Payment Institution (PI)
A Payment Institution is a firm licensed to provide payment services, such as executing transfers, acquiring transactions, or issuing payment instruments, without issuing e-money. It sits alongside the EMI as the other main non-bank payments licence, with a lighter scope and often lower capital.
Choosing between a PI and an EMI licence sets your permitted activities and capital for years, and picking the wrong one means reapplying or restructuring later. A PI is usually faster and cheaper to obtain than an EMI but cannot hold e-money balances, so matching the licence to your actual model at the outset avoids a costly redo.
An EMI licence is the authorisation a regulator grants a firm to operate as an Electronic Money Institution: issuing e-money and providing payment accounts and services.
Safeguarding is the regulatory obligation on EMIs and payment institutions to protect customer funds by holding them separately from the firm’s own money, typically in a segregated account at a credit institution or covered by an insurance arrangement, so customers are repaid if the firm fails.
A capital requirement is the minimum amount of own funds a regulator obliges a licensed payments or e-money firm to hold, sized to its licence type and activity, so it can absorb losses and wind down safely.
The Financial Conduct Authority is the United Kingdom’s regulator for financial services firms, including EMIs, payment institutions, and many crypto businesses for AML purposes.