The UK remains a highly developed market for payment services, but launching a payment or e-money company requires considerably more than receiving regulatory approval from the Financial Conduct Authority (FCA).
A new business has to determine the right regulatory status, build the technology needed to operate customer accounts and transactions, protect customer funds under the UK safeguarding rules, and connect to banks and payment infrastructure capable of delivering the actual services promised to customers.
For founders, the practical launch process can be divided into three closely connected areas: regulation and safeguarding, software, and banking infrastructure.
Choosing between the four UK regulatory routes
Payment and electronic money businesses operating in the UK generally need to be authorised or registered with the FCA and obtain payment institution licence or e-money institution licence in the UK. The appropriate route depends on the services offered, the scale of the business and whether the company intends to issue electronic money.
Four structures are particularly relevant.
Authorised Payment Institution
An Authorised Payment Institution (API) can provide payment services covered by its FCA permissions.
This structure can be suitable for businesses focused on activities such as money remittance, payment execution, acquiring or other regulated payment services without issuing electronic money.
Authorisation involves an assessment of much more than the product itself. The FCA expects appropriate governance, experienced management, compliance controls, financial resources, security arrangements and a clear explanation of how funds and payments will move through the business.
For a payment company expected to operate at meaningful scale, an API is generally the full authorisation route rather than the simplified registration available to smaller firms.
Small Payment Institution
A Small Payment Institution (SPI) is registered rather than fully authorised by the FCA.
It can be relevant to smaller payment businesses whose transaction volumes remain within the applicable limits and whose operating model fits the SPI regime.
An SPI can provide payment services, but the structure is more restricted than an API. It should therefore be considered in the context of the company’s expected volumes and longer-term plans rather than simply as an easier route into the market.
For a business intending to scale quickly, add more complex services or significantly increase payment volumes, full API authorisation may eventually become necessary.
Authorised Electronic Money Institution
An Authorised Electronic Money Institution (AEMI) is generally more relevant when the proposed product includes the issuance of electronic money.
An AEMI can issue electronic money and provide payment services within its permissions.
The FCA assesses capital, governance, management, safeguarding, AML controls, operational risks and the wider business model before granting authorisation.
Small Electronic Money Institution
A Small Electronic Money Institution (SEMI) is the registered alternative available for smaller e-money businesses that satisfy the relevant conditions.
The FCA currently allows firms projecting average outstanding e-money of no more than €5 million to consider the SEMI route, subject to the other regulatory requirements. An SEMI cannot provide certain services such as Account Information Services or Payment Initiation Services.
The distinction between an AEMI and SEMI is therefore not simply “licence versus no licence”. Both are regulated statuses. The key difference is that one involves full FCA authorisation while the other operates under a smaller registered regime with additional limitations.
CASS 15 has changed the safeguarding framework
Regulatory approval is only part of the UK compliance picture.
From 7 May 2026, the FCA introduced its strengthened safeguarding regime for payment and e-money firms, including the new CASS 15 rules.
Safeguarding is designed to separate relevant customer funds from the firm’s own money so that those funds remain identifiable and protected if the institution fails. Unlike deposits held at a bank, funds held by payment and e-money institutions are not directly covered by the Financial Services Compensation Scheme simply because they are safeguarded.
Under CASS 15, safeguarding firms need stronger records, controls and oversight of relevant customer funds.
The changes include monthly safeguarding reporting, regular reconciliation requirements and stronger preparation for a possible insolvency. The FCA requires firms to carry out internal safeguarding reconciliations at least once on each reconciliation day.
Responsibility also needs to be clearly assigned. CASS 15 requires a sufficiently senior director or manager to oversee compliance with the relevant funds regime and report to the governing body.
Safeguarding assurance and audits
The new framework also makes independent assurance more important.
The FCA introduced annual safeguarding audits by qualified auditors for firms within scope, although smaller firms holding less than £100,000 in customer funds are exempt from the audit requirement. Monthly reporting and daily safeguarding checks form part of the wider regime.
This means safeguarding needs to be designed operationally rather than treated as documentation prepared after authorisation.
A payment company needs to know which funds are relevant funds, where they are held, how internal ledger balances are reconciled against external bank balances and how discrepancies are detected and corrected.
Where funds are held in safeguarding bank accounts, CASS 15 also introduces detailed requirements around the relationship with the relevant bank. For example, firms generally need acknowledgement letters confirming the status of safeguarding accounts.
The choice of safeguarding bank is consequently an important part of launching a UK payment business.
Software is the operating layer behind the licence
A regulated business also needs technology capable of implementing the operating model described to the FCA.
Two types of systems are particularly relevant.
Core banking software
Core banking software provides the central ledger and account-management layer.
For a payment or e-money institution, it can be used to manage customer accounts, balances, currencies, fees, transaction histories and internal transfers.
When a user sees £4,000 in their account, the system needs to maintain the underlying financial records showing exactly how that balance was created and every debit or credit that subsequently changes it.
This becomes particularly important under safeguarding rules because the institution needs accurate internal records against which external safeguarding balances can be reconciled.
Core banking software may also connect to KYC/KYB providers, AML systems, accounting tools, card processors and external banking partners.
Payment software
Payment software solves a different part of the problem.
Instead of primarily maintaining accounts and balances, it can manage payment instructions and the connections through which transactions are executed.
Depending on the architecture, this may include payment routing, transaction orchestration, provider integrations, payment status management, fees, reconciliation and access to different currencies or payment methods.
Some companies use an integrated platform covering both core ledger and payments. Others combine a core banking system with a separate payment engine.
The right architecture depends on the product. A remittance company processing international transfers may have different requirements from an EMI offering GBP accounts, cards and domestic payments.
Building the UK banking and Banking-as-a-Service layer
The next challenge is connecting the regulated entity and its software to real financial infrastructure – payment rails.
The UK has several domestic payment systems. Faster Payments supports rapid GBP payments, Bacs supports services including Direct Debit and Direct Credit, and CHAPS is used for high-value, time-critical sterling payments.
A fintech does not necessarily need to connect directly to every scheme.
Many payment and e-money institutions work with banks, EMIs and Banking-as-a-Service or payment infrastructure providers that provide access through APIs.
For example, ClearBank offers account infrastructure and direct access to Faster Payments, Bacs and CHAPS, as well as SEPA services for euro payments. It also provides account structures that can be used for segregated or safeguarding purposes depending on the arrangement.
Clear Junction provides payment and account infrastructure to regulated financial institutions, including access to Faster Payments, Bacs and CHAPS in the UK, as well as virtual IBAN structures and international payment capabilities.
Modulr is another UK infrastructure provider. As of August 2026, it has direct participation in Faster Payments, Bacs and CHAPS, alongside API-based accounts, collections and payment functionality. Its broader product stack also includes card services and access to other international payment methods.
These are examples rather than universal solutions. Whether a provider will work with a particular fintech depends on its licence, customers, jurisdictions, transaction flows, risk profile and expected volumes.
Accounts, FX and cards complete the proposition
Most payment companies need more than domestic GBP transfers.
An EMI targeting international businesses may need GBP and EUR accounts, SWIFT connectivity or other international payment routes, and an FX provider capable of converting customer funds between currencies.
If the product includes cards, the company also needs card issuing and processing infrastructure, usually involving Visa or Mastercard programme capabilities through an appropriate issuer or programme partner.
Safeguarding has to sit alongside these services. Customer money may need to be held separately in dedicated safeguarding accounts with an appropriate bank, while the operating company maintains separate accounts for its own funds.
The important point is that these relationships should be designed together.
A core banking platform must understand the account structure used by the bank. The safeguarding process must reconcile against the same external balances. Payment software must know which provider or rail should execute each transfer. FX and card transactions must ultimately be reflected correctly in the customer ledger.
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A UK payment company is an infrastructure project as well as a regulatory one
Obtaining an API, SPI, AEMI or SEMI status is an important milestone, but it does not by itself create an operational payment business.
A functioning UK fintech requires several layers to work together:
regulatory authorisation or registration → CASS 15 safeguarding → core banking and payment software → banking and payment infrastructure.
The strongest operating models are usually designed with all four in mind from the start.
A decision about customer balances affects the regulatory status. The licence affects the safeguarding model. Safeguarding influences account structures and reconciliation. The banking providers available to the company can then determine which payments, currencies and card services can realistically be offered.
For founders, understanding these dependencies early is often more valuable than focusing on the licence in isolation.
