Using payment service providers

Find out more about non-bank payment providers, what protections you have if you use their services, and what happens if a provider fails.

Key information:

  • There are many ways to make payments. Some are made through a bank, others through non-bank payment service providers.
  • If you use a non-bank payment service provider, your money won’t be protected by the Financial Services Compensation Scheme (FSCS). Instead, it  will be protected by  a regulated process known as 'safeguarding'. In this case, it may take longer for you to get your money back if your provider goes out of business than if it was FSCS protected and you may not get all  of your money back. 
  • When choosing a service provider for day-to-day banking and payments, you should make sure you understand how your money is protected.


There are a range of non-bank payment service providers, including:

  • Electronic money institutions (EMIs): Electronic money, also known as 'e-money'  is stored electronically, usually in an online account or wallet, or on a prepaid card. You can use it to pay for goods and services.
  • Authorised payment institutions (APIs): APIs provide a range of regulated payment services. A type of API you could use may be a money remitter, which sends money around the world.
  • Small payment institutions (SPIs): SPIs can provide the same services as APIs, but handle much smaller amounts of money. As a result, there are fewer rules that SPIs need to follow.

How you can tell if a firm is a non-bank payment provider

All non-bank payment service providers (ie APIs, EMIs and SPIs) must be authorised or registered with us. You can contact us for more information about regulated firms.

Some of these non-bank providers may trade under different names than the one authorised or registered with us. This might mean that the company you deal with is not itself regulated, but provides services on behalf of an authorised or registered firm. 

The Financial Services Register (FS Register) will tell you whether a firm you are dealing with is a bank or a non-bank payment service provider. You can also check what activities non-bank payment service providers have permission to carry out. Because  brand names are not always listed on the FS register, you should look for the name of the company operating behind it. You can normally find this information at the bottom of the firm’s website. It should also be given in the firm’s terms and conditions.

Some online accounts and prepaid card products offered by EMIs can look and work a lot like bank current accounts. While EMIs can provide regulated payment services to customers, there are some things they cannot do with your money. For example, they can’t pay you interest.

The FS Register will tell you whether you are using a bank or an EMI. 

How APIs, EMIs and SPIs protect your money

If you decide to use an API, EMI or SPI instead of a bank, there are different protections for your money. The protection you have depends on the type of service you use.

Remember, there are many ways to make payments. When choosing a service provider, especially if you will use the account for holding or depositing money, you should make sure you understand how your money is protected.

Financial Services Compensation Scheme (FSCS) protection

Consumers who use UK-authorised banks, building societies and credit unions are protected by the FSCS. If one of these firms goes out of business, the FSCS will protect your money up to £85,000 per depositor. 

If you have money in several accounts with banks that are part of the same banking group (and share a banking licence) they are treated as one bank. This means that the £85,000 compensation limit only applies to the total you hold across all these accounts, not to each separate account.

The FSCS does not cover money held with APIs, EMIs and SPIs. If FSCS protection is important to you, find out more about opening a bank account.


APIs and EMIs are required to protect the money you gave them  through a process known as safeguarding. Once an API or EMI is authorised, we expect them to safeguard correctly. If the EMI or API is not safeguarding properly, you could lose all the money you gave them.

To safeguard properly, APIs and EMIs must either put the money you sent them in a separate safeguarding account with a bank, or protect it with an insurance policy or similar guarantee.

This means that, if they go out of business, you should get most of your money back, although some costs will be taken by the administrator or liquidator of the firm). It could also take longer for you to be refunded than it would with a bank.

To check whether an API or EMI is authorised, use the FS Register.

SPIs don't have to safeguard the money they receive from you. If you are using a payment service provider, it’s worth checking whether it’s an SPI. You should ask the firm what protections it has in place. You can check if a firm is an SPI on the FS Register. You can also check whether an SPI is authorised on the FS Register

What protection different providers offer


Electronic money institution
eg an e-wallet or prepaid card

Authorised payment institution
eg a company that sends money for you internationally

Small payment institution
eg local shop that sends money abroad for you

Bank account (deposit taking institutions)
eg bank account with a high street bank or building society

FSCS protection





Required to safeguard





Complaints can be considered by the Financial Ombudsman Service





Making a complaint

If you’re unhappy with the service you get from a firm, you should complain to the payment provider first. If you’re unhappy with their response, you may be able to appeal to the Financial Ombudsman Service.

Find out more about how to complain.

What happens if a payment service provider fails?

If your payment service provider goes out of business, it will stop providing services. This means you won't be able to access your money in the usual way.

If you are using a non-bank payment service provider, you will have to contact the liquidator or administrator of the firm, who will be responsible for distributing any funds to customers.

To keep you updated, the payment service provider should produce some frequently asked questions. These should include information on who the insolvency practitioners are. 

If you fall into financial difficulty as a result of the firm failing, there are many organisations that offer help and advice.

Page updates

07/04/2021: Editorial amendment Information updated and edited across the page.