exchange office;
Transfer of money or other equivalent representations, through all possible means (funds transmittal);
Cash in cheques payable to the client (from third parties).
Usually, HMRC is the institution responsible for the registration and supervision of MSB. However, if they provide money remittance services, they also need to be certified by FCA, and to become a Payment Institution UK, according to Payment Services Regulations, from 2017. FCA will authorize MBSs only for the money remittance. Therefore, not all MBSs receive a Payment License UK from FCA. They are not obliged to. However, if they decide to enter the money transfer activity, or cheque cashing, they have to register with the FCA and be supervised by them. Thus, not all MBS activities fall under the regulations of FCA, and the Principles for Business do not apply to all their services.
API – Authorised Payment Institution License
This type of license certifies your company for all the services covered by the PSR 2017, Schedule 1, Part 1. The application process, in this case, includes the obligation to explain the reason you need authorization for each specific payment service. You need to present how each of these financial services fits together within the greater business model and plan of your company.
PFSER assists companies in the following matters: identification of best payment services for each business model, design an explanation for the need of each payment service, according to FCA regulations. PFSER also helps your business go one step forward, with acquiring the E-Money License UK.
If you want to become an API business, you need an initial capital amounting to GBP 125.000. For the additional payment initiation and account information services, you also need to hold a professional indemnity guarantee.
PISP – Payment Initiation Service Provider License
This refers to the authorization to act as an initiation services provider. This is a different type of license as there is a different type of regulations applicable.
If your company intends to activate only as an initiation services provider, an initial capital of GBP 50,000 is required. Additionally, you have to hold a guarantee, like professional indemnity insurance or something alike. The purpose is to be covered for the areas where the PISPS provides this payment initiation service.
Their FCA authorized activity includes cash transfer and withdrawal, all operations connected to the payment account, operations for payment transactions, issuance of payment instruments and acquisition of transactions, plus the money remittance service.
Any newcomer might have a hard time with the registration and authorization process for the Payment Institution License UK. Thus, PFSER provides you all the useful know-how and industry insights.
We help you decide which is the best type of license for your intended activity. We provide you with all the elements needed for authorization and with a strong activity framework. PFSER services consist of:
Company formation services;
Drafting and filing the documents for authorization and registration under FCA;
Legal counseling for UK company legal matters;
Trademark and domain names incorporation and registration;
Communication with FCA during the whole process of authorization/ registration;
Counseling in regard to the appropriate business model, banking partners, employees, software, etc;
Assistance with finding appropriate safeguarding account.