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July 8, 2021SPI vs. API: A Brief Overview
In the UK, a company can apply to become an authorised payment institution (API) or a small payment institution (SPI) through the Financial Conduct Authority. It is important to understand the differences between them as this can have an impact on business strategy and success
1. Authorised Payment Institution (API)
Once authorised as an API, a company can provide payment services across all EEA (European Economic Area) countries. The requirements for initial capital range from EUR 20,000 to 125,000, according to the planned payment activity.
For an API licence, in addition to the initial capital, some of the main requirements are for a company to:
- Have a physical office in the UK or in the European country of application
- Recruit employees in the UK or in the European country of application
- Buy or build IT systems to show they have adequate systems and controls in place
- Form a company in the UK.
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2. Small Payment Institution
For an SPI licence, a company:
- May only offer payment services in the UK and not across the EEA
- Is not required to meet an initial capital requirement required for an API
The other requirements for SPI are the same as those listed in the bullet points for the API licence, apart from the required number of people based in the UK being smaller.
As it is possible to ‘upgrade’ from an SPI to an API licence, an SPI licence can be beneficial when looking to reduce initial risks and costs.
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Making the choice between an API and an SPI licence depends on a company’s strategy for development. Accessing specialist advice can help to ensure that the licence application is effective and timely.
At PayCompliance, we have 18 years’ experience of supporting the success of payment institutions across 65 countries. Our comprehensive product range includes consulting, financial auditing and licensing services.
For more information, go to: https://paycompliance.com
