The preceding payment institution guide and EMI guide cover capital, fees and applications. The question here is which permission the proposed product requires. (Payment Services Regulations 2017, regulation 138(1); FCA, Our Approach, paragraph 3.5; Central Bank of Ireland, Payment Institutions, “Payment Service Providers”.)
Summary
- UK and Ireland. PI permission does not authorise a business to issue its own e-money. An EMI can also provide payment services within its permitted scope, so the two activities do not automatically require two institutional licences. (FCA, Our Approach, paragraphs 3.5–3.6; Central Bank of Ireland, Payment Institutions, “Payment Service Providers”; ABC Projektai, Case C-661/22, paragraph 46.)
- UK and EU. A customer balance does not automatically require EMI permission. PIs can maintain payment accounts; receipt of funds without an immediate payment order does not itself establish e-money issuance. (Payment Services Regulations 2017, regulation 33; ABC Projektai, paragraphs 34–37 and 52.)
- Ireland. Third-party acceptance requires examination of what the payee receives and the relevant contractual relationship. Irish official publications distinguish acceptance of e-money from its redemption into ordinary funds. (EBA Q&A 2022_6336, final answer of 17 January 2025; National Risk Assessment 2026, p. 173; Central Bank of Ireland, Payments and E-Money Newsletter, July 2026, pp. 1–2.)
- UK. Specific exclusions can remove an activity from the payment-services regime, while the e-money regime has its own exclusions. A business must satisfy the actual conditions for technical services, commercial agency or limited use; its description as a software business or marketplace is insufficient. (Payment Services Regulations 2017, Schedule 1, Part 2, paragraphs 2(b), (j) and (k); Electronic Money Regulations 2011, regulation 3(a); PERG 15.5, Q33A and Q39–Q40; PERG 3A.5, Q26–Q27.)
- UK. A branded product can use another firm's e-money. The issuer must remain identifiable, and distribution does not authorise the distributor to originate its own value or independently provide regulated payment services. (PERG 3A.4, Q21–Q22.)
Permission for payment services and e-money
A business providing regulated payment services without issuing e-money should assess the PI route and its applicable alternatives. A PI cannot add e-money issuance merely because it already handles payments. In the UK, a new issuer ordinarily requires EMI authorisation or small EMI registration, unless another permitted issuer status or exemption applies. (Payment Services Regulations 2017, regulation 138(1); FCA, Our Approach, paragraphs 3.3 and 3.5; ABC Projektai, paragraph 46.)
An EMI does not ordinarily need separate PI authorisation for payment services covered by its permission. The UK Regulations recognise an EMI as a payment service provider. Ireland's Payment Services Regulations include an electronic money institution among the persons permitted to provide payment services under regulation 6(1)(b). A combined business must still identify the particular payment services it will provide. (Payment Services Regulations 2017, regulation 138(1)(f); Electronic Money Regulations 2011, regulation 32(1)(a); European Union (Payment Services) Regulations 2018 (Ireland), regulation 6(1)(b); European Communities (Electronic Money) Regulations 2011 (Ireland), regulation 28(1)(a).)
Under the FCA's guidance, an overseas-head-office EMI operating through a UK branch can provide only payment services linked to e-money issuance. The small-institution restrictions addressed in the earlier guides also remain relevant. (PERG 3A.4, Q20; FCA, Our Approach, paragraph 3.6.)
The rights created by the product
The e-money definition has cumulative elements. There must be electronically stored monetary value representing a claim against the issuer, issued on receipt of funds. Its purpose must be payment transactions, and someone other than the issuer must accept it. Applicable exclusions must then be considered. A displayed balance alone is insufficient to classify the product as e-money. (Electronic Money Regulations 2011, regulation 2, definition of “electronic money”; Central Bank of Ireland, Electronic Money Institutions, definition of e-money.)
The assessment must identify the company liable on the monetary claim, the customer's rights and the permitted uses of the value. The FCA examines those features rather than treating a wallet, card or account label as decisive. (PERG 3A.3, Q9 and Q16.)
Payment accounts and retained balances
A UK PI can maintain a payment account. Regulation 33 restricts that account to use in relation to payment transactions. The existence of a positive balance therefore does not establish that the provider requires EMI permission. The separate e-money definition must still be applied to the arrangement. (Payment Services Regulations 2017, regulation 33; Electronic Money Regulations 2011, regulation 2.)
In ABC Projektai, the Court of Justice rejected automatic reclassification of funds retained without an immediate payment order. EU PIs can receive funds for future payment orders, including orders not yet specified. The account must remain dedicated to payment transactions. Leaving money available in that account does not itself establish consent to separate e-money issuance. (ABC Projektai, Case C-661/22, judgment of 22 February 2024, paragraphs 34–37, 43–45, 48 and 52.)
A product that issues a separate monetary asset accepted by others presents a different question. The Court requires an agreement with the customer to issue that asset in exchange for funds. Merely crediting a payment account does not establish that agreement. (ABC Projektai, paragraphs 47–49.)
Third-party acceptance in Ireland
Ireland's National Risk Assessment 2026 describes the European Commission's interpretation of e-money: third parties must accept the product as payment, rather than value being solely redeemed with the issuer. It identifies a contractual agreement between issuer and payee as a consequence of that interpretation. (National Risk Assessment 2026, p. 173, “Redefinition of E-Money”.)
The European Commission's final answer to EBA Q&A 2022_6336 states that someone other than the issuer must voluntarily accept e-money as a separate monetary asset, rather than merely receive ordinary funds resulting from redeemed e-money. It also states that, where the accepting person becomes an e-money holder, a contractual arrangement with the issuer is required. The Q&A is an administrative interpretation of Union law; it does not itself amend the legislative definition. (EBA Q&A 2022_6336, final answer of 17 January 2025; Directive 2009/110/EC, article 2(2).)
Under that interpretation, a merchant's receipt of ordinary bank funds after redemption does not constitute acceptance of e-money. The proposed arrangement must identify whether a payee voluntarily accepts the issued value as a separate monetary asset and, if so, what contractual relationship it has with the issuer. Merchant acceptance of a card backed by e-money is insufficient where the merchant receives only ordinary bank funds. (EBA Q&A 2022_6336, final answer of 17 January 2025.)
The Central Bank's July 2026 newsletter states that many firms had not thoroughly assessed EBA Q&A 6336. It calls for priority analysis of affected business models and announces intensified supervisory engagement. An Irish applicant should address third-party acceptance in its product assessment before relying on an EMI classification. (Central Bank of Ireland, Payments and E-Money Newsletter, July 2026, pp. 1–2.)
The UK treatment of prepaid products
The FCA treats prepaid value usable with third-party merchants as capable of being e-money, including account-based products. A UK programme requires assessment under the UK definition and FCA guidance, even where a related Irish product has been classified differently. (Electronic Money Regulations 2011, regulation 2; PERG 3A.3, Q8–Q9 and Q16.)
Payments for a marketplace's own sales
A UK marketplace does not necessarily provide payment services merely because it receives money. The FCA distinguishes a genuine reseller that purchases and resells goods as principal. In that arrangement, the customer contracts with the reseller, which receives payment for its own sale. A platform collecting money under contracts between customers and independent sellers requires a different assessment. (PERG 15.5, Q33A.)
The commercial-agent exclusion requires authority to negotiate or conclude a sale or purchase for either the payer or payee, not both. Merely accepting payment or providing an ordering interface does not establish that authority. The FCA examines whether the purported agent can bind its principal. A contractual label must correspond to the role actually performed. (Payment Services Regulations 2017, Schedule 1, Part 2, paragraph 2(b); PERG 15.5, Q33A.)
Holding the buyer's money until delivery does not create a general escrow exemption. The FCA identifies regular escrow services as potentially regulated payment services. The platform must establish its permission or an applicable exclusion even where payment handling forms part of a wider commercial service. (PERG 15.5, Q33A.)
Store credit and limited-use instruments
Assume that prepaid credit can be spent only with the same legal entity that issues it. The third-party-acceptance element of e-money is absent on those facts. Adding acceptance by a separately incorporated merchant changes that premise, even where the businesses share a brand. The product must then be tested against the remaining elements and exclusions. (Electronic Money Regulations 2011, regulation 2.)
A genuinely limited-use instrument can fall outside the UK payment-services and e-money definitions. Relevant routes cover the issuer's premises, a limited merchant network under direct agreements with the professional issuer, or a very limited range of goods or services. The FCA's shopping-centre guidance requires functional restrictions as well as contractual restrictions. Describing a generally usable instrument as a closed network does not satisfy those conditions. (Payment Services Regulations 2017, Schedule 1, Part 2, paragraph 2(k)(i)–(iii); Electronic Money Regulations 2011, regulation 3(a)(i)–(iii); PERG 3A.5, Q26–Q27.)
For those limited-use exclusions, transactions exceeding €1 million in a 12-month period trigger notification to the FCA under the payment-services and e-money regimes, as applicable. That figure is a notification threshold, rather than a general exemption for smaller businesses. Exceeding it does not automatically require authorisation; the underlying exclusion must still be satisfied. (Payment Services Regulations 2017, regulation 38(1), (3) and (5); Electronic Money Regulations 2011, regulation 3A.)
Software and technical support
A UK supplier confined to excluded technical support does not need PI permission for that support. The exclusion requires the supplier never to possess the funds being transferred. It can cover data processing, authentication, communications and terminal maintenance. Payment initiation and account information services are expressly outside this exclusion, even though their providers need not hold customer funds. (Payment Services Regulations 2017, Schedule 1, Part 2, paragraph 2(j).)
Savings features and redemption rights
A proposed savings product requires a separate deposit-taking assessment. UK PI accounts must remain connected to payment transactions. The FCA distinguishes e-money from deposits by examining permitted uses, incentives to retain value and marketing. (Payment Services Regulations 2017, regulation 33; PERG 3A.3, Q15–Q16.)
For e-money, the UK issuer generally owes redemption at par on request, subject to regulations 40–44. A product promising interest or another benefit determined by holding duration conflicts with regulation 45. (Electronic Money Regulations 2011, regulations 39–45; FCA, Our Approach, paragraphs 8.375 and 8.378–8.380.)
Branded products supplied through another issuer
A business can distribute another firm's e-money without becoming its issuer. The FCA identifies the originator as issuer. Distribution alone does not require EMI authorisation or registration, provided the distributor neither issues value nor acts as a payment-services agent. The principal should notify the FCA. Payment services performed by the distributor require their own assessment. (PERG 3A.4, Q22.)
The FCA recognises branded programme-manager arrangements involving outsourcing, agency or distribution. An agent may provide payment services for its principal once registered, but cannot issue e-money on the principal's behalf. A distribution agreement cannot establish that another company issued value which the branded business itself originated. (FCA, Our Approach, paragraphs 8.373–8.374; PERG 3A.4, Q21–Q22.)
