What Is SPI? PSD2 Article 32 Explained
Article 32 of the EU's Second Payment Services Directive (PSD2) provides member states with the option to create a simplified registration regime for small payment service providers. Firms qualifying for this exemption — primarily those whose average monthly transaction volume over the preceding 12 months does not exceed €3 million — can register as Small Payment Institutions (SPIs) rather than obtaining full authorisation as Electronic Money Institutions (EMIs) or Payment Institutions (PIs).
The SPI category exists to reduce regulatory barriers for early-stage payment companies and fintech innovators. By removing the capital requirement and streamlining the application process (typically 3–6 months vs 6–18 months for a full EMI), regulators create a pathway for startups to enter the regulated space, build their compliance infrastructure, and demonstrate viability — before committing to the higher costs and requirements of full authorisation.
Not all EU member states have implemented the Article 32 exemption. The UK, Poland, and Czech Republic are the three most popular SPI jurisdictions for international fintech companies. Each has a slightly different volume threshold (expressed in local currency) and registration process, but all follow the PSD2 framework principles.
The SPI licence has important limitations. SPIs are registered rather than authorised — a meaningful distinction. They cannot issue electronic money. Their cross-border passporting rights are more limited than full EMIs. And the volume threshold means rapid-growth companies must plan their regulatory upgrade carefully. Despite these limitations, the SPI is an excellent starting point for most payment startups entering the European market.
SPI vs EMI: Key Differences
| Feature | SPI | Full EMI |
|---|---|---|
| Regulatory basis | PSD2 Art. 32 exemption | PSD2 Art. 11 authorisation |
| Process type | Registration | Authorisation |
| Min capital | None required | €350,000 (EU standard) |
| Volume cap | €3M/month per service | No cap |
| E-money issuance | Not permitted | Permitted |
| EU passporting | Limited | Full PSD2 passport |
| Timeline | 3–6 months | 6–18 months |
| Best for | MVP testing, startups | Scale operations, e-wallets |
Permitted Activities & AML Obligations
SPIs can provide most payment services under PSD2, including payment execution (credit transfers, direct debits), payment initiation services (PIS), account information services (AIS), and in some jurisdictions money remittance. They cannot issue electronic money — that activity is reserved for EMIs.
Despite their simplified registration status, SPIs are not exempt from AML/CFT obligations. The Anti-Money Laundering Directives (AMLD5/6) apply to SPIs in full. They must implement KYC/CDD procedures, transaction monitoring, suspicious activity reporting, and appoint a compliance officer. AML obligations are one area where SPIs face similar requirements to full EMIs.
Safeguarding obligations also apply once SPIs hold client funds, though the specific requirements may vary by jurisdiction. SPIs should implement safeguarding procedures from inception, even if the volume threshold technically does not yet trigger the obligation.
- Credit transfers and direct debits
- Payment initiation services (PIS)
- Account information services (AIS)
- Money remittance (jurisdiction-dependent)
- Merchant payment acceptance (some jurisdictions)
Top Jurisdictions for SPI Registration
When to Upgrade from SPI to EMI
Most SPI holders eventually outgrow the registration. The upgrade from SPI to full EMI (or PI) authorisation should be planned well in advance of the volume threshold being reached. EU regulators typically expect SPI holders to initiate the upgrade process when their monthly volumes reach 80–90% of the applicable threshold.
Beyond volume, the EMI upgrade is also triggered by: the desire to issue e-money and hold customer balances for extended periods; the need for full EU passporting rights to serve clients across multiple countries; institutional or banking partner requirements for full authorisation; or the commercial need to build brand credibility beyond the startup phase.
Planning tip: Start your EMI upgrade application 6–9 months before you expect to hit the volume threshold. Full EMI authorisation in most EU jurisdictions takes 6–12 months. Being SPI-only when you breach the threshold creates regulatory risk and potential enforcement action.