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Fintech Market Overview

This article does not constitute legal advice.

Payment services in the UK

Fintech Software

Where the activities of a business relate to the provision of payment services, the regime implemented in the Payment Services Regulations 2017 (PSRs) will apply to the authorisation, registration and conduct of business obligations of those businesses. These aspects are discussed in more detail in Section IV.1

The UK is also a world leader in payment services. Firms will often seek authorisation from the FCA even where they do not intend to serve customers in the UK to benefit from the halo effect of being a UK-regulated firm when considering international expansion.1

Payment service activities regulated under the PSRs in the UK include services relating to the operation of payment accounts (e.g., cash deposits and withdrawals from current accounts and savings accounts), execution of payment transactions (whether covered by a credit line or otherwise), card issuing and money remittance. The second Payment Services Directive (PSD II), as implemented by the PSRs, also creates authorisation and registration regimes for payment initiation service providers (PISPs) and account information service providers (AISPs), two activities newly defined in 2017 that capture those businesses looking to utilise Open Banking standards to provide consumers with information about their finances, or that facilitate payments directly from users' bank accounts without the need to use a payment card.1

Firms offering payment services are required to identify at the outset whether they will apply for registration or authorisation under the PSRs. Small payment institutions (SPIs), small electronic money institutions (EMIs) and firms that will only offer account information services can apply to be registered as such, or as a registered account information service provider (RAISP), and a lighter touch registration and conduct regime will apply to those firms. Firms that do not qualify as an SPI, small EMI or RAISP but that intend to carry on payment services in the UK must apply for authorisation and follow more onerous conduct of business requirements. These alternative routes are particularly popular where available.1

PSD II and the PSRs also facilitated new Open Banking standards, requiring banks and building societies to give third parties access to customers' accounts and data where the user consents to it. At the moment, only the UK's nine largest banks and building societies must make customer data available through Open Banking, but a number of smaller banks and building societies have also opted in to the regime. Relevant third parties that benefit from the Open Banking regime include PISPs and AISPs, which are able to use customer account data to provide these new breeds of services.1

Cryptocurrencies in the UK

Fintech in the UK

Fintech in other countries

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UK Fintech Lawyers

Maxim Minaev

Maxim Minaev

We provide legal and organizational services for the creation, structuring and development of fintech companies

Languages: EN LV RU

Dr Irena Dajkovic

Dr Irena Dajkovic

International law firm authorised by the UK Solicitors Regulation Authority

Languages: EN FR

Ilya Druzhinin

Ilya Druzhinin

I have over 22 years of experience in legal practice, most of which is accompanied by e-com and fintech projects

Languages: RU EN

Notes
  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/spain
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