By: Money Navigator Research Team
Last Reviewed: 26/01/2026
FACT CHECKED
Quick Summary
Relying on a single e-money provider can create a single point of operational failure for day-to-day payments, even when customer funds are safeguarded. The highest-impact issues are usually timing and access: payment rails can be paused, compliance reviews can restrict activity, and provider distress can delay withdrawals while processes run.
Operational resilience (as defined by the regulator) is about preventing disruption where possible and recovering quickly when it happens, especially for “important business services” like making and receiving payments.
For firms using e-money accounts, concentration risk shows up most clearly when payroll, supplier payments, and tax payments depend on one platform and one set of rails.
This article is educational and not financial advice.
What “operational resilience” means and why it matters for business payments
The FCA describes operational resilience as the ability to prevent, adapt to, respond to, recover and learn from operational disruption, with a focus on keeping “important business services” running within defined impact tolerances (see the FCA’s overview of operational resilience and the policy framework in PS21/3).
From a business user’s perspective, the most relevant point is practical: payments are a service, not just a balance. If one provider is the gateway for Faster Payments/Bacs/standing orders, card settlement sweeps, and vendor transfers, then a disruption becomes a whole-business problem quickly.
Operational resilience is not only about “big outages”. It also includes operational events such as risk controls switching on (for example, payment holds), third-party failures, and processes that slow access while checks are completed.
Why single-provider reliance is different with e-money accounts
Many app-based business accounts are provided by e-money institutions (EMIs) rather than deposit-taking banks. That distinction matters because the protections and mechanics differ.
The FCA’s consumer guidance on using payment service providers explains that protections can vary across non-bank providers and that outcomes can differ if a provider fails.
A key concept is safeguarding: customer funds received in exchange for e-money issued (or in connection with payment services) must be protected in specified ways under the regulatory regime and guidance (see the FCA’s Approach Document for payment services and e-money, alongside the legal frameworks in the Electronic Money Regulations 2011 and the Payment Services Regulations 2017).
Safeguarding is often misunderstood as “instant availability”. In practice, safeguarding is about protecting funds from being used as the firm’s own money, especially in insolvency or failure scenarios.
Access and timing can still be affected by operational constraints, third parties, and the provider’s control environment – which is why the FCA has also published changes aimed at strengthening the regime for payments and e-money firms (see PS25/12).
For readers wanting a site-level explanation of what safeguarding means in plain English, see our guide: Safeguarding explained for e-money institutions.
How disruptions typically show up when one e-money provider is the only hub
1) Outgoing payments can be paused (even if the account still exists)
Some disruptions look like a “soft freeze”: outbound payments stop while the account remains open, and inbound activity may continue. In a single-provider setup, that can interrupt payroll runs, supplier payments, and scheduled tax payments.
This scenario – and why it can happen – is covered in: E-money provider pauses outgoing payments: payroll, suppliers, tax. It becomes more acute because statutory deadlines do not pause just because rails are temporarily unavailable (for example, HMRC’s published dates for paying PAYE bills in Pay employers’ PAYE).
2) Compliance reviews can restrict activity or slow access
E-money providers (and the banks and processors they depend on) operate under anti-money laundering and counter-terrorist financing obligations. In practice, that means periodic reviews and requests for evidence, and sometimes temporary restrictions while information is assessed.
Where businesses see this in the real world is through “evidence packs” and re-verification requests; this is documented in: Bank review evidence packs and Periodic KYC refreshes. If a single provider is the only account, even a short review window can have disproportionate operational impact.
3) Provider distress or failure can turn “access” into a process
If a provider becomes insolvent or enters administration, access to funds can involve a multi-step process, with time needed to reconcile records and return funds through the safeguarding mechanism.
The FCA flags failure scenarios as a key consumer risk area in its guidance on using payment service providers, and has pursued reforms to strengthen safeguarding outcomes (see PS25/12).
For the practical steps and typical delays, see: E-money provider enters administration: access steps and delays.
4) The “bank vs e-money” status can be unclear unless checked
Operational resilience planning starts with knowing what your provider is. Some brands look like banks but are e-money (or rely on partner firms for regulated permissions). This matters for how funds are protected and which complaint routes apply.
Our walkthrough: App business accounts: bank or e-money? Check the FCA Register, alongside regulator tools such as the FCA’s Firm Checker.
Summary table
| Scenario | Outcome | Practical impact |
|---|---|---|
| Outgoing payments paused | Transfers cannot be sent for a period | Payroll batches, supplier runs, and scheduled HMRC payments can miss timing windows (see PAYE payment dates) |
| Compliance review triggered | Account features restricted while information is reviewed | Time spent compiling documentation; operational delays across routine payments (see evidence packs) |
| Periodic KYC refresh | Requests for updated ownership/identity/trading evidence | Payment processing can slow until review completes (see periodic refreshes) |
| Payment rail dependency issue | Transfers fail or queue | Knock-on delays to suppliers, refunds, and standing orders |
| Provider distress / administration | Access becomes a managed process | Withdrawals may depend on reconciliation and return steps (see administration delays) |
| Safeguarding operational constraint | Funds are protected but not immediately accessible | “Safeguarded” does not necessarily mean “same-day availability” (see FCA Approach Document) |
| Status misunderstood (bank vs e-money) | Wrong expectations about protections and routes | Misalignment on what “FSCS deposit cover” applies to (see check status) |
| Complaint needed after disruption | Escalation route depends on provider and issue | The Financial Ombudsman Service explains its scope for banking and payments complaints |
Scenario table
| Scenario-level | Process-level (what happens behind the scenes) | Outcome-level (what you typically see) |
|---|---|---|
| “Payments paused” event | Risk controls restrict outbound activity while checks complete | Outbound transfers fail/queue; inbound may continue |
| “Review” event | Requests for evidence; verification and ongoing monitoring steps | Additional documents requested; partial feature lock |
| “Failure” event | Safeguarding and insolvency processes govern return of funds | Access delays; staged repayments depending on process |
| “Rails” disruption | Transfer routing and settlement dependencies become constrained | Unpredictable completion times; retries required |
| “Protection misunderstanding” | Safeguarding regime differs from deposit-taking protections | Confusion about what is protected and when |
| “Complaint escalation” | Eligibility and jurisdiction depend on provider status and facts | Complaint can be in scope for FOS for banking/payment issues, depending on circumstances |
(Regulatory context for safeguarding and payment services is set out in the FCA’s Approach Document, the Electronic Money Regulations 2011, and the Payment Services Regulations 2017.)
Safeguarding vs FSCS deposit cover: why the operational risk is often “access”, not “loss”
FSCS deposit cover applies to eligible deposits held with UK-authorised banks, building societies and credit unions, within FSCS rules (see What we cover (FSCS)). That framework is not the same as e-money safeguarding.
For e-money users, the central risk question is frequently: what happens to day-to-day payment ability and access timelines during disruption? The FCA’s consumer guidance on using payment service providers highlights that protections and outcomes can differ versus traditional banking, particularly around failure scenarios.
For a detailed internal explainer written for business users, see: Safeguarding vs FSCS deposit cover and the mechanics of control and release in How safeguarding accounts work in practice.
Compare Business Bank Accounts
Business bank accounts and e-money business accounts can both support everyday trading, but they are built on different regulatory models and protections.
Deposit-taking bank account: deposits may be eligible for FSCS deposit cover within scheme rules (see FSCS: what we cover).
E-money account: customer funds are generally subject to safeguarding obligations under the e-money/payment services regime (see FCA Approach Document).
Operational resilience lens: the practical question is how quickly important payment services continue or recover during disruption (see FCA operational resilience).
For our neutral overview of the main account category and features, see: Business bank accounts.
Frequently Asked Questions
FSCS deposit cover is designed for eligible deposits held with UK-authorised banks, building societies and credit unions, assessed under FSCS rules. FSCS sets out what it covers, including how limits apply and what products fall within scope, in What we cover (FSCS).
E-money providers are generally not deposit-taking banks. Instead, they operate under the e-money/payment services regime where safeguarding is the primary protection mechanism for relevant funds (see the FCA’s Approach Document and the Electronic Money Regulations 2011). That difference affects both expectations and how “access” works during disruption.
Safeguarding is the framework requiring payment and e-money firms to protect relevant customer funds from being mixed with (or used as) the firm’s own money, with specific methods and expectations set out in regulation and guidance.
The FCA’s Approach Document explains how the FCA interprets key requirements in the Payment Services Regulations 2017 and Electronic Money Regulations 2011.
In operational terms, safeguarding is mainly designed to improve outcomes in failure scenarios, but it does not automatically remove all access friction during operational disruption (for example, payment holds, reconciliations, or dependency outages).
That is why the FCA has moved to strengthen the regime for payments and e-money firms (see PS25/12).
Yes, payment capability can be restricted without a full closure. From the user’s perspective, this can look like outbound payments being blocked or queued, while other parts of the account remain accessible.
This is one reason single-provider reliance creates resilience risk: a “partial restriction” can still halt core business services. For the scenario detail and typical impacts, see E-money provider pauses outgoing payments: payroll, suppliers, tax and the FCA’s consumer context in Using payment service providers.
Operationally, payroll and tax payments are timing-dependent. If outbound transfers are unavailable during a payment window, practical consequences can follow even if funds exist on-screen as a balance.
HMRC publishes PAYE payment timing in Pay employers’ PAYE, including the dates by which payments must be made depending on method. The key point for resilience planning is that external deadlines are independent of provider incidents, which can turn a short payment pause into a wider operational event.
Yes. Ongoing monitoring and periodic reviews are part of how financial firms maintain AML/CTF compliance over time, not just at onboarding. In practice, established businesses can still be asked to re-confirm ownership, trading activity, source information, or supporting documents.
Where this becomes an operational resilience issue is concentration: if one provider is the only payment hub, a review that temporarily reduces account functionality can disrupt routine supplier runs or payroll cycles. For what firms typically request, see Bank review evidence packs and Periodic KYC refreshes.
Not necessarily. Even where safeguarding is in place, access can depend on process steps such as reconciliations, identification of customer entitlements, and administrator-led timelines in failure contexts.
The FCA highlights provider failure as a consumer risk area for non-bank providers in Using payment service providers, and it has published reforms intended to improve outcomes (see PS25/12).
For a practical walkthrough of steps and common delay drivers, see E-money provider enters administration: access steps and delays.
Control and release depend on how safeguarding is structured and what operational arrangements exist between the provider and third parties (for example, where safeguarded funds are held and how withdrawals are executed).
The regulatory framework sets the objectives and expectations, while operational practice determines how quickly funds can be returned or moved (see the FCA’s Approach Document).
In day-to-day disruption scenarios, this matters because “safeguarded” describes how funds are protected, not necessarily the exact mechanics of release during an incident. For an internal, plain-English explanation of operational control points, see How safeguarding accounts work in practice.
Branding is not always a reliable indicator of regulatory status. Checking the provider’s authorisation and permissions is part of setting correct expectations for protections, complaint routes, and resilience planning.
The FCA provides tools for checking firms, including the Firm Checker. Our step-by-step guide to interpreting what you see is: App business accounts: bank or e-money? Check the FCA Register.
Operational resilience is a regulatory framework aimed at ensuring firms can continue delivering important services within impact tolerances. The FCA sets out the concept and expectations in its operational resilience materials and in PS21/3.
For customers, the practical “help” is indirect: better resilience expectations can drive better mapping of dependencies, testing, and incident response.
But even in a strong regime, no framework removes the basic operational reality that single-provider concentration magnifies the impact of any one incident on payroll, suppliers, and tax flows.
The Financial Ombudsman Service (FOS) explains the types of issues it can help with under banking and payments, including disruptions, disputed transactions, and service problems, depending on eligibility and circumstances.
In operational disruptions, complaint outcomes often turn on facts: what happened, what communications were provided, what steps were taken, and what losses can be evidenced. Separately, the FCA’s consumer materials on using payment service providers can help frame the regulatory context for non-bank payment providers and failure scenarios.
Operational resilience risk in e-money is often misunderstood as a question of “is the money safe?” when the more immediate business risk is “can the business operate on time?” Safeguarding is designed to protect relevant funds within a regulatory model, but it does not eliminate the operational dependencies that determine access, transfer execution, and incident recovery.
A single-provider setup concentrates multiple moving parts – payment rails, compliance controls, third-party dependencies, and operational processes – behind one interface.
That concentration is why small disruptions (like a temporary outbound payment pause) can create disproportionate real-world impact, even before any extreme scenario such as insolvency is considered.
Sources & References
FCA: PS25/12 – Safeguarding regime changes for payments and e-money firms
FCA: Payment Services and Electronic Money – Our Approach (PDF)
UK legislation: Electronic Money Regulations 2011
UK legislation: Payment Services Regulations 2017
FSCS: What we cover
Financial Ombudsman Service: Banking and payments
GOV.UK (HMRC): Pay employers’ PAYE
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