A Small Payment Institution (SPI) is the fastest regulated route to offer limited payment services in the UK. If your expected transaction volumes are below the SPI threshold and you don’t need e-money powers, an SPI lets you operate under a lighter regulatory regime — but you still need robust AML controls, a fit-and-proper management team, and clear bank and settlement arrangements. This guide explains the FCA requirements, the application path via FCA Connect, what documents are essential, realistic timelines, and a practical checklist to get you live quickly — plus how 7BaaS can help you avoid common delays.
What is an SPI and when to choose it?
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SPI = registration (not full authorisation) for firms providing payment services with low volumes.
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Key limit: Rolling monthly average of transactions must stay under €3,000,000 (check FCA updates for any changes). If you expect higher volumes, apply for full authorisation as a Payment Institution/Authorised Payment Institution (API).
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SPI is attractive for startups, niche payment flows, and MVP launches because it reduces capital & reporting burdens compared to full authorisation.
Who must be on your management team?
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FCA expects fit & proper senior managers: senior managers must have appropriate experience, no disqualifying convictions, and clear CVs and references.
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Appoint a Compliance Officer and (where applicable) a Money Laundering Reporting Officer (MLRO). Provide CVs, referee details, and a short description of governance processes.
Core documentation & systems you must prepare
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Business plan & financial forecasts (12–24 months) showing volumes, margins, and stress-test scenarios.
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AML / KYC policy and transaction monitoring design (sample rules and alert thresholds).
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Organogram & job descriptions for senior roles.
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Banking & PSP letters of intent — evidence of settlement route or plan.
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IT & security evidence: architecture diagrams, access controls, encryption, BCP/DR.
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Complaint handling, T&Cs, privacy & data processing docs.
FCA Connect application process (practical)
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Register for FCA Connect and complete the PSR (Payments Services Regulations) SPI submission modules.
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Upload the documents above with clear versioning and author signatures.
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FCA assigns a case officer — respond promptly to questions (fast responses materially shorten timelines).
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If complete, expect a decision window of ~3 months for payments/e-money matters; incomplete or complex cases may take longer. (Always budget conservatively.)
Bank readiness & go-to-market
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Banks review KYC samples and AML monitoring logic; prepare sanitized examples.
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If immediate bank access is essential, consider a sponsor / white-label partner or acquiring an existing payments vehicle — both options are services 7BaaS can arrange.
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Maintain transparent transaction flows and staged customer onboarding to minimize AML risk at launch.
Typical timeline & costs
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Document prep: 2–6 weeks (depends on existing policies and team readiness).
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FCA processing: 4–12 weeks typical (if all docs complete).
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Costs: legal & compliance advisory fees, senior hires or contractors, one-off FCA admin costs (check FCA FEES manual), and implementation of monitoring tools.
Common pitfalls to avoid
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Weak AML documentation or missing monitoring examples.
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Unclear senior manager responsibilities or missing fit-and-proper evidence.
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No bank route or unrealistic settlement plan.
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Underestimating costs for compliance staff and monitoring tools.
Launch checklist
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Finalised business plan & 12-month financial forecast
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Drafted AML policy + transaction monitoring rules
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Compliance Officer & MLRO CVs uploaded
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Bank/psp LOIs or sponsorship plan
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IT security & BCP documentation
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FCA Connect registration completed & submission uploaded
How 7BaaS helps
7BaaS provides SPI pre-application reviews, help drafting the AML manual, introductions to sponsor banking and white-label partners, and assistance with FCA submission and case-officer responses.
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