Digital Payments & Fintech - United Kingdom

Firms must obtain FCA authorisation or registration as an Authorised Payment Institution (API), Small Payment Institution (SPI), Authorised E-Money Institution (AEMI), or Small E-Money Institution (SEMI) under PSR 2017 and EMRs 2011. The FCA maintains a public register and publishes detailed application guidance.

FCA Policy Statement PS25/12 introduced a strengthened safeguarding regime for payment and e-money firms, effective 7 May 2026. Customer funds must be ring-fenced from firm assets; proportionate audit exemptions apply for firms holding under £100,000 in customer funds.

Unregulated Buy Now Pay Later (classified as Deferred Payment Credit) comes under FCA regulation from 15 July 2026 via PS26/1. Lenders must conduct affordability checks, provide clear pre-contract information, and support customers in financial difficulty. A temporary permissions window opened 15 May 2026 for existing firms to register ahead of full authorisation.

The Joint Regulatory Oversight Committee (JROC) governs the transition of Open Banking Limited to a permanent future entity. Variable Recurring Payments (VRP) launched in Q1 2026 via the UK Payments Initiative (UKPI), a consortium of 31 firms. HM Treasury is expected to introduce legislation in 2026 granting powers to set long-term open banking rules.

The New Payments Architecture (NPA) programme was renamed the Interbank Infrastructure Renewal (IIR) following cancellation of the original procurement; the July 2026 migration deadline under Specific Direction 3 was missed. A National Payments Vision strategy published November 2025 sets a new, more flexible approach to next-generation retail infrastructure.

In September 2025 HM Government consulted on abolishing the Payment Systems Regulator and transferring its functions—including competition and innovation oversight of designated payment systems—to the FCA. The FCA and PSR are collaborating on operational readiness for the transfer.