EMI or bank: what changes for your business money
Many business accounts are run by e-money institutions (EMIs), not banks. The account looks the same. What happens to your balance if the provider fails does not.
E-money is not a deposit
EU law says what an EMI receives in exchange for e-money is not a deposit. That is why the deposit protection that covers a bank account does not cover it.
Such funds shall not constitute either a deposit or other repayable funds received from the public within the meaning of Article 5 of Directive 2006/48/EC.
No FSCS protection in the UK
The FCA says it plainly for UK customers of payment and e-money firms.
If your non-bank payment provider goes out of business, your money won’t be protected by the Financial Services Compensation Scheme (FSCS).
Safeguarding instead
An EMI must keep customers' money apart from its own. In the UK:
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.
Member States shall require an electronic money institution to safeguard funds that have been received in exchange for electronic money that has been issued
If the provider fails
Safeguarding is meant to get the money back, not to get it back at once or in full.
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.
The rules will come into effect on 7 May 2026.
What to ask a provider in writing
Every provider page on Banxta names the licence the provider holds and its regulator. Before you move a large balance, these questions get answers that matter:
- Are you a bank or an e-money institution, and which regulator authorised you?
- Where are my funds safeguarded, and with which bank?
- Which compensation scheme, if any, covers my balance?