A payment institution license is the authorisation that a non-bank firm needs to provide regulated payment services, such as money remittance, card acquiring or running payment accounts, as a payment institution. The licensing rules, capital requirements and permitted activities are covered in full in that entry.
In the European Union the license is granted by a national regulator under the payment services directives, most recently PSD2, and the United Kingdom runs a similar regime under its Payment Services Regulations. An authorised payment institution can use passporting to offer its services in other EU member states, while smaller firms may register as a small payment institution with lighter rules but no passport. A payment institution license does not allow the firm to issue electronic money; that requires a separate electronic money institution license. Holding a license also matters for access to banking services, since many fintechs use one to connect to payment systems directly rather than relying entirely on a correspondent or sponsor bank.