payment institution

The Payment Services Regulations 2017 list the activities that count as payment services, including acquiring payment transactions, executing payments and money remittance, and require any business carrying them on in the UK to be authorised as a payment institution, registered as a small payment institution, or otherwise permitted, for example as a bank or an e-money institution. Authorised payment institutions appear on the FCA register, hold minimum capital, safeguard customer funds and report to the FCA. The small payment institution route applies only below a monthly average of three million euros in transactions and brings fewer obligations.

Why it matters to a software platform: whether the platform needs to be one. The FCA's guidance on the commercial agent exclusion says a platform that lets payments pass through an account it controls is likely to be acting for both payer and payee and so likely to need authorisation. A platform that never holds the money, because a regulated acquiring partner holds the licences and the funds and divides each payment at source, generally does not. Legal advice on the specific product should confirm it, and the FCA says the same.

Synapto is not a payment institution and does not hold funds. The regulated acquiring partner is the authorised party. What to watch: check the FCA register for any provider that will hold your money, and read which permissions it actually holds.