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 your bank, while others happen through non-bank payment providers.
  • • If you use a non-bank payment provider, your money won’t be protected by the Financial Services Compensation Scheme (FSCS). Instead, your money will be protected through a process known as 'safeguarding'. If your provider goes out of business, you won’t automatically get your money back.
  • • When choosing a service provider for day-to-day banking and payments, especially if the account will be used for holding or depositing money, you should make sure you understand if your money is FSCS 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 wallet or on a prepaid card. You can use it to make payments for goods and services. Issuing e-money is a regulated activity in the UK.
  • 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 providers (APIs, EMIs and SPIs) must be authorised or registered with us. You can contact us for more information about regulated firms.

The Financial Services Register (FS Register) will tell you what type of firm you are dealing with, whether a bank or a non-bank payment provider. You can also check what activities non-bank payment providers have permission for.

Some e-wallet and prepaid card products offered by EMIs can look and function a lot like bank accounts. EMIs can provide regulated payment services to their customers but are limited in what they can do with your money, for example, they can’t pay you interest.

The FS Register will tell you whether you’re 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 and carry out day-to-day banking. When choosing a service provider, especially if the account will be used for holding or depositing money, you should make sure you understand if your money is protected by the FSCS. 

Financial Services Compensation Scheme (FSCS) protection

UK-authorised banks, building societies or credit unions are protected by the FSCS. If one of these firms fails or become insolvent, the FSCS will protect your money up to £85,000 per depositor.

Money held with APIs, EMIs and SPIs isn’t covered by the FSCS. If they go out of business, you won’t automatically get your money back. If FSCS protection is important to you, find out more about opening a bank account.  


APIs and EMIs protect your money 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 your money. 

To safeguard properly, APIs and EMIs must either keep your money separate from their own money, 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 (remember that some costs will be taken by the administrator or liquidator of the firm). It could also take longer 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 your money. If you're using a payment institution, it’s worth checking whether it’s an SPI. You should ask the firm what protections it has in place and, if they need to hold your money, the reason for them doing so. You can also check whether an SPI is authorised on the FS Register. 


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 the payment provider you use 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 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 provider should produce some frequently asked questions. These should include information on who the insolvency practitioners are.

Page updates

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