Find out more about non-bank payment providers, what protections you have if you use their services, and what happens if a provider fails.
There are many ways to make payments. Some are made through a bank, others through non-bank payment service providers.
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 e-money to pay for goods and services. EMI’s can also provide non-bank current accounts.
- Authorised payment institutions (APIs): APIs provide a range of payment services. For example, if you’re looking to send money abroad, you may use a money remitter, which is a type of API.
- Small payment institutions (SPIs): SPIs can provide the same services as APIs, but have limits on the value of payments they can make over time. For this reason, an SPI may be a relatively new business. Or it may be a company that focuses on a relatively small market, for example a money remitter that only sends money to one country.
When choosing a provider for day-to-day banking and payments, make sure you understand how your money is protected.
How to tell if a firm is a non-bank payment provider
All non-bank payment service providers (such as APIs, EMIs and SPIs) must be authorised or registered with us. You can check our Financial Services Register[1] to make sure a provider is authorised and has permission for the service it’s offering you.
Some providers use different names to the one authorised or registered with us.
Because these 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 at the bottom of your provider’s website, or in its terms and conditions.
Once you've found the right firm, the FS Register will tell you whether it’s a bank or a non-bank payment service provider. If you decide to use an API, EMI or SPI instead of a bank, there are different protections for your money.
How you're protected if your provider fails
It’s important to know that if your non-bank payment provider goes out of business, your money won’t be protected by the Financial Services Compensation Scheme (FSCS).
If you use an EMI or an API, it will instead be protected by a process known as safeguarding.
SPIs don't have to safeguard your money. If you’re using an SPI, you should ask the firm what protections it has in place.
How safeguarding works
To safeguard properly, EMIs and APIs must either put your money 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. But it may take some time to receive, and it may not be the full amount, as some costs could be taken by the administrator or liquidator of the firm.
How to make a claim if your provider goes out of business
If your EMI, API or SPI goes out of business, you’ll have to contact the liquidator or administrator of the firm.
The administrator or liquidator acts on behalf of the failed firm. They’ll be responsible for distributing any money to customers.
To keep you updated, your provider should also produce some frequently asked questions. These are usually displayed on the provider’s website and should include information on who the insolvency practitioners are.
How to make a complaint
If you’re unhappy with the service you get from an EMI, API or SPI, you should complain to the provider first. If you’re unhappy with their response, you can complain to the Financial Ombudsman Service[3].
Follow our steps on how to complain[4].
Protection offered by different providers
| Electronic money institution (EMI) | Authorised payment institution (API) | Small payment institution (SPI) | Bank account or building society | |
|---|---|---|---|---|
| FSCS protection | No | No | No | Yes |
| Required to safeguard | Yes | Yes | No | No |
| Complaints can be made to the Financial Ombudsman | Yes | Yes | Yes | Yes |
