Your balances are held with our Principal firm, PayrNet Limited who are an authorised Electronic Money Institution (EMI) regulated by the Financial Conduct Authority (FCA) in the UK under the Electronic Money Regulations 2011 for the issuance of electronic money and the provision of payment services with FCA reference number 900594 (“PayrNet”) .
Payrnet is a 100% subsidiary of Railsbank Technology Ltd.
We have addressed some of the questions you may have on this matter below:
What is e-money?
When you send us money, we load up the value of that remittance in your account. The sums that we credit you in this exercise is called “issued e-money”.
This may sound similar to what a bank will do with your money when they credit an account or card balance in your name, but PayrNet is not a bank - it cannot use funds for its own purposes, for lending to customers or as deposits. As a result of PayrNet not being a bank, you do not benefit from the protections afforded by the Financial Services Compensation Scheme (“FSCS”).
How are e-money balances protected?
Your money is protected by a process known as safeguarding, which is a regulatory requirement for all EMIs such as PayrNet.
Under this process all e-money balances, including any money you add into your Pockit account, must be kept separate from all other cash balances such as operating fund balances that we may hold with PayrNet.
These segregated balances must be held with a bank and be routinely reconciled to ensure that the sum of all issued e-money balances is the same as the sum of cash held by the bank in the segregated account.
PayrNet is required to get an independent check by an expert at least annually to validate that the safeguarding process is operating properly.
What happens if Pockit or PayrNet goes into insolvency?
If Pockit or Payrnet was ever to go out of business, an insolvency practitioner would be appointed to return your Safeguarded funds back to you. This means that you would be able to receive your money back if such an event was ever to occur. Please note that if this was ever to happen, the insolvency practitioner may deduct costs in respect of returning the Safeguarded funds to you. For that reason, you may not get all your money back.
How does FSCS compare with safeguarding?
If you hold money in a bank account which qualifies for FSCS protection, in the event that the bank goes into an insolvency procedure you will be entitled to a maximum payment from FSCS of £85,000, even if the value of your loss was bigger than this sum. If your money was held in a joint account, the maximum payment from FSCS is £170,000.
If you hold money in a safeguarded account, you will be able to get all of your funds returned, subject to whatever charges are imposed by an insolvency practitioner for distributing the funds.
Typically an administration process of distributing safeguarded funds may take longer than a claim under the FSCS.
You can find out more about non-bank payment services on the FCA’s website.