Overview
The United Kingdom (UK) offers a comprehensive and well-regulated framework for payment services, positioning itself as one of the leading global financial hubs. The regulatory environment is governed by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), which ensure compliance with domestic and international financial standards. The UK’s regulatory framework is aligned with the Payment Services Regulations (PSRs) 2017, which implement the European Union’s Payment Services Directive 2 (PSD2) into UK law.

Licenses Available

1. Payment Institution (PI) License: This license allows businesses to provide a wide range of payment services, including money transfers, payment processing, and direct debits. Payment institutions can operate across the UK and, post-Brexit, have separate arrangements for European Economic Area (EEA) operations.
2. Electronic Money Institution (EMI) License: Companies issuing electronic money, such as prepaid cards, e-wallets, or digital currency solutions, must obtain an EMI license. This license enables businesses to manage e-money activities with comprehensive regulatory oversight.
3. Small Payment Institution (SPI) License: This license is designed for smaller companies with lower transaction volumes and less stringent regulatory requirements. It offers a more flexible entry point into the payment services market.
4. Money Service Business (MSB) License: Businesses involved in currency exchange, money remittance, and cheque cashing must register as a Money Service Business with Her Majesty’s Revenue and Customs (HMRC) and comply with the UK’s anti-money laundering (AML) and counter-terrorist financing (CTF) regulations.

Regulator: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)
The FCA is the primary regulator for payment services in the UK, ensuring compliance with the Payment Services Regulations (PSRs) and related laws. The PRA also plays a role for institutions that engage in more complex banking-related services. The FCA is renowned globally for its robust regulatory approach, transparency, and commitment to financial stability, ensuring a secure operational environment for payment service providers.

Payment Services Regulations (PSRs) 2017, which implement the European Union’s Payment Services Directive 2 (PSD2) into UK law.