If you’re moving funds across borders, you’ve probably seen phrases like “FCA authorised”, “FCA registered” or “authorised payment institution” on provider websites. The term FCA authorised payment institution sounds reassuring, but what does it actually guarantee in practice – and where are the limits?
For CFOs, finance directors and founders, getting this wrong isn’t just a technicality. It touches core questions:
- Are client funds properly protected if the firm fails?
- What standards does the provider have to meet day-to-day?
- How is an FCA authorised payment institution different from a bank, or from an EMI like Revolut or Wise?
In this guide, we’ll break the jargon into plain English and show how to use FCA authorisation as one piece of a smarter framework for choosing an FX and payments partner.
Table of Contents
Who is the FCA and why their label matters
The Financial Conduct Authority (FCA) is the conduct regulator for financial services in the UK. It oversees banks, brokers, investment firms, payment institutions, EMIs and a growing list of digital finance players. Its job is to:
- Protect consumers and businesses using financial services
- Keep markets fair and orderly
- Promote effective competition
Under the Payment Services Regulations 2017 and Electronic Money Regulations 2011, the FCA is responsible for supervising payment institutions and EMIs, including how they safeguard client funds and how they handle complaints.(FCA)
The badge “FCA authorised” means the firm isn’t just operating on a whim; it has passed through a structured licensing process and is subject to ongoing supervision. But that simple phrase hides quite a bit of nuance.
What does “FCA authorised” actually mean?
At a high level, “FCA authorised” means a firm has:
- Applied for and received specific permissions from the FCA
- Met conditions around governance, capital, systems and controls
- Been added to the FCA Register with defined permissions (for example, “Authorised Payment Institution” for certain types of payment services)(Legislation.gov.uk)
For payment services, an authorised payment institution (API) is defined in UK law as a firm that:
- Has been authorised as a payment institution under Regulation 6 of the Payment Services Regulations 2017; and
- Is entered on the FCA Register as an authorised payment institution.(Legislation.gov.uk)
So when a provider’s website says “We are an FCA authorised payment institution”, they are claiming that specific status – not just some vague relationship with the FCA.
“Authorised” vs “Registered” vs “Regulated”
This is where confusion often starts:
- Authorised – usually means the firm holds full permissions to provide a service (e.g. authorised payment institution, authorised investment firm).
- Registered – can mean a lighter-touch permission for a narrower purpose. For example, some account information providers or cryptoasset firms are “registered” for anti-money-laundering supervision, but not authorised to provide a broad set of regulated services.(FCA)
- Regulated – a general marketing term. A firm may say “regulated by the FCA” without clearly stating how or for what activities.
For a corporate user, the key is the exact line on the FCA Register: are they an authorised payment institution, a small payment institution, an EMI, or just registered for something else entirely?
What is a payment institution?
Under the Payment Services Regulations, a payment institution (PI) is a firm allowed to provide one or more regulated payment services, such as:(FCA)
- Money remittance
- Execution of payment transactions (for example, sending a supplier payment to another country)
- Payment initiation services
- Merchant acquiring / card acceptance services
Crucially, a payment institution is not a bank:
- It cannot take deposits in the way a bank does
- It typically cannot use client funds to lend or invest for its own benefit
- It must safeguard client funds in specific ways, separate from its own operational funds
Some PIs are focused on remittances, others on B2B cross-border payments, others on embedded payments through APIs. From the FCA’s perspective, they all sit in the same regulatory family – but their risk profiles and capabilities can vary widely.(FCA)
Authorised Payment Institution vs Small PI vs EMI
Within this framework, you’ll typically encounter three main categories:
1. Authorised Payment Institution (API)
An authorised payment institution is the “full” version of a payment institution licence. APIs:
- Can provide a wide range of payment services
- Must meet minimum initial capital thresholds (for many firms, at least £50,000+ depending on services)(fcaauthorisation.info)
- Are subject to detailed risk, governance and reporting requirements
- Must follow strict safeguarding rules for client funds(FCA)
APIs are typically the structure used by more established providers with significant transaction volumes.
2. Small Payment Institution (SPI)
A small payment institution (SPI):
- Can offer many of the same payment services as an API
- Is limited to relatively modest transaction volumes (historically under €3m per month in the UK, subject to updates)(fcaauthorisation.info)
- Faces lighter capital requirements but still has to meet conduct standards
SPIs are often newer or more niche providers. They can be well-run, but their smaller scale may matter when you’re looking at operational resilience, especially for high-value B2B flows.
3. Electronic Money Institution (EMI)
An electronic money institution (EMI) can issue e-money (for example, stored value in a digital wallet or prepaid card) as well as provide payment services. An EMI:
- Can hold client balances for longer periods
- Must comply with both payment services rules and additional e-money rules
- Has its own safeguarding regime, which is now being tightened alongside payment institutions(FCA)
Well-known fintech names like Revolut and PayPal operate under EMI or similar permissions in the UK, rather than as banks.
Safeguarding: how client funds should be protected
For most corporate users, safeguarding is the most important practical consequence of working with an FCA authorised payment institution.
Under FCA rules, APIs and EMIs must:(FCA)
- Segregate client funds from their own operational funds, typically in a designated safeguarding account with a bank or via an approved insurance/guarantee model
- Keep records that clearly show which funds belong to which clients
- Regularly reconcile safeguarded balances against outstanding client liabilities
- Have documented processes for returning client funds if the firm fails
Following several high-profile failures of payment and e-money firms where customers lost a material share of their balances, the FCA has now strengthened the safeguarding regime. From May 2026, new rules will require:
- Stricter segregation of client funds and firm funds
- More frequent reconciliations and daily checks for larger firms
- Monthly reporting and annual audits for many providers(Reuters)
For a CFO, that translates into a higher expectation that, if a regulated payment firm collapses, client funds should be returned faster and with smaller shortfalls. It does not mean zero risk (more on that shortly), but it’s a step-change compared with the light standards in the early 2010s.
What FCA authorisation does not guarantee
This is the part providers’ marketing pages rarely spell out. Even with an FCA authorised payment institution, you do not automatically get:
- FSCS protection for client balances
- Client funds held by payment institutions and EMIs are usually not covered by the Financial Services Compensation Scheme (FSCS) in the same way bank deposits are. Safeguarding is a different model to deposit protection.(FCA)
- Zero risk of firm failure
- The FCA supervises firms but does not guarantee their survival. Poor governance, fraud, or business model problems can still bring a provider down. Future safeguarding rules aim to reduce losses in these cases, but they can’t eliminate risk entirely.(Ashurst)
- Best pricing on FX and fees
- Being FCA authorised says nothing about the spreads you’re charged, the transparency of fees, or the quality of execution across different corridors. Studies of FX users repeatedly show that firms often pay wider spreads than they realise, with volatility in 2024–2025 putting even more focus on cost control.(Reuters)
- Flawless operational resilience
- FCA rules require firms to test and document operational resilience, but outages and incidents still happen, and the FCA has been clear that many payment firms need to upgrade controls.(Finextra Research)
So FCA authorisation is necessary, but not sufficient, for choosing a provider for large-scale FX flows, payroll or supplier payments.
How to check if a provider is really FCA authorised
Before you send the first pound or euro through a new provider, you should spend three minutes on the FCA Register. Here’s how.
Step 1: Search the firm by legal name
- Go to the FCA’s online register (search for “FCA register” in your browser).
- Type the legal entity name, not just the brand name. If you only know the brand, ask the provider for the legal entity as listed on the register.
Step 2: Confirm the permissions
On the firm’s page, look for:
- Firm status – e.g. “Authorised”, “Authorised – Payment Institution”, “Authorised – Electronic Money Institution”, “Registered – Small Payment Institution”, or just “Registered”.(FCA)
- Permissions – which activities is the firm allowed to carry on? You’re specifically looking for permissions related to payment services or e-money.
- Restriction notes – are there limitations, requirements or ongoing regulatory actions?
Step 3: Check for clones
The FCA also lists “clone firms” – fraudulent entities copying details from legitimate firms. Always:
- Verify the contact details (phone, URL, email) on the FCA Register match the ones you’re dealing with
- Be wary if the firm refuses video calls, won’t give a physical address, or asks you to deal through a personal email account
Step 4: Confirm the group structure
Ask the provider:
- Which group entity is authorised?
- Which entity will hold client funds and sign your contract?
- Are there any outsourcing or agency arrangements you should understand?
If the answers are vague, treat it as a warning sign. Clarity here is a minimum requirement for any serious B2B FX relationship.
How this affects FX, hedging and cross-border payments
So why should a corporate treasurer or CFO care that their provider is an FCA authorised payment institution rather than, say, a lightly regulated remittance shop or an unregulated platform?
1. Confidence in safeguarding and reconciliations
With FX markets as volatile as they’ve been in 2024–2025, many companies are moving higher volumes through specialist payment firms instead of just relying on house banks. Independent analysis shows that businesses are extending their hedges and thinking harder about counterparty risk as geopolitics drives currency swings.(Reuters)
If your hedging strategy relies on a provider that holds client balances before executing bulk conversions or payroll runs, you want comfort that:
- Those balances are segregated
- Reconciliations are frequent and independently audited
- There is a clear plan for returning client funds in a wind-down scenario
An FCA authorised payment institution sits inside a defined framework here; an unregulated provider does not.
2. Better alignment with your own governance
Boards and audit committees increasingly ask “who holds our FX and payments risk?”. Being able to say:
“We work with FCA authorised payment institutions that meet specific safeguarding and reporting standards”
is very different from:
“We use whichever online platform had a nice app and an attractive headline rate.”
That matters when explaining your risk framework to investors, auditors and, in some sectors, regulators.
3. Structuring forward contracts and hedging programmes
Many corporate hedging programmes use forward contracts and other instruments facilitated by specialist FX providers. Those providers may sit under different regulatory permissions (for example, investment firm authorisation as well as payment institution status).
A robust provider should be able to explain:
- Which entity is authorised for which activity
- How client funds are held when you pre-fund forwards or run rolling hedges
- How they manage margin calls, collateral and settlement risk
If a firm cannot clearly map its FCA permissions to its FX products, that’s reason to pause.
For a deeper look at structured FX risk management and forward strategies, you can also explore dedicated resources like Kazzius Capital’s hedging solutions and forward contracts.
Due-diligence questions to ask any payment institution
Regulation is only the starting point. When you assess a provider – whether an authorised payment institution, EMI or bank – these practical questions will quickly surface strengths and weaknesses:
Governance & regulation
- Are you an FCA authorised payment institution, small payment institution or EMI?
- Which legal entity will we contract with, and how is it authorised?
- Have you ever been subject to FCA enforcement or restrictions? If so, what changed afterwards?
Safeguarding & resilience
- Where are client funds held? Which banks do you use as safeguarding institutions?
- How often do you reconcile safeguarded balances?
- How will client funds be returned if you cease trading?
- What does your wind-down plan look like in practice?
Recent FCA policy statements stress the need for realistic wind-down planning and ready-to-execute client money distribution plans, especially in light of past failures where customers recovered only a fraction of their balances.(FCA)
Pricing & FX execution
- How do you quote FX – fixed spread, tiered pricing, or per-deal negotiations?
- Can you show historic average spreads for our main corridors vs mid-market rates?
- Do you charge additional payment fees, lifting fees, or intermediary bank fees?
According to Reuters and other market analysts, firms using online payment providers without understanding spreads often underestimate their FX costs relative to their total transaction volume.(Reuters)
Product fit
- Can you support named collection accounts so overseas clients can pay you like a local?
- Do you offer mass payment tools for global payroll and supplier runs?
- How do your APIs integrate with ERP, TMS or accounting systems?
If you’re pushing large, recurring volumes, you want more than regulatory compliance – you want a platform designed to reduce operational workload and FX leakage. For an example of that type of approach, see Kazzius Capital’s mass payment capabilities.
Where a specialist FX partner goes beyond regulation
The FCA sets the floor, not the ceiling. Two firms can both be FCA authorised payment institutions and still feel very different from a corporate client’s perspective.
A specialist partner like Kazzius Capital is built around three priorities that matter directly to CFOs and treasury teams:
1. Genuine human support
Global payments are full of edge cases: unusual corridors, cut-off times, local clearing quirks, complex beneficiary chains. When something goes wrong on a high-value trade or a time-critical payroll, you need:
- A named contact who knows your business
- Clear escalation paths
- Proactive updates while an issue is investigated
That’s a very different experience from dealing with a generic email inbox or a chatbot that can’t understand your use case.
If you want to see how that level of support can look in practice, start with the main Kazzius Capital overview.
2. Institutional-grade safeguarding and controls
Regulation tells firms what they must do; strong providers go further in how they do it. For example:
- Holding safeguarded funds with well-rated banks, with diversified concentration limits
- Running daily internal reconciliations even where rules technically permit a slower pace
- Testing incident and wind-down playbooks with real scenarios, not just paperwork
Recent FCA guidance and industry commentary (including Finextra and leading law firms) makes it clear that the standard is rising; payments firms that treat safeguarding as a tick-box exercise will find life increasingly uncomfortable.(Finextra Research)
3. Efficiency for finance teams
Beyond compliance, a modern FX partner should actively help you:
- Reduce FX costs through sharper spreads and smarter execution strategies
- Simplify workflows with bulk payments, approvals, and real-time tracking
- Gain visibility with dashboards showing exposure, upcoming settlements and historical rates
That combination of regulatory strength plus practical efficiency is where specialist providers earn their keep. To see the type of features you should expect, browse Kazzius’ latest news and insights on FX and payments trends.
Key takeaways
Let’s bring it together. When you see “FCA authorised payment institution” on a website, here’s what it really means – and how to use that information:
- It’s a specific regulatory status.
- The firm is authorised under the Payment Services Regulations and appears on the FCA Register with defined payment permissions.
- It comes with safeguarding and conduct rules.
- Client funds must be segregated and reconciled, with stricter rules being phased in from May 2026 to improve outcomes if a firm fails.(Reuters)
- It’s not deposit protection or a guarantee.
- FSCS cover usually does not apply, and FCA supervision doesn’t remove all risk of failure or poor service. You still need to assess governance, pricing and resilience.
- You should always verify claims on the FCA Register.
- Check the exact legal entity, permissions, status and any restrictions before sending funds or signing a contract.
- Regulation sets the floor; your provider choice sets the ceiling.
- For serious FX and cross-border activity, look for:
- Clear regulatory status (API/EMI)
- Strong safeguarding and wind-down plans
- Transparent FX pricing and clear fee structures
- Named collection accounts and mass payments where needed
- Real people who understand treasury, not just generic support scripts
- For serious FX and cross-border activity, look for:
If you’re reviewing your current providers – or planning to expand into new markets – this is a good moment to upgrade both your regulatory comfort and your commercial outcomes.
- To explore how a specialist FX partner can combine regulatory strength with sharper execution, start here: https://kazziuscapital.com/
- To discuss your specific corridors, volumes and hedging needs with a human expert, book a conversation: https://kazziuscapital.com/contact-us/
- To stay ahead of FCA changes, currency volatility and payment trends, keep an eye on the latest market commentary: https://kazziuscapital.com/news-and-insights/
Used well, the FCA authorised payment institution label can be a powerful filter. It just shouldn’t be the only one you rely on.