On 7 May 2026, the FCA's new safeguarding regime came into force for every UK payments and e-money firm. The changes set out in Policy Statement PS25/12 are the biggest overhaul of customer-money protection in payments for almost a decade — and for UK merchants they materially change the question of how safe your float really is between capture and settlement.

What's actually changed

Safeguarding is the rule that requires a payment firm to keep your money separate from its own, so that if the firm fails the money can still be returned. The previous regime, in force since 2017, set the principle but gave firms wide discretion on how to operate it. PS25/12 closes the gaps with four substantive changes:

  • Daily reconciliation — safeguarded funds must now be reconciled every business day rather than periodically, and any mismatch must be resolved before the next business day.
  • Monthly FCA returns — firms must report the total value of safeguarded funds to the FCA each month, giving the regulator a near real-time view of which providers are operating with thin coverage.
  • Annual independent audit — most authorised firms must arrange an independent safeguarding audit each year. Only firms that held less than £100,000 of relevant funds at any point in the previous 53 weeks are exempt.
  • Resolution packs — firms must maintain a comprehensive, regularly updated pack so that in insolvency an administrator can identify and return customer funds without delay.

Why this matters to UK merchants

For a merchant taking card payments, "safeguarded funds" are the moneys your payment service provider holds on your behalf in the window between transaction capture and net settlement into your bank account. For an acquirer or PSP processing tens or hundreds of millions of pounds a month, that float can run into eight figures at any moment. If the firm fails before settlement, those funds need to be returnable — and historically, weak books at a handful of UK payment firms meant that wasn't always straightforward.

The FCA published the new rules after concluding that some firms presented an unacceptable risk of harm to consumers and market integrity. In plain English, the regulator had seen enough cases of mixed funds, late reconciliations and missing records to decide the old regime needed replacing rather than refining.

Expect consolidation, and expect questions

The practical implication is that running a UK payments or e-money business just got more expensive. Daily reconciliations, monthly returns and an annual audit are not optional and not cheap. Smaller and recently authorised firms in particular face a step-change in compliance overhead, and we expect this to accelerate consolidation in the market over the next 18 months — some firms will be acquired, others will choose to exit, and a few will simply lose their authorisation if they cannot meet the new standard.

For merchants, that is a reason to ask your current provider a few pointed questions now, while there is still time to switch on your terms rather than someone else's:

  • Are you FCA-authorised in your own right? — many gateway brands operate as agents of a larger acquirer. The safeguarding obligation sits with the authorised entity, not the brand on the front of your statement.
  • How are my funds segregated? — ask which UK bank holds the safeguarding account, and whether it is held in a designated client trust account rather than a generic operating account.
  • How often are reconciliations performed? — under the new regime, the answer must be "daily, every business day". Anything else is now non-compliant.
  • When was your last safeguarding audit? — your provider should be able to confirm this within minutes and identify any qualifications raised.

How Monek's approach compares

Monek is directly FCA-authorised (FRN 920628) as a payment services provider, with all merchant funds safeguarded in designated UK trust accounts and reconciled every business day. Our internal controls were built around the new standards well ahead of the 7 May commencement, so there has been no operational change for merchants this week — settlement remains next working day, with no holding period and no impact on day-to-day use of the Monek Portal, terminals, Virtual Terminal or Pay by Link.

If you would like a clear, plain-English read of how your current PSP measures up against the new rules — and what it means for your settlement risk and cash-flow exposure — our team will review your current contract and a recent statement at no cost and tell you exactly where you stand.