The United Kingdom remains one of the most attractive jurisdictions for fintech startups and payment services.

But in practice, it works a bit like an exclusive nightclub with a strict dress code: to get inside, you need to look the part - and know the password.

‍

In the fintech world, the “outfit” is your licence from the FCA (Financial Conduct Authority), and the “password” is choosing the right business model and regulatory status.

If you pick a licence that doesn’t fit your business, you risk getting a rejection instead of scaling -  or even attracting unwanted attention from the regulator.

‍

In this article, we’ll break down the main types of financial licences in the UK and explain how they differ:

‍

1. EMI (Authorised Electronic Money Institution) - The Fintech Major League:

EMI is the “grown-up” level of fintech licensing. It’s designed for companies that want to build a full-scale financial platform, not just a simple payment service.

‍

• What an EMI licence allows you to do:

• Issue electronic money (e-money);

• Launch multi-currency wallets;

• Issue prepaid cards;

• Process large transaction volumes for both businesses and individuals;

• Build complex payment infrastructure and scale internationally.

‍

• Regulation. EMIs are regulated under:

• Electronic Money Regulations 2011 (EMRs);

• Payment Services Regulations 2017 (PSRs 2017)

In practice, the FCA relies on the document FCA Approach - Payment Services & Electronic Money, which explains capital calculations and operational requirements in detail.

Supervision is carried out by the Financial Conduct Authority (FCA).

‍

• Capital requirements:

You will often see the figure of €350,000 mentioned, but in reality the required amount depends on your business model, transaction volumes, safeguarding structure, financial forecasts. So €350,000 is more of a benchmark than a fixed “entry price”.

• The licence is issued for an indefinite period, but the FCA can revoke it if the company breaches AML/CTF rules, fails safeguarding requirements, or ignores reporting and governance obligations.

• Who grew with an EMI licence?

Revolut, Monese, Starling Bank - once startups, now fintech giants.

If you’re planning multi-currency wallets and large-scale expansion, an EMI licence is your key to the big fintech league.

‍

2. API (Authorised Payment Institution) - Payments at Scale, Without E-Money

API is a payment business model without issuing e-money, but with no limits on transaction volumes. Companies that want to work professionally with payments - but not issue e-money - usually choose API.

‍

• What an API licence allows you to do:

• Process large volumes of payments;

• Work with client funds;

• Provide payment services without the limits imposed on SPI;

• Build scalable payment businesses (PSPs, aggregators, platforms).

‍

• Regulation:

•Payment Services Regulations 2017 (PSRs) - the main law governing payment services in the UK;

• FCA Approach - detailed guidance on capital, governance, and risk management.

The FCA provides ongoing supervision. Even though the licence is indefinite, it can be revoked for AML/CTF breaches or failures in financial reporting and controls.

• Capital requirements depend on the type of services:

• Most payment services - €125,000;

• PISP - €50,000;

• Money remittance - €20,000;

• AISP - no initial capital requirement.

API is suitable for payment platforms, PSPs, aggregators, fintechs with large transaction volumes, and businesses planning to scale across Europe.

• Real-world examples:

• Worldpay - processing billions of transactions worldwide;

• Checkout.com - a major API-driven payment provider for e-commerce.

API is the tool for serious payment businesses that don’t issue e-money but take on full regulatory responsibility.