When you’re ready to buy or sell a payment institution in the UK , you’re making one of the biggest decisions in fintech. Whether you’re looking at a Small Payment Institution (SPI) or an Authorised Payment Institution (API), understanding the market can save you months of time and thousands in costs.
This guide breaks down everything you need to know about acquiring or selling regulated payment firms in plain English.
What Exactly Are Payment Institutions?
Payment institutions are licensed companies that can handle money transfers, process payments, and offer other financial services—but they’re not banks. Think of them as the regulated infrastructure behind money remittance services, payment processors, and cross-border transfer apps.
Small Payment Institution (SPI) vs Authorised Payment Institution (API)
The difference between these two types matters a lot for buyers and sellers.
Small Payment Institutions are the entry-level option. They’re cheaper to run but come with strict limits:
- Monthly transaction cap of €3 million
- Lower capital requirements
- Faster to get approved initially
Authorised Payment Institutions are the full package:
- Unlimited transaction volumes
- Higher capital requirements (€20,000 to €125,000 depending on services)
- More complex compliance obligations
If you’re planning to handle serious volume, an API is what you need. If you’re testing the market or operating locally, an SPI might be enough.
Why Buy Instead of Building From Scratch?
Here’s the reality: applying for a new payment institution license from the FCA takes an average of 6-12 months. Buying an existing one can cut that to 8-12 weeks once regulatory approval comes through.
The Real Advantages of Acquisition
Speed to market is the obvious win, but there’s more:
- Established bank relationships are worth their weight in gold. New applicants often struggle for months to get safeguarding accounts opened.
- Proven compliance systems mean you’re not building policies and procedures from zero.
- Existing payment corridors and partnerships can be immediately valuable if you’re in FX or remittance.
- Track record with regulators shows the business can actually operate compliantly.
How to Buy a Payment Institution: The Step-by-Step Process
Buying a regulated entity isn’t like buying a regular business. The regulator has to approve the new ownership, which adds layers of complexity.
Step 1: Define What You Actually Need
Before you start looking at listings, get clear on:
- Do you need SPI or API?
- What payment services specifically? (Money remittance, payment initiation, account information, etc.)
- What transaction volumes are you planning?
Step 2: Find Quality Targets
“Clean” licenses are the gold standard in 2026. This means:
- No historic FCA warnings or compliance issues
- Up-to-date safeguarding arrangements
- Current audit reports with no major findings
- Active bank relationships in good standing
Marketplaces and brokers like Vertice Fintech regularly have available licenses.
Step 3: Deep Due Diligence
This is where most deals either succeed or fall apart. Your checklist should include:
Regulatory compliance:
- Full FCA/regulator correspondence history
- All audit reports from the past 3 years
- AML/CTF policies and testing records
- Any historic breaches or warnings
Financial structure:
- How safeguarding accounts are set up
- Which banks are used and relationship health
- Capital adequacy calculations
- Outstanding liabilities or claims
Operational reality:
- Actual transaction volumes vs. what’s reported
- Technology systems and their condition
- Key staff and their regulatory approval status
- Customer contracts and partnerships
Don’t skip this. Finding compliance issues after you’ve paid is expensive and potentially deal-breaking.
Step 4: Navigate Change of Control Approval
The FCA must approve any ownership change. This process involves:
- Submitting detailed applications about the new owners
- Proving financial soundness and “fit and proper” status
- Demonstrating you understand the regulatory requirements
- Sometimes interviews with the regulator
Timeline: 8-12 weeks if everything is straightforward, but can stretch to 6 months if issues arise.
Step 5: Post-Acquisition Integration
Once you own it, the work begins:
- Integrate compliance systems without breaking what already works
- Notify all bank partners about the ownership change
- Review and potentially upgrade technology infrastructure
- Assess and retain key staff who understand the business
- Plan remediation if you discovered any issues during due diligence
How to Sell Your Payment Institution: Maximizing Value
If you’re on the sell side, preparation is everything. The difference between a quick clean sale and a painful process often comes down to how well you’ve organized things.
What Actually Determines Your Sale Price?
Forget simple revenue multiples—payment institution valuations are unique.
License-only sales (dormant or minimal operations) typically fetch £50,000-£200,000 for SPIs and £200,000-£500,000 for APIs, depending on jurisdiction and cleanliness.
Operating business sales add significant premiums based on:
- Monthly transaction volume and growth trajectory
- Quality of bank relationships (established rails are incredibly valuable)
- Specific payment corridors you’ve built (UK-India remittance is worth more than generic domestic transfers)
- Customer base quality and retention rates
- Compliance history (spotless records command premium pricing)
Preparing for Sale: The 6-Month Runway
Smart sellers start preparing well before listing:
Month 1-2: Clean house
- Resolve any outstanding compliance issues
- Update all policies to current regulatory standards
- Get your latest audit completed
- Organize all regulatory correspondence
Month 3-4: Build the data room
- Financial statements for 3 years
- All regulatory approvals and correspondence
- Customer contracts and partnership agreements
- Technology documentation
- Employee records and key person dependencies
Month 5-6: Market positioning
- Prepare a compelling business summary
- Highlight unique value (corridors, tech, relationships)
- Identify your ideal buyer profile
- Engage a broker if you’re using one
Common Seller Mistakes to Avoid
Hiding compliance issues always backfires. Buyers will find them in due diligence, and then they’ll walk or slash your price.
Overvaluing your license because you know what you paid to get it. The market sets the price, not your sunk costs.
Ignoring integration difficulty when evaluating offers. Sometimes a lower offer from a buyer with compatible systems is worth more than a higher offer from someone who’ll struggle to integrate.
Not having key staff locked in with retention agreements. If your compliance officer can leave the day after sale, that’s a problem.
Post-Acquisition Risk: What Happens When You Find Problems
Let’s be honest: sometimes you discover compliance issues after the deal closes. Maybe due diligence missed something, or the scope of a problem wasn’t clear until you got inside.
Remediation Strategies
Immediate notification to your regulator if you find serious issues. Hiding problems compounds them.
Develop a remediation plan with specific timelines:
- What needs fixing
- Who’s responsible
- Resources required
- Target completion dates
Consider quarantining problematic business lines while you fix issues, rather than risking the whole license.
Document everything you’re doing to fix problems. Regulators want to see proactive compliance, not just reaction when caught.
When to Walk Away
Sometimes the best decision is to shut down an acquired entity and start fresh. Consider this if:
- Compliance issues are systemic and cultural
- Remediation costs exceed the value of keeping the license
- Key bank relationships are damaged beyond repair
- Staff turnover has eliminated institutional knowledge
Market Trends Shaping M&A in 2026
Several forces are driving the current market for payment institution acquisitions and sales.
The “Clean License” Premium
Buyers are paying 20-30% premiums for licenses with absolutely spotless compliance records. After seeing several high-profile cases of acquired institutions facing unexpected enforcement actions, due diligence has become exhaustive.
Consolidation Among Smaller Players
Many SPI holders who launched during the 2020-2022 fintech boom are now looking to exit as they hit transaction limits or realize the path to profitability is longer than expected. This has created a buyer’s market for SPIs, but a seller’s market for quality APIs.
Frequently Asked Questions
How much does it cost to buy a payment institution license?
Expect to pay £50,000-£200,000 for a basic SPI license and £200,000-£500,000+ for an API license, depending on the operational history. Operating businesses with established customer bases and revenues command much higher multiples, often reaching £1-5 million for successful API-licensed businesses.
How long does the change of control approval take?
Typical timelines range from 8-12 weeks for straightforward transfers with well-prepared applications. However, if the regulator has questions about the new owners’ backgrounds, fitness, or business plans, the process can extend to 4-6 months.
What’s the biggest risk when buying a payment institution?
Hidden compliance issues are the number one risk. A license might look clean on the surface, but have systemic problems in AML processes, safeguarding calculations, or regulatory reporting that only become apparent after acquisition. This is why comprehensive due diligence, including hiring specialist compliance consultants to review the target, is essential.
What due diligence should I do before buying?
Your due diligence should cover: complete regulatory history and all correspondence with supervisors, three years of financial statements and audit reports, AML/CTF policies and testing records, safeguarding account structures and calculations, technology systems architecture and security, key customer and partner contracts, employee records especially for approved persons, and bank relationship health and account status. Don’t rush this process—90 days of thorough due diligence is better than discovering problems after closing.
Is it better to buy or build a payment institution?
Buying gets you to market in 2-4 months versus 6-18 months to build from scratch. You also inherit bank relationships that can take a year to establish independently. However, building new gives you complete control over systems and culture, plus zero legacy compliance risk. The decision depends on your timeline, budget (buying costs more upfront but saves time), and risk tolerance for inheriting someone else’s history.
What happens if the FCA rejects the change of control?
If your application is rejected, the deal typically cannot complete and you won’t acquire the business. This is why most purchase agreements include regulatory approval as a condition precedent. Your deposit or initial payment would normally be returned, though you’ll have lost time and due diligence costs. To minimize this risk, engage with the regulator early, ensure all new owners are clearly “fit and proper,” and demonstrate deep understanding of regulatory requirements.
Bottom line: Buying or selling a payment institution in 2026 requires careful navigation of regulatory requirements, thorough due diligence, and realistic valuation expectations. The market rewards preparation, transparency, and clean compliance records. Whether you’re acquiring your first license or exiting a business you’ve built, taking time to understand the process will save you money and headaches down the road.
