December 9, 2022


All monetary establishments that function within the UK have to be approved by the Monetary Conduct Authority (FCA). Through the authorization course of, monetary service suppliers should guarantee they’re looking for the proper permissions for his or her enterprise mannequin – since these permissions will have an effect on the best way the FCA gives ongoing regulatory supervision. Corporations that apply to the FCA with incorrect permissions danger delaying and even failing to realize authorization. 

For potential cost service suppliers (PSP), choosing the proper permissions on their utility is an important step. The FCA has elevated its give attention to authorization: no matter whether or not a PSP submits a Small Fee Establishment (SPI) or an Approved Fee Establishment (API) utility, the FCA will apply a excessive degree of scrutiny to make sure their utility meets the related requirements. In instances the place the FCA believes that an applicant has chosen incorrect permissions or has omitted a permission that the FCA thinks is required for the applicant’s proposed actions, the regulator might request a rationale as to why the applicant believes the permissions utilized for are applicable. 

Given the significance of PSP compliance with FCA guidelines and laws, it pays to know what the regulator expects in the course of the approval course of – and find out how to ship it. Accordingly, on this installment of our FCA approval sequence, we’re taking a better have a look at the FCA’s vary of operational permissions with a purpose to assist your agency streamline the approval course of. 

Understanding which permissions your PSP wants

Beneath the Fee Providers Rules (PSR) 2017, there are eight doable permissions for which potential cost providers companies can apply. The permissions required for every agency will depend upon the particular nature of its enterprise mannequin and its felony danger publicity. When excited about their FCA purposes and ongoing UK AML compliance necessities, PSPs ought to study the methods by which they serve their clients and the way their clients work together with their merchandise to find out which PSR permissions they might want to receive. 

With that in thoughts, take into account the next key service necessities: 

Prospects that have to deposit money in a cost account

When a agency creates cost accounts for its clients and permits clients to obtain funds into such accounts, the PSP should receive permission from the FCA for ‘Providers enabling money to be positioned on a cost account and all the operations required for working a cost account’. The permission pertains to processes by which a agency creates cost accounts for its clients and permits clients to obtain funds into such an account. 

Most PSPs conducting cost buying exercise would require this permission as per the FCA’s steerage in its strategy doc to cost providers and e-money. The FCA deems the accounts by which cost acquirers obtain transactions on behalf of retailers as cost accounts. 

FCA permission required: Providers enabling money to be positioned on a cost account and all the operations required for working a cost account

Prospects that have to withdraw money from their accounts

Simply as clients might have to deposit money into funds accounts, they could additionally have to withdraw it. On this context, the PSP requires an FCA permission for patrons to make withdrawals from their account. An instance may embody companies that permit clients to withdraw from their account at an ATM or over a counter. 

FCA permission required: Providers enabling money withdrawals from a cost account and all operations required to function a cost account.

Prospects that have to make transactions from their accounts and obtain cost transfers

There are two circumstances the place this type of permission can be required. Firstly, it might be relevant in instances the place a PSP permits its clients to make transactions from their cost accounts by way of direct debits, funds playing cards (or related gadgets), or credit score transfers (i.e., financial institution transfers). For instance, if a PSP issued cost accounts to its clients and supplied performance for patrons to arrange direct debits from their accounts, the PSP can be conducting the execution of cost transactions and would require this permission. 

Secondly, the permission can be mandatory in situations the place a PSP permits its buyer to obtain funds by way of direct debit, card funds, or credit score transfers. Sometimes, this situation would apply to companies that purchase funds – corresponding to card funds by means of point-of-sale gadgets – on behalf of consumers, subsequently permitting the shopper to obtain funds. 

FCA permission required: The execution of cost transactions, together with transfers of funds on a cost account with the consumer’s cost service supplier or with one other cost service supplier.

Prospects that have to make or obtain funds lined by credit score

This permission additionally applies to companies that want to permit clients to finish or obtain cost transactions. Nevertheless, for this permission to use, the transactions have to be lined by a line of credit score. For instance, a agency allowing its buyer to make financial institution transfers from their cost account utilizing overdraft services would require this permission to undertake this exercise. Likewise, PSPs that situation bank cards or deferred debit playing cards would execute cost transactions in step with this permission.

FCA permission required: The execution of cost transactions the place the funds are lined by a credit score line for a cost service consumer 

Corporations that have to situation clients with cost devices, corresponding to gadgets or customized procedures, with a purpose to facilitate transactions

A agency can be issuing cost devices if it was issuing customized gadgets or a customized set of procedures by means of which its clients may make cost transactions. At a primary degree, issuing cost devices would entail issuing debit or bank cards to clients, which is assessed as a “customized machine” inside the FCA’s steerage. Moreover, the requirement to acquire this permission applies to PSPs that provide bodily devices, corresponding to cost playing cards, and PSPs that permit clients to request funds over the phone by means of a web based or cellular utility. 

This permission would even be mandatory for companies that contract with both companies or sole merchants to gather funds on their behalf. Conventional service provider buying exercise, the place PSPs contract with service provider companies to obtain funds for items/providers by way of card scheme transactions, would fall inside the scope of this permission. Nevertheless, this permission additionally applies to companies that settle for funds by means of cost devices apart from cost playing cards, corresponding to by means of direct debits or scanning distinctive QR codes on cellular gadgets.

FCA permission required: Issuing cost devices or buying cost transactions

Prospects that have to remit funds to a beneficiary or a beneficiary’s PSP

Cash remittance entails transferring a buyer’s funds, no matter whether or not an trade of forex has taken place, to a beneficiary or a beneficiary’s PSP. One of many central tenets of offering cash remittance is that transmission of funds takes place with out making a cost account for both the payer (i.e., the person or enterprise sending the cash) or the payee (i.e., the person or firm receiving the cash). 

This permission is usually required for cash switch firms working a money acceptance mannequin or on-line platform and hawala (casual cash switch) brokers. 

FCA permission required: Cash remittance

Prospects that have to facilitate Open Banking Funds from buyer accounts instantly to a different PSP

Corporations might have to permit customers to make Open Banking funds from their cost account at one other PSP. When offering a cost initiation service underneath such an association, a agency wouldn’t maintain the consumer’s cash in its account as can be the case in a remittance or cost buying mannequin. As a substitute, a agency would merely be initiating a cost order to the consumer’s different PSP to make a transaction to a vacation spot checking account. To conduct such a service, companies would both combine the Open Banking APIs instantly into their infrastructure or use a technical providers supplier (TSP). 

This permission would seize companies that present a cost initiation service platform to account homeowners instantly and companies that contract with retailers to permit them to simply accept initiated cost transactions. 

FCA permission required: Fee initiation providers

Corporations with on-line providers want to supply clients with data from their cost accounts with different PSPs

A agency that gives a web based monetary service could also be required to supply a consolidated overview of the knowledge obtained from a number of of a buyer’s cost accounts with different PSPs. This consists of data on the shopper’s account balances, current incoming/outgoing transactions, and recurring funds. 

There are numerous use instances for account data providers that vary from companies that intend to make use of a buyer’s account data information to supply a customized monetary administration and budgeting software, to companies that wish to use the knowledge for credit score scoring and referencing functions. 

FCA permission required:  Account data providers

Exercise Exclusions Beneath the PSRs 

Beneath Schedule 1 of PSR 2017, a number of potential actions are excluded from the scope of offering cost providers. Any agency that gives or intends to supply these actions doesn’t want to use for FCA authorization as a PSP.

The exclusions embody skilled money courier firms gathering and delivering banknotes, and cash and cash-to-cash forex trade operations the place the funds usually are not held in a cost account.

ComplyTry: FCA Compliance for Fee Service Suppliers

FCA compliance ought to be a major precedence for PSPs within the UK. Past making certain the proper PSP permissions are sought in the course of the FCA approval course of, companies may also have to show to the regulator that they’re able to implementing efficient compliance measures to satisfy the related UK AML/CFT laws.  These laws embody implementing a variety of buyer monitoring and screening measures, together with transaction monitoring, sanctions screening, PEP screening, and hostile media screening. These processes ought to be backed by appropriate compliance software program, able to assembly the huge information assortment and evaluation obligations that the FCA requires. 

ComplyAdvantage’s ComplyTry platform represents a manner for companies to ease their UK compliance burden with smarter, sooner AML/CFT screening and monitoring, and streamlined cost experiences for patrons. Free to make use of, ComplyTry permits PSPs to entry a spectrum of compliance information assets together with real-time sanctions data, PEP lists and watch lists, and hostile media. Utilizing ComplyTry is easy and free: add the related buyer particulars, choose a most well-liked information supply, and hit search – our software program will generate a buyer profile as a pre-filled information card. 

Are you an early stage FinTech and want a KYC and AML answer?

Uncover ComplyLaunch™, our automated compliance options bundle for early stage FinTechs.

Study extra


The Thistle Initiatives Group is an award-winning compliance consultancy that gives monetary providers companies with professional compliance assets and capabilities to handle tasks throughout all regulatory areas. Fee Providers Supervisor, Jack Williams, has in depth expertise making ready profitable digital cash and cost providers purposes for shoppers, together with implementing their compliance framework and drafting key compliance insurance policies and procedures. 

All monetary establishments that function within the UK have to be approved by the Monetary Conduct Authority (FCA). Through the authorization course of, monetary service suppliers should guarantee they’re looking for the proper permissions for his or her enterprise mannequin – since these permissions will have an effect on the best way the FCA gives ongoing regulatory supervision. Corporations that apply to the FCA with incorrect permissions danger delaying and even failing to realize authorization. 

For potential cost service suppliers (PSP), choosing the proper permissions on their utility is an important step. The FCA has elevated its give attention to authorization: no matter whether or not a PSP submits a Small Fee Establishment (SPI) or an Approved Fee Establishment (API) utility, the FCA will apply a excessive degree of scrutiny to make sure their utility meets the related requirements. In instances the place the FCA believes that an applicant has chosen incorrect permissions or has omitted a permission that the FCA thinks is required for the applicant’s proposed actions, the regulator might request a rationale as to why the applicant believes the permissions utilized for are applicable. 

Given the significance of PSP compliance with FCA guidelines and laws, it pays to know what the regulator expects in the course of the approval course of – and find out how to ship it. Accordingly, on this installment of our FCA approval sequence, we’re taking a better have a look at the FCA’s vary of operational permissions with a purpose to assist your agency streamline the approval course of. 

Understanding which permissions your PSP wants

Beneath the Fee Providers Rules (PSR) 2017, there are eight doable permissions for which potential cost providers companies can apply. The permissions required for every agency will depend upon the particular nature of its enterprise mannequin and its felony danger publicity. When excited about their FCA purposes and ongoing UK AML compliance necessities, PSPs ought to study the methods by which they serve their clients and the way their clients work together with their merchandise to find out which PSR permissions they might want to receive. 

With that in thoughts, take into account the next key service necessities: 

Prospects that have to deposit money in a cost account

When a agency creates cost accounts for its clients and permits clients to obtain funds into such accounts, the PSP should receive permission from the FCA for ‘Providers enabling money to be positioned on a cost account and all the operations required for working a cost account’. The permission pertains to processes by which a agency creates cost accounts for its clients and permits clients to obtain funds into such an account. 

Most PSPs conducting cost buying exercise would require this permission as per the FCA’s steerage in its strategy doc to cost providers and e-money. The FCA deems the accounts by which cost acquirers obtain transactions on behalf of retailers as cost accounts. 

FCA permission required: Providers enabling money to be positioned on a cost account and all the operations required for working a cost account

Prospects that have to withdraw money from their accounts

Simply as clients might have to deposit money into funds accounts, they could additionally have to withdraw it. On this context, the PSP requires an FCA permission for patrons to make withdrawals from their account. An instance may embody companies that permit clients to withdraw from their account at an ATM or over a counter. 

FCA permission required: Providers enabling money withdrawals from a cost account and all operations required to function a cost account.

Prospects that have to make transactions from their accounts and obtain cost transfers

There are two circumstances the place this type of permission can be required. Firstly, it might be relevant in instances the place a PSP permits its clients to make transactions from their cost accounts by way of direct debits, funds playing cards (or related gadgets), or credit score transfers (i.e., financial institution transfers). For instance, if a PSP issued cost accounts to its clients and supplied performance for patrons to arrange direct debits from their accounts, the PSP can be conducting the execution of cost transactions and would require this permission. 

Secondly, the permission can be mandatory in situations the place a PSP permits its buyer to obtain funds by way of direct debit, card funds, or credit score transfers. Sometimes, this situation would apply to companies that purchase funds – corresponding to card funds by means of point-of-sale gadgets – on behalf of consumers, subsequently permitting the shopper to obtain funds. 

FCA permission required: The execution of cost transactions, together with transfers of funds on a cost account with the consumer’s cost service supplier or with one other cost service supplier.

Prospects that have to make or obtain funds lined by credit score

This permission additionally applies to companies that want to permit clients to finish or obtain cost transactions. Nevertheless, for this permission to use, the transactions have to be lined by a line of credit score. For instance, a agency allowing its buyer to make financial institution transfers from their cost account utilizing overdraft services would require this permission to undertake this exercise. Likewise, PSPs that situation bank cards or deferred debit playing cards would execute cost transactions in step with this permission.

FCA permission required: The execution of cost transactions the place the funds are lined by a credit score line for a cost service consumer 

Corporations that have to situation clients with cost devices, corresponding to gadgets or customized procedures, with a purpose to facilitate transactions

A agency can be issuing cost devices if it was issuing customized gadgets or a customized set of procedures by means of which its clients may make cost transactions. At a primary degree, issuing cost devices would entail issuing debit or bank cards to clients, which is assessed as a “customized machine” inside the FCA’s steerage. Moreover, the requirement to acquire this permission applies to PSPs that provide bodily devices, corresponding to cost playing cards, and PSPs that permit clients to request funds over the phone by means of a web based or cellular utility. 

This permission would even be mandatory for companies that contract with both companies or sole merchants to gather funds on their behalf. Conventional service provider buying exercise, the place PSPs contract with service provider companies to obtain funds for items/providers by way of card scheme transactions, would fall inside the scope of this permission. Nevertheless, this permission additionally applies to companies that settle for funds by means of cost devices apart from cost playing cards, corresponding to by means of direct debits or scanning distinctive QR codes on cellular gadgets.

FCA permission required: Issuing cost devices or buying cost transactions

Prospects that have to remit funds to a beneficiary or a beneficiary’s PSP

Cash remittance entails transferring a buyer’s funds, no matter whether or not an trade of forex has taken place, to a beneficiary or a beneficiary’s PSP. One of many central tenets of offering cash remittance is that transmission of funds takes place with out making a cost account for both the payer (i.e., the person or enterprise sending the cash) or the payee (i.e., the person or firm receiving the cash). 

This permission is usually required for cash switch firms working a money acceptance mannequin or on-line platform and hawala (casual cash switch) brokers. 

FCA permission required: Cash remittance

Prospects that have to facilitate Open Banking Funds from buyer accounts instantly to a different PSP

Corporations might have to permit customers to make Open Banking funds from their cost account at one other PSP. When offering a cost initiation service underneath such an association, a agency wouldn’t maintain the consumer’s cash in its account as can be the case in a remittance or cost buying mannequin. As a substitute, a agency would merely be initiating a cost order to the consumer’s different PSP to make a transaction to a vacation spot checking account. To conduct such a service, companies would both combine the Open Banking APIs instantly into their infrastructure or use a technical providers supplier (TSP). 

This permission would seize companies that present a cost initiation service platform to account homeowners instantly and companies that contract with retailers to permit them to simply accept initiated cost transactions. 

FCA permission required: Fee initiation providers

Corporations with on-line providers want to supply clients with data from their cost accounts with different PSPs

A agency that gives a web based monetary service could also be required to supply a consolidated overview of the knowledge obtained from a number of of a buyer’s cost accounts with different PSPs. This consists of data on the shopper’s account balances, current incoming/outgoing transactions, and recurring funds. 

There are numerous use instances for account data providers that vary from companies that intend to make use of a buyer’s account data information to supply a customized monetary administration and budgeting software, to companies that wish to use the knowledge for credit score scoring and referencing functions. 

FCA permission required:  Account data providers

Exercise Exclusions Beneath the PSRs 

Beneath Schedule 1 of PSR 2017, a number of potential actions are excluded from the scope of offering cost providers. Any agency that gives or intends to supply these actions doesn’t want to use for FCA authorization as a PSP.

The exclusions embody skilled money courier firms gathering and delivering banknotes, and cash and cash-to-cash forex trade operations the place the funds usually are not held in a cost account.

ComplyTry: FCA Compliance for Fee Service Suppliers

FCA compliance ought to be a major precedence for PSPs within the UK. Past making certain the proper PSP permissions are sought in the course of the FCA approval course of, companies may also have to show to the regulator that they’re able to implementing efficient compliance measures to satisfy the related UK AML/CFT laws.  These laws embody implementing a variety of buyer monitoring and screening measures, together with transaction monitoring, sanctions screening, PEP screening, and hostile media screening. These processes ought to be backed by appropriate compliance software program, able to assembly the huge information assortment and evaluation obligations that the FCA requires. 

ComplyAdvantage’s ComplyTry platform represents a manner for companies to ease their UK compliance burden with smarter, sooner AML/CFT screening and monitoring, and streamlined cost experiences for patrons. Free to make use of, ComplyTry permits PSPs to entry a spectrum of compliance information assets together with real-time sanctions data, PEP lists and watch lists, and hostile media. Utilizing ComplyTry is easy and free: add the related buyer particulars, choose a most well-liked information supply, and hit search – our software program will generate a buyer profile as a pre-filled information card. 

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The Thistle Initiatives Group is an award-winning compliance consultancy that gives monetary providers companies with professional compliance assets and capabilities to handle tasks throughout all regulatory areas. Fee Providers Supervisor, Jack Williams, has in depth expertise making ready profitable digital cash and cost providers purposes for shoppers, together with implementing their compliance framework and drafting key compliance insurance policies and procedures. 

Initially printed September 2, 2022, up to date September 2, 2022



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