Business scope and permission boundaries
Instruments usable only on the issuer’s premises, within a limited network of service providers directly contracted with a professional issuer, or to purchase only a very limited range of goods or services may qualify for the electronic money exclusion under Article 3 of EMR. The exclusion is a regulatory perimeter assessment, not a “small gift card SEMI” or an automatic exemption for non-profit enterprises.[4] [25]
This entry is used to determine whether limited network or closed-purpose instruments fall within exclusions under payment and electronic money legislation. It is not a SEMI sub-licence, nor does its inclusion in the SEMI directory require SEMI registration. Actual activities qualifying for an exclusion are not subject to that registration's capital requirements, personnel approvals or application decision deadlines. However, where the limited network notification conditions are met, FCA must still be notified, and continued compliance with the exclusion conditions must be demonstrated. The verification date is 2026-11-07; conclusions must be based on the actual product, contracts and fund flows.[2] [25] [300]
This page discusses instruments usable only on the issuer's premises, only within a limited network of service providers under direct commercial agreement with a professional issuer, or only to purchase a very limited range of goods or services. Each must be assessed under the applicable statutory limb; these usage restrictions need not all be met simultaneously, and a limited merchant list or the words 'limited network' in a contract cannot replace genuine usage restrictions. The electronic money exclusion is based on provision 3 of EMR, while the payment services exclusion requires checking the relevant conditions in Part 2 of Schedule 1 to PSRs.[2] [25]
FCA uses certain shopping centre gift cards to illustrate circumstances that may qualify; it does not recognise all gift cards, points, charity wallets or so-called closed accounts as excluded. It is necessary to examine whether customers acquire electronically stored monetary value and a claim against the issuer, who actually accepts payments, and whether the network and uses for goods are genuinely limited. Product names, non-profit status or low transaction amounts do not in themselves determine the regulatory perimeter.[4] [25] [300]
The exclusion covers only the specific activities that meet its conditions. Where the same operator also provides open-loop electronic money, money remittance, merchant acquiring, account information or payment initiation services, the corresponding authorisation or registration must be assessed separately; the instrument's excluded status cannot expand the scope of business. Where an existing SEMI also operates an excluded instrument, the registration obligations of SEMI itself do not disappear.[2] [300]
Application value and choice of route
Select the minimum sufficient combination of permissions that lawfully supports the actual business, client scope and financial responsibilities, rather than treating the broadest permissions or fastest approval as the sole objective.
Instruments meeting the exclusion conditions may operate within their genuine business boundaries without applying for a non-existent limited-network SEMI licence for this activity. This distinguishes regulated from excluded activities; it does not grant banking, electronic money or general payment service permissions.[2] [25] [300]
Perimeter analysis and ongoing transaction records can explain why an exclusion is relied upon and when a limited network notification is required. Notification information may appear on the FCA Financial Services Register, but this cannot be used to advertise authorised EMI or registered SEMI status.[2] [300]
Operators can identify changes in regulatory routes before expanding their network or uses, avoiding the mistaken assumption that the original exclusion conclusion automatically covers commercial expansion. An exclusion assessment or submission of a notification does not guarantee FCA acceptance of the analysis, bank account opening, partner onboarding or project fees.[25] [300]
Application conditions and entry requirements
First assess whether the actual fund flows and product rights constitute electronic money or payment services, then explain the specific limb of the exclusion to be relied upon. Provide the relevant facts separately for the issuer’s premises, a service network limited by direct commercial agreements, and a very limited range of goods or services. A common brand, closed technology or contractual statement alone cannot establish an exclusion.[2] [4] [25]
If relying on a limited network, identify the issuing or service entity, the actual merchants accepting the instrument, and the direct commercial agreements between the professional issuer and service providers. Technology and contracts should jointly restrict use of the instrument. New merchants, goods categories and acceptance methods must be included in reassessment; open-ended general-purpose payment instruments must not be presented as limited network instruments.[25]
The limited network notification test is whether the total value of payment transactions executed through the relevant services or completed using the monetary value issued exceeds EUR1,000,000 in any rolling twelve-month period. It is not a company turnover, average outstanding balance or SEMI capital test. Exceeding the threshold triggers notification but does not, solely by reason of the amount, invalidate the exclusion. Remaining below the threshold does not establish that the product qualifies for the exclusion either.[2] [300]
When the notification conditions are met, a limited network exclusion notification must be submitted through Connect, describing the relevant services within the UK and the grounds for the exclusion relied upon, and complying with the FCA direction. Merely registering a Connect account or obtaining notification registration details does not amount to applying for or obtaining SEMI registration.[300]
The exclusion addresses only the payment and electronic money regulatory perimeter for the relevant activity. It does not imply exemption from company law, tax, consumer contracts, data protection, sanctions or any applicable anti-money laundering obligations. Where other business is also conducted, its regulatory status and obligations must be checked separately; the instrument's exclusion does not imply that the entire company is unregulated.[2] [20] [300]
Shareholders, directors and key personnel
Conducting only activities qualifying for the limited network exclusion does not, by virtue of this entry, require SEMI director or business head EMD registration or SEMI controller information. Notification does not create SMF approval or annual certification requirements. Whether SM & CR apply depends on whether the legal entity separately holds FSMA authorisation; SEMI personnel application templates must not be carried over as entry conditions for excluded instruments.[2] [14] [300]
Operators should still identify who is responsible for the product perimeter, merchant contracts, transaction data and FCA notifications, and ensure that these people can explain actual usage restrictions and changes. Shareholder and director information is used to establish the actual operating entity, ordinary corporate governance and necessary due diligence. This page does not set SEMI qualifying holding approval thresholds, uniform nationality ratios or uniform compliance staff experience requirements. If the same entity is already registered as SEMI or has another regulated status, the corresponding personnel and controller obligations must still be discharged independently under that status.[2] [300]
Capital and financial resources
Instruments genuinely meeting the exclusion are not subject to SEMI initial capital or ongoing own-funds formulas by virtue of this activity. The EUR500,000 average outstanding electronic money threshold and 2% rules are not capital requirements for limited-network instruments; nor is the EUR1,000,000 twelve-month transaction threshold for limited-network notification a capital amount or minimum entry amount.[3] [5] [25] [300]
Operators should arrange operating, redemption and exit resources according to actual contractual liabilities and business risks, and budget separately for technology, personnel and notification costs. FCA states that limited network notifications attract a fee. The amount should be checked in Connect and FEES 3 Annex 8R at the time of submission. SEMI application or annual fees must not be applied, and this page does not speculate on pricing.[300]
If the exclusion ceases to apply and the activity constitutes electronic money issuance, an appropriate regulatory route must be selected afresh. The balance threshold and capital rules for SEMI apply only if that status is chosen and all registration conditions are met. If the same entity is already a SEMI, funds from excluded instruments must not be mixed indiscriminately with regulated electronic money and funds requiring safeguarding, nor may resources from excluded business be used arbitrarily to offset statutory capital.[2] [3] [5] [25]
Registered office and operational substance
This page analyses the scope of excluded activities; it is not an application for SEMI registration. Its UK head-office and substantive central-management conditions therefore cannot be applied merely because the directory places it under SEMI. The service description for a limited network notification must identify the relevant services provided in the UK and accurately specify the actual operating and notifying entities; registered addresses, business locations, issuer premises and merchant networks should be consistent with contracts and actual usage.[25] [300]
If relying on the limb for 'use only on the issuer's premises', the premises restriction must genuinely apply; a mailing address does not prove that the instrument is used only on those premises. The operator's company registered address requirements and head office conditions required for other activities must be met separately. A Hong Kong or Shenzhen consultancy address cannot replace the operator's address, prove actual UK office operations or establish eligibility for an exclusion. This page does not guarantee the occupancy status of any actual office premises.[25]
Application document checklist
Perimeter analysis materials: explain the issuing or service entity, the rights acquired by customers, receipt-of-funds and settlement arrangements, and whether the instrument involves electronic money or payment services. Specify each limb of the exclusion relied upon and the actual facts; do not treat a SEMI registration application form as material for determining an exclusion.[2] [4] [25]
Evidence of restrictions on use: product descriptions, user terms, funds flow diagrams, lists of actual merchants and goods or services, and applicable direct commercial agreements. The materials must explain why transactions can take place only within restricted premises, networks or purposes; FCA expressly encourages notifications to include funds flow diagrams and instrument terms.[2] [25]
Transaction threshold evidence: retain detailed records, statistical methodologies and any necessary basis for euro conversion sufficient to reconstruct the total value of relevant payment transactions over any consecutive twelve months, and record the date on which EUR1,000,000 was first exceeded. Do not directly substitute electronic money balances, top-up amounts or company revenue for statutory payment transaction statistics.[2] [300]
Notification materials: provide a description of the relevant UK services and the basis for the exclusion through Connect, supplement information according to the actual form and direction, and retain submission receipts, fee records, FCA enquiries and replies. Notification information may appear on the register. The document list does not include a SEMI three-year budget, evidence of capital, EMD individual applications or change in control approval applications required solely because of this excluded activity.[2] [300]
Maintain documentation: retain review records of changes to the network and its uses, contract versions, assessments by those responsible and subsequent notifications, and keep separate records of other regulated business conducted by the same entity. This documentation supports ongoing exclusion analysis and notification; it does not justify claiming that all such documents are application attachments uniformly required by FCA for every limited network operator.[2] [25] [300]
This is provided as a reference for organising the project; it cannot replace current official application forms or case-specific requests for additional materials. Please do not send identity documents or customer records through website forms.
Application process and key steps
Identify the actual products, contractual rights and funds flows, compare them against payment and electronic money definitions, and explain which specific activity meets which exclusion limb. Services that do not meet an exclusion must follow the correct separate authorisation or registration route, rather than applying directly for SEMI simply because this page exists.[2] [4] [25] [300]
Implement genuine usage restrictions, merchant agreements and data statistics, and continuously monitor the total value of relevant payment transactions over any consecutive twelve months. Perimeter analysis must be maintained even when the notification threshold is not exceeded; 'no notification required' must not be interpreted as dispensing with the exclusion conditions.[25] [300]
When the notification condition of exceeding EUR1,000,000 is first met, submit a limited network exclusion notification through Connect and pay the applicable notification fee no later than twenty-eight days from the date that condition is met. This is a LNE notification, not a SEMI registration application.[300]
Explain the services and grounds for exclusion as required by FCA, and retain regulatory correspondence. Notification information appearing on the register does not amount to SEMI authorisation or registration, nor can notification legitimise business that does not qualify for the exclusion. If the actual activities fall within regulated services, apply for the required status rather than using notification as a substitute.[2] [300]
Thereafter, notify again every twelve months while the notification conditions continue to be met. If, at the end of twelve months after the last notification, the notification conditions are found no longer to be met, FCA must still be informed using the same notification form. Specific calculations and submission requirements follow the direction and the Connect form current at the time; this is not an annual SEMI licence renewal.[300]
Reassess the exclusion before expanding merchants, permitted purchases or funds functionality. If the expansion constitutes regulated payment or electronic money business, appropriate authorisation, registration or other lawful status should be secured before conducting that business. An excluded operator must not be treated as already holding SEMI, nor may the thirty-day application rule following a breach of the SEMI threshold be used as a grace period for this activity.[2] [300]
Approval deadlines and project timelines
The limited network exclusion is not an application for SEMI registration. The statutory SEMI decision periods of three months for complete applications and twelve months for incomplete applications do not apply to this page, nor is there any promise of obtaining a licence within “3 to 6 months”. Product analysis, contractual implementation, notification preparation and FCA enquiries each depend on the actual facts. No uniform LNE approval timeframe has been confirmed in the evidence reviewed here; submitting a notification does not guarantee acceptance of the exclusion analysis.[2] [300]
The clear notification timings supported by evidence for this activity are: submit no later than twenty-eight days after first meeting the notification conditions; notify again every twelve months while the conditions continue to be met; and, if the conditions are no longer met at the end of twelve months after the last notification, still notify using the same form. These twelve months are the transaction measurement and subsequent notification cycle, not an approval period. Read the FCA direction and follow the actual form; do not independently add uniform five-day or ten-day change deadlines or a sixty-business-day control deadline.[300]
Changes to shareholders, directors and permissions
Where only activities qualifying for an exclusion are conducted, shareholder or director changes do not attract SEMI prior change-of-control approval, 10%/20%/30%/50% thresholds, EMD personnel appointment or removal notifications, or SMF approval. This page does not concern a SEMI registration through which a change of control can be processed. Ordinary corporate change obligations and approvals or notifications under other regulated statuses must be assessed separately.[2] [300]
Changes genuinely material to the exclusion analysis include changes in the issuing or service entity, an increase in merchants actually accepting the instrument, expansion of the types of goods or services, changes in geographical or premises restrictions on use, and changes in how funds are transferred. Before implementation, review whether direct commercial agreements and use restrictions still satisfy the statutory limb, and verify whether notification information remains accurate. The evidence reviewed here does not confirm a single fixed number of days for FCA notification of all such changes; this must not be guessed.[25] [300]
If changes mean that an exclusion no longer applies, it must be reassessed whether the activity constitutes regulated payment services or electronic money issuance, and the required status must be obtained for the actual activities; a historical notification cannot continue to cover new business. If the target entity is already a SEMI, SEMI change-of-control and personnel change requirements still arise from that registered status and are not removed by the exclusion of certain instruments.[2] [300]
Ongoing compliance and annual maintenance
Ongoing maintenance concerns exclusion conditions and limited network notification obligations, not annual reapplication for an SEMI licence. Regularly review actual places of use, direct commercial agreements with merchants, network scope and the purposes of goods or services, updating the assessment before planned expansion; this scope monitoring must continue even while the notification threshold is not exceeded.[25] [300]
Continue calculating the total relevant payment transactions over any consecutive twelve months, distinguishing the tests of continued eligibility for the exclusion and whether EUR1,000,000 has been exceeded, requiring notification. Once in the notification cycle, notify again every twelve months while the conditions remain met; if they are no longer met at cycle end, still notify using the same form rather than silently withdrawing as transactions decrease. Retain calculations, contracts and notification records, and comply with the actual direction and FCA information requirements.[2] [300]
Excluded activities alone do not give rise to SEMI annual FIN060b returns, monthly REP027 safeguarding reports, SEMI safeguarding audits or annual fee arrangements; the parent topic’s full reporting calendar must not be applied to this page. Limited network notification fees must be checked under their own rules, and other corporate or business obligations must still be met. If the same operator also has SEMI or other regulated business, the client money, reporting and compliance obligations applicable to that business remain. Different activities should be identified through separate accounting; an exclusion finding cannot be used to cancel safeguarding obligations or commingle funds requiring safeguarding.[2] [25] [300]
If the conditions for an exclusion cease to be met, the regulatory perimeter should be reassessed promptly, and the new scope must no longer be described as excluded activity. Continuing to provide regulated services requires the appropriate status for the actual business or adjustment of the product to a lawful scope. This page does not provide a uniform statutory grace period after an exclusion ceases to apply. In particular, it does not extend the over-limit conversion period for SEMI itself to excluded operators that have never been registered.[2] [300]
Acquisition due diligence and transaction considerations
Acquiring a limited network instrument operator means purchasing corporate shares, assets or contractual business, not a transferable SEMI sub-licence. Due diligence should first distinguish purely excluded operators from companies also registered as SEMI. The LNE notification information on the register must not be treated as electronic money authorisation, SEMI registration or eligibility to conduct open-loop payment business.[2] [300]
Obtain product terms, funds flow diagrams, direct commercial agreements with merchants, the actual acceptance network and lists of goods or services to test whether the exclusion remains valid after completion. Also reconstruct the relevant twelve-month total payment transaction value, the date notification conditions were first met, previous notifications and correspondence with FCA, checking for missed notifications, errors in calculation scope and the seller's reliance on names alone to establish an exclusion. If the buyer plans to add merchants or general-purpose uses, transaction valuation and completion arrangements should account for the costs and conditions of re-entering the regulatory perimeter, rather than assume the exclusion transfers permanently with the company.[2] [25] [300]
A target conducting only excluded activities is not subject to the SEMI change-of-control approval process. If the actual issuer or service provider changes after acquisition, reassess who relies on the exclusion and who must notify, rather than directly retaining the seller entity’s registration information. If the target also has SEMI or other regulated status, the change-of-control approval, personnel and business change requirements for that status must be handled separately. Customer contractual liabilities, data, suppliers and ordinary corporate changes should also undergo separate due diligence. This page does not guarantee immediate expansion, account opening or approval after acquisition.[2] [300]
View the complete process for acquiring a licensed companyBusiness segments and applicable regimes
The following are specific permissions, organisational models or statutory categories covered by this topic. They do not necessarily each constitute a separate financial licence.
Frequently asked questions
As this page is under the SEMI directory, must SEMI registration be obtained first?+
No. The directory compares scope. This page discusses specific activities excluded because they meet limited-network or limited-use conditions, not a subsidiary SEMI licence. That registration is pursued only where the actual business constitutes regulated electronic money and the SEMI route is selected and its conditions met. Other payment or electronic money business must be assessed according to its actual activities.[2] [25] [300]
Are all gift cards, closed wallets or non-profit instruments excluded?+
No. The actual premises, network or use of goods must be shown to satisfy the specific applicable statutory limb. FCA gives certain shopping centre gift cards as examples; it does not grant a general exemption for gift cards, points or non-profit entities. Contractual and technical labels cannot replace the facts.[4] [25] [300]
Does the one-million-euro threshold refer to capital, balances or the value of payment transactions?+
This is a notification test of whether the total value of payment transactions executed through the relevant services or using the monetary value issued exceeds EUR1,000,000 in any consecutive twelve-month period, not a test of capital, company revenue or average outstanding electronic money. Exceeding that amount does not itself remove the exclusion, but triggers notification; remaining below it does not establish that the exclusion applies.[2] [300]
How soon after the notification conditions are met must a submission be made, and is notification required only once?+
Notify through Connect no later than twenty-eight days after the conditions are first met. Notify again every twelve months while the conditions continue to be met. If the conditions are no longer met at the end of twelve months after the previous notification, you must still inform FCA using the same form. Read the official direction for detailed calculation and submission requirements.[300]
Does appearing on the FCA register after notification mean approval as a SEMI?+
No. Official guidance states that notification information will appear on the register, and existing methodology documents also list notified excluded service providers separately from authorised and registered institutions. A LNE notification must not be promoted as SEMI registration, nor can it legalise activities that do not qualify for the exclusion.[2] [300]
Does this activity have a three-month or twelve-month approval deadline?+
This page does not concern a SEMI application and does not apply the SEMI decision deadlines of three months for complete applications and twelve months for incomplete applications. The twelve months under LNE concern transaction testing and repeat notification cycles, not an approval period or guarantee of approval. This review has not confirmed a uniform limited network approval timeframe.[2] [300]
Do we need to prepare SEMI capital, EMD personnel forms and monthly safeguarding reports?+
Activities qualifying for an exclusion alone do not attract these SEMI registration and ongoing obligations. A notification requires an accurate service description, the basis for the exclusion and relevant product materials. Notification fees should be checked in Connect and the fees manual, rather than applying the SEMI application fee. If the entity also conducts regulated business, that business’s own capital, personnel and safeguarding reporting obligations must still be met.[2] [5] [25] [300]
Does a share acquisition or replacement of directors require SEMI change-of-control approval?+
Operators conducting only excluded activities do not have the SEMI registration described on this page and must not be subjected to SEMI control and personnel approvals. Review the actual operating entity, network contracts and post-completion use. Where the target also has SEMI or another regulated status, the corresponding approvals or notifications must still be completed independently.[2] [300]
Can the original notification still be relied on after expanding the merchant network or switching to a general-purpose wallet?+
The exclusion cannot automatically continue to be used. Whether its conditions remain satisfied must be reassessed. If they are no longer satisfied and the business constitutes regulated payment or electronic money business, the required status must be obtained for the actual services or the product adjusted. Unregistered operators cannot claim the thirty-day conversion rule for SEMI exceeding its limits as their own grace period.[2] [25] [300]
Official basis and verification sources
Primarily based on FCA, PRA / Bank of England, GOV.UK and current legislation. Older third-party guides supplied by users are used to organise business material and do not override the latest official requirements.
Tang Shangyong (Mr Tang / Drew) · Business Manager
Global financial licence application, transaction and ongoing compliance services