What does FCA Authorised Payment Institution mean?

The Financial Conduct Authority (FCA) is the UK’s financial regulator, overseeing firms that provide services to consumers and maintaining the integrity of UK markets. Any company that carries out payment services – such as money transfers, foreign exchange or digital payments – in the UK must be either authorised or registered by the FCA. In practice, most full-scale providers are Authorised Payment Institutions (APIs) under the UK’s Payment Services Regulations. This means they have applied to the FCA, met strict requirements (capital, governance, compliance) and been granted formal permission to offer regulated payment services.

FCA authorised payment institution defined

An FCA-authorised payment institution is a licensed firm that can provide payment services by law. 

Under the Payment Services Regulations 2017 (implementing the EU’s PSD2 rules in the UK), an API is a company authorised by the FCA to carry out activities like executing payment transactions (e.g. transfers, direct debits, card payments) on behalf of customers.  

In contrast, an Authorised Electronic Money Institution (EMI) has essentially the same permissions as an API plus the ability to issue electronic money (e-money) and operate electronic wallets. For example, a typical currency-transfer or remittance business would be an API (licensed to send and receive client funds) but would not be an EMI unless it also held customers’ money in e-money form.

Like banks, FCA-authorised payment institutions must protect client funds. By law, they must “safeguard” customer money – usually by keeping it in segregated trust accounts or an insurance policy – so that funds cannot be used for the firm’s own business and are protected if the firm fails. In fact, the FCA notes that over 95% of authorised payment firms use segregated accounts to hold customer funds. This means your money is ring-fenced from the firm’s liabilities. FCA-authorised PIs also comply with anti-money laundering (AML) rules and reporting requirements under the Money Laundering Regulations, adding further oversight of their operations.

Why FCA authorisation matters

Using an FCA-authorised payment institution is important for safety and legality. In the UK, it is a criminal offence to provide payment services without FCA authorisation or registration.  Only a regulated PI has the right to hold or move customer money legally. In practice, this means unregulated firms are unsafe: if they go bust, there is no legal protection for your funds.

The FCA and industry reports highlight real risks: for example, between 2018 and 2023, about a dozen UK payment firms failed, and regulators found vast shortfalls in client funds – on average, customers lost 65% of their money in those cases. In some failures the gap was over £20 million, and clients waited years for any refund. By contrast, FCA-authorised PIs must meet capital and compliance standards, and customers have legal recourse through the FCA if things go wrong.

CurrencyTransfer emphasises the value of FCA authorisation. We work only with top-tier FCA authorised payment institutions, ensuring that customer payments are handled securely. Similarly, we only stream exchange rates from FCA-authorised money service businesses, all of which segregate client accounts. This means every payment partner on the platform has undergone rigorous FCA checks. In general, choosing an FCA-authorised provider means you get the benefit of regulatory safeguards – segregation of funds, mandatory reporting, and oversight – which help protect your money.

Safeguarding of customer funds

The core legal requirement for FCA-authorised PIs is to safeguard client funds. Under the Payment Services Regulations, firms must either hold client money in trust accounts at banks or buy insurance/guarantees covering the funds. The dominant method, used by most firms, is segregation: client funds are kept in accounts separate from the firm’s own operational accounts. The FCA specifically highlights this: “one of the ways customer funds can be safeguarded is to keep them separate… this method is used by more than 95% of firms”. Segregation means that if the firm becomes insolvent, those monies are not considered part of its estate and can be returned to customers (typically via a special administration process).

CurrencyTransfer underlines this protection. Our partner payment institutions must follow a strict code to segregate client accounts. In other words, your money is held in a dedicated client account and cannot be seized by the payment firm’s creditors. This is the same principle applied by banks under UK law – client funds do not enter the firm’s balance sheet.  For users, this means an extra layer of safety: even in the unlikely event a payment partner fails, your money should be safeguarded by law.

Verifying FCA authorisation

You can always check if a company is an FCA-authorised payment institution via the FCA Register on fca.org.uk. Each authorised firm has a registered company number and FCA reference.  For example, CurrencyTransfer’s partners each list their FCA permission on the Register. The FCA Register will explicitly say if a firm is “authorised” for payment services (or for e-money). Beware firms that claim to be “FCA-approved” but do not appear on the Register as authorised or registered payment institutions – this likely means they are illegitimate. Regulatory guidance advises confirming authorisation status before sending money with any provider.

For added peace of mind, look for FCA logos or reference numbers on a provider’s website, and cross-check them on the official FCA site. We encourage clients to confirm the safety of their funds via its own Security and Regulation documentation. In general, regulated PIs will be transparent about their authorisation, while unregulated companies often provide vague or false details.

Choosing an FCA-authorised provider

Working with an FCA-authorised payment institution not only keeps you on the right side of the law, but also usually means better consumer protection. Authorised PIs must maintain capital buffers (up to €125,000 or more depending on services) and carry professional indemnity/insurance in some cases. They are subject to regular FCA audits and must have anti-fraud and AML controls. By comparison, “small payment institutions” (SPIs) with turnover under €3 million can register for a lighter-touch approval and are not required by law to safeguard funds (though many still do voluntarily). CurrencyTransfer explicitly excludes small, lightly-regulated firms from its marketplace, preferring only FCA-authorised partners.  This means you deal only with thoroughly vetted institutions that meet high compliance standards.