A Small Payment Institution (SPI) is a category of financial service provider that offers a limited range of payment services. These services can include money remittance, payment execution, and account management, among others. SPIs are designed to accommodate smaller-scale operations that do not meet the requirements or thresholds for full authorisation as a Payment Institution.

The regulatory framework for SPIs is typically less stringent compared to fully authorised Payment Institutions, as they operate on a smaller scale and offer a more limited range of services. Nevertheless, Small Payment Institutions are still required to register with their respective national regulatory authority, such as the Financial Conduct Authority (FCA) in the UK. This registration process ensures that they adhere to certain standards and requirements in order to maintain the integrity and stability of the financial services sector.

It is important to note that the specific thresholds and requirements for qualifying as a Small Payment Institution may vary depending on the jurisdiction. In general, SPIs must demonstrate that their average total value of payment transactions executed over a given period falls below a certain threshold, typically set by the regulatory authority. Additionally, SPIs must adhere to compliance standards, such as anti-money laundering (AML) and counter-terrorism financing (CTF) regulations, to ensure the safety and security of their operations.

In summary, Small Payment Institutions offer a more accessible entry point for smaller financial service providers looking to offer payment services. They cater to a niche market within the broader financial services industry, providing a valuable service to customers who may not require the comprehensive services of fully authorised Payment Institutions.