When does a platform or marketplace need to become an FCA agent?

A practical Q&A for platforms, marketplaces and software businesses using Pay by Bank. It explains when a business can accept payments in its own name, when it may be carrying on regulated payment services, and when becoming an FCA agent of Asima may be the right structure.

Why this matters

One of the most common questions in platform payments is simple: when does a business stop being a normal merchant and start looking like a regulated payments intermediary?

The answer matters because the UK Payment Services Regulations 2017, or PSRs, apply not only to specialist fintechs, but also to marketplaces, booking platforms and other businesses that sit in the flow of funds as a regular business activity.^1

In practice, the dividing line is usually whether the business is merely taking payment for its own goods or services, or whether it is receiving, controlling or routing money that belongs to someone else.^1

A quick terminology point

For UK payment institutions and e-money institutions, the statutory term is agent. In everyday discussion, some people say “appointed agent”, but that is not the same regime as a FSMA appointed representative.

Under the PSRs, an agent is a person acting on behalf of an authorised or small payment institution in the provision of payment services.^2

The Q&A

1. When does a business usually not need to become an agent?

If the business is simply accepting Pay by Bank payments for its own sales, and the funds go directly to its own account, agent status is usually not required.^1

A straightforward example would be a retailer, charity, restaurant, professional practice or SaaS company using Pay by Bank to collect money from its own customers for its own products or services.

In that scenario, the business is the payee. It is not standing between payer and third-party seller, and it is not usually providing a regulated payment service to others.^1

2. What is the main trigger for needing an agent model?

The usual trigger is that the business is in the middle of the transaction flow.

The FCA expressly highlights online marketplaces, businesses bringing sellers and customers together, and booking services as models that may be providing payment services where they receive customer money before passing it on to a seller.^1

If customer money lands in an account controlled by the platform, including a bank account, e-money account or merchant acquirer account in the platform’s name, the FCA says the business may be providing a payment service, for example money remittance or operating a payment account for customers.^1

That is the point at which a pure software or marketplace business can stray into regulated territory, even if payments are not its core commercial proposition.^1

3. What kinds of business model tend to create this issue?

Common examples include:

marketplaces collecting from buyers and later settling sellers;
booking platforms collecting customer funds before releasing them to venues, clinics, tradespeople or service providers;
software platforms that pool merchant proceeds and control onward disbursements;
platforms that deduct commission from incoming customer funds before paying the balance to a third party;
donation or fundraising models where the collecting entity is not itself the end beneficiary^1.

The legal analysis always turns on the precise flow of funds, the contractual structure, who the customer is paying, when the debt is discharged, and who has control over the money at each stage.^3

4. Does every platform or marketplace automatically need to become an agent?

No. Some models may fall outside regulation, and some may need their own authorisation instead of operating as an agent.

The biggest area people look at first is the commercial agent exclusion.^3

Under the FCA’s guidance, that exclusion can apply where payment transactions are made through a commercial agent that is authorised, through a formal agreement, to negotiate or conclude the sale or purchase of goods or services on behalf of either the payer or the payee, but not both.^3

The FCA also says that if a business acts on behalf of both payer and payee, it is likely to require authorisation or registration.^3

5. Why is the commercial agent exclusion often harder to rely on than people expect?

Because it is narrow.

The FCA says a business is likely to be acting for both sides if payments go into an account that the business controls or manages before being sent to the payee, while the payer’s debt is only settled once the payee receives payment.^3

The FCA also says that authority to “conclude” a sale usually means authority to bind the payer or the payee to the purchase or sale of goods or services.^3

So a business cannot safely assume that merely having terms and conditions, or being commercially important to the sale, is enough. Many platform models do not fit the exclusion once the contractual mechanics and money flow are analysed properly.^3

6. If the business does need a regulated structure, why might becoming an agent of Asima make sense?

Where the client wants to provide payment services as part of its product but does not want to become directly authorised itself, an agent model can be the right answer.

Under the FCA’s approach, payment institutions may provide payment services through agents, provided those agents are registered first.^2

That means the payment activity sits within an authorised framework, while the principal (Asima), remains responsible for the regulated activity carried on through the agent.^2

In practical terms, that can be attractive for software platforms or marketplaces that need a compliant structure for collecting and routing funds but do not want the cost, timing and operational burden of seeking their own FCA authorisation from day one.^4

7. What does the FCA require for an agent registration?

The FCA’s guidance says the principal must register the agent and provide details including:

the agent’s name and address;
the payment services for which the agent is appointed;
details of directors or management;
evidence that relevant individuals are fit and proper;
appropriate anti-money laundering controls and oversight arrangements^2.

The FCA says it must make a decision on a complete agent application within two months, and a payment institution (PI) cannot provide payment services through an agent until the agent appears on the Register.^2

8. Who is responsible for the agent’s conduct?

The principal.

The FCA states that payment institutions are responsible for anything done or omitted by an agent, to the same extent as if they had carried out the act themselves.^2

That is why agent appointment requires proper governance, onboarding, AML controls, contractual discipline, training and monitoring.^2

9. Could the client decide to get its own FCA permissions instead?

Yes.

If a firm is providing payment services in its own right, it may choose to become an authorised payment institution or, if it fits within the threshold, a small payment institution.

The FCA says firms that provide payment services as a regular occupation or business activity in the UK generally need to become authorised or registered unless an exclusion applies.^4

For some businesses, direct authorisation makes sense strategically. For others, the agent model is more proportionate. The right answer depends on scale, product roadmap, control model and regulatory appetite.^4

10. So what is the practical rule of thumb?

A useful starting point is:

own sales, own account, own money: usually no agent issue;
collecting or controlling funds for third parties: likely regulated analysis required;
marketplace or platform sitting between buyer and seller: high likelihood that the structure needs careful PSR analysis;
relying on the commercial agent exclusion: only sensible where the facts genuinely support acting for one side only^1.

Final thought

The biggest mistake businesses make is assuming that regulation only applies to “payments companies”.

If a platform, marketplace or booking service receives customer money and passes it on, it may already be in payment services territory.^1

For clients using Asima, the agent model can be an effective route where the business needs to facilitate payments compliantly under Asima’s permissions.

It is not automatic, and it is not a substitute for proper legal and regulatory analysis of the actual flow of funds, contracts and operational model.