Neobanks: Licensing Overview and Provider Ratings

Regulation

Concept

A neobank is a financial company that opens and maintains client accounts without a banking license, under one of the lighter regulatory regimes. These regimes are called different things in different jurisdictions, but economically they represent a single model: the company is permitted to hold client funds and process payments—but without the rights of a bank.

Neobanks emerged as regulators' response to the problem of serving small and medium-sized businesses. A full banking license is too heavy and expensive—high minimum capital, Basel III adequacy ratios, separate treasury and risk management functions, regular audited reporting and supervision, direct account with the central bank. This model does not pay off for a small client: compliance costs are comparable to the revenue from them.

Therefore, starting in 2007, regulators began introducing lighter regimes—payment and e-money licenses with reduced requirements for capital, team, and reporting. Today they exist in the EU, UK, Singapore, Hong Kong, USA, and dozens of other jurisdictions. Specific types of licenses, regulators, and provider examples are in the jurisdictions section below.

Under these regimes, several generations of companies have grown—from Wise and Revolut to Airwallex and Statrys. Their turnover is comparable to large second-tier banks (Wise had £118.5 billion in cross-border transfers for the 2024 financial year), even though legally they are payment institutions with capital in the hundreds of thousands of euros, not banks.

🍓 A neobank is a working business account. A safe for savings and reserves is a bank.

What is "lighter" in the payment regime

A payment license differs from a banking license in both rights and requirements. A company with a payment license operates within three structural limitations.

First—client funds cannot be accepted as deposits on the company's own balance sheet. Client money is not recorded as the company's obligation to depositors and does not finance its active operations. It is held separately, in specially designated accounts at partner banks, or invested in safe instruments—government bonds, money market funds. This mechanism is called safeguarding and is enshrined in each regime separately: for UK API/EMI—in Electronic Money Regulations 2011 (section 20) and Payment Services Regulations 2017, for EU—in Article 10 EMD2 and Article 10 PSD2, for Hong Kong—in C&ED license conditions for MSO.

Second—lending from client funds is prohibited. Credit operations are either completely prohibited or permitted only from the company's own capital. This blocks the fundamental banking model—fractional reserve banking, where a bank lends more from accepted deposits than its own capital.

Third—no direct correspondent account with the central bank. Settlements in dollars, euros, pounds, Singapore dollars, Hong Kong dollars go through a partner bank that holds a master account at the US Federal Reserve, European Central Bank, Bank of England, MAS, or HKMA. For the client, this means dependence on the stability of the relationship between their payment provider and its partner bank.

In exchange for these limitations, the regime has reduced requirements for capital, team, reporting, and supervision.

Client fund protection: safeguarding

There is no government deposit insurance at neobanks. UK FSCS, US FDIC, Singapore SDIC, European national DGS—all these schemes work only for licensed banks and do not extend to funds in payment institutions. Instead of insurance, segregation is applied: client funds are physically separated from the company's own funds and in case of the company's bankruptcy are not included in its bankruptcy estate. Legally, this is a trust structure—the company holds funds on behalf of the client, but not as its own.

🍓 Segregation protects against bankruptcy of the payment institution itself. It does not protect against bankruptcy of the partner bank holding the segregated funds, and does not protect against operational collapse of the intermediary through which settlements pass.

Three precedents that showed the limits of safeguarding

Wirecard (2020). German Wirecard AG, holder of UK EMI license Wirecard Card Solutions, went bankrupt after revealing €1.9 billion in balance sheet falsification. FCA suspended operations of the UK subsidiary. Clients received access to segregated funds after several weeks, but partner companies (Curve, Pockit, Anna) that built products on top of Wirecard were down for months.

Banking Circle (2022). Several European payment institutions lost access to payment channels after Danish partner bank Banking Circle terminated their service. There was no client compensation—this was a commercial decision by the partner bank, not an insurable event.

Synapse (2024). US intermediary company Synapse, through which several neobanks with a partner bank model operated (Yotta, Juno, Copper, Mainvest), went bankrupt. About $265 million in end-client funds were frozen, and reconciliation revealed a discrepancy of $65–95 million between Synapse and partner bank records. Deposits formally sat in partner banks (Evolve Bank & Trust, American Made Group) under FDIC protection, but restoring access took more than six months due to accounting discrepancies, and some funds were lost.

Regulatory trends 2024–2026

European Union: PSD3 + PSR and MiCA. The PSD3 package (licensing directive) and PSR (Payment Services Regulation—directly applicable regulation on conduct rules) was agreed at the end of 2025 and approved by the EU Council in April 2026; publication in the Official Journal is expected in 2026, application—approximately from 2028. Payment institution and electronic money institution licenses are merged into one; verification of payee name and IBAN matching is introduced, mandatory reimbursement for fraud with sender impersonation, and stricter safeguarding. In parallel, MiCA (Regulation 2023/1114) regulates crypto-assets: rules for CASP apply from December 30, 2024, transitional period for previously operating companies—until July 1, 2026 (shorter in some countries).

United Kingdom: safeguarding reform. Following consultation CP24/20, FCA adopted rules (PS25/12): from May 7, 2026, an enhanced safeguarding regime applies—detailed accounting, monthly reconciliation and reporting, audit, resolution pack. Full regime with statutory trust over client funds is postponed and depends on legislative reform expected in 2026. Separately, from October 2024, mandatory APP fraud reimbursement applies (£85k limit, split equally between sending and receiving bank).

USA: Synapse aftermath. In response to the Synapse collapse, FDIC proposed in October 2024 the Recordkeeping for Custodial Accounts rule—named beneficiary accounting and daily reconciliation for custodial accounts with transactional functionality; as of 2026 it remains at the proposal stage. Banking-as-a-service model sponsor banks received a series of consent orders (Evolve, Lineage, Blue Ridge, Cross River). Regulators place compliance responsibility on the bank, not the fintech.

Singapore and Hong Kong: stablecoins. MAS finalized the stablecoin regime back in August 2023 (100% reserves, redemption at par within five business days, prohibition on lending by issuer), and from September 2024 introduced protection measures for DPT providers—asset segregation, about 90% in cold storage, prohibition on lending and staking retail assets. In Hong Kong, from August 1, 2025, the Stablecoins Ordinance applies: issuance of fiat-pegged stablecoins requires HKMA license.

When a neobank is suitable—and when it is not

A neobank is appropriate as an operational business and individual entrepreneur tool. It opens accounts faster (usually from several hours to several weeks versus several months at a bank), has softer KYC approach, works better with multi-currency revenue and marketplaces. Specific scenarios:

• incoming revenue from clients and marketplaces—Amazon, eBay, Shopify, Etsy, AliExpress;
• payments to contractors and suppliers in several currencies simultaneously;
• currency conversions at mid-market rate without hidden margin;
• corporate cards for team with expense separation;
• B2B settlements in Southeast Asia without opening a local company;
• project and one-time payments where opening a bank account takes longer than the project lasts.

⚠️ A neobank is not suitable for storing reserves above the deposit insurance amount of one jurisdiction, for credit lines and letters of credit, for prime brokerage and securities settlements, for long-term capital management and family office services. For these tasks—a bank.

Jurisdictions and licenses

🇪🇺 European Union — Payment Institution and EMI (PSD2 + EMD2)

Single license passport: a national competent authority of one country issues authorization, it is valid in all 27 EU countries. Licenses are divided into three types.

Payment Institution (PSD2). Covers transfers, merchant acquiring, payment processing, open banking services. Minimum capital—from €20k to €125k depending on service type.

Electronic Money Institution (EMD2). Covers issuance of electronic money (e-money) plus everything permitted to payment institutions. Minimum capital—€350k.

Crypto-Asset Service Provider (MiCA, Regulation 2023/1114). Covers crypto-asset operations—exchange, custodial storage, transfer. Rules for CASP apply from December 30, 2024; transitional period for previously operating companies—until July 1, 2026 (shorter in some countries). Can be a separate license or addition to EMI.

Where it's heading. The PSD3 + PSR package was agreed at the end of 2025 and approved by the EU Council in April 2026; publication expected in 2026, application—approximately from 2028. PSR is a directly applicable regulation (conduct rules), PSD3 is a directive (licensing); payment institution and EMI licenses are merged into one.

📎 Popular licensing jurisdictions. Lithuania (Bank of Lithuania—EMI for Revolut Payments UAB before obtaining banking license, also Bitstamp, Lemonway, PingPong DigiTech; most popular jurisdiction 2018–2023 due to fast process). Estonia (active in VASP / crypto category). Ireland (Central Bank of Ireland—Stripe Payments Europe, Payoneer Europe; more expensive than Lithuania, but higher correspondent trust). Netherlands (De Nederlandsche Bank—Airwallex Netherlands, Mollie). Malta (MFSA—niche EMI and VASP).

📎 Who operates under this regime. Payoneer Europe (Ireland), PingPong (Lithuania), Wise Europe SA (Belgium), Stripe Payments Europe (Ireland). Among neobanks with full EU banking license—Revolut (Lithuania), N26 (BaFin, Germany), Bunq (Netherlands), Lunar (Sweden).

🇬🇧 United Kingdom — FCA (Authorised Payment Institution / EMI)

After Brexit, the UK maintained a parallel regime, separate from the European one. Regulator—FCA, main structures under Payment Services Regulations 2017 and Electronic Money Regulations 2011.

Authorised Payment Institution (API). Minimum capital—€125k. Covers transfers, acquiring, money remittance. Without the right to issue electronic money.

Authorised Electronic Money Institution (EMI). Minimum capital—€350k. Covers issuance of electronic money plus everything permitted to API.

In both cases, safeguarding of client funds is mandatory—either through a segregated account at an approved bank or through an equivalent mechanism (insurance, investment in approved instruments).

Where it's heading. Following consultation CP24/20, FCA adopted rules (PS25/12): from May 7, 2026, an enhanced safeguarding regime applies—detailed accounting, monthly reconciliation and reporting, audit. Full regime with statutory trust over client funds is postponed. Separately, from October 2024, mandatory APP fraud reimbursement applies (£85k limit).

📎 Who operates under this regime. Wise Payments Limited (FRN 900507), Revolut Ltd (EMI from 2015; banking license with restrictions—2024, full PRA authorization—2026), WorldFirst UK Limited, Currenxie (UK), Payoneer UK Limited, Airwallex UK Limited (FRN 900849), Wirex (UK EMI plus crypto card), Tide. Starling Bank from 2018—full UK bank under PRA supervision.

🇭🇰 Hong Kong — Money Service Operator and Stored Value Facility

The Hong Kong regime consists of two independent tracks with different regulators and different weight.

Money Service Operator (MSO). Regulator—Customs and Excise Department under Anti-Money Laundering and Counter-Terrorist Financing Ordinance, Cap. 615. Two-year license with mandatory renewal, no minimum statutory capital required by law, but regulator assesses "sufficient resources" upon application. Covers money transfers (including SWIFT, SEPA, Hong Kong FPS), currency exchange, virtual asset operations subject to AML/CFT compliance. Does not cover deposit-taking, stored value issuance, lending as standalone business. Details—MSO licence Hong Kong.

Stored Value Facility (SVF). Regulator—Hong Kong Monetary Authority under Payment Systems and Stored Value Facilities Ordinance, Cap. 584. Minimum paid-up capital—HKD 25 million. License for e-wallets, prepaid cards, stored-value products. Details—SVF licence Hong Kong.

🍓 SVF is much heavier than MSO. Among payment providers for business, only a few have full SVF: Airwallex through subsidiary UniCard Solution Limited (SVF registry number SVF0009), plus several consumer wallets (Octopus, Alipay HK, WeChat Pay HK, HKT Tap & Go, PayMe from HSBC).

Virtual banks. From 2020, HKMA additionally issued eight full banking licenses to virtual banks—ZA Bank, livi bank, Mox Bank, WeLab Bank, Ant Bank, Airstar Bank, Fusion Bank, Ping An OneConnect Bank. These are no longer neobanks in the strict sense: deposits up to HKD 800k are protected through Hong Kong Deposit Protection Scheme.

Stablecoins. From August 1, 2025, the Stablecoins Ordinance applies: issuance of fiat-pegged stablecoins requires HKMA license (HKD 25M capital, 100% reserves, redemption at par in approximately one business day). First licenses issued in 2026.

📎 Who operates under this regime. Statrys, Currenxie, Airwallex Hong Kong, FOMO Pay Hong Kong, Wise Payments Hong Kong, Payoneer Hong Kong, World First Asia Limited.

🇸🇬 Singapore — Payment Services Act 2019 (SPI / MPI / DPT)

From 2019, Singapore has a unified law that replaced fragmented regulation. Regulator—Monetary Authority of Singapore. Three license categories.

Money-Changing Licence—no limit; currency exchange only.

Standard Payment Institution (SPI)—up to SGD 3M per payment service; medium operators.

Major Payment Institution (MPI)—no limit; large operators.

Within the license, MAS specifies specific permitted services: account opening and maintenance, domestic transfers, cross-border transfers, merchant acquiring, e-money issuance, digital payment token (DPT) services, currency exchange. "The provider has MPI" is insufficient fact; need to check the specific service set in the registry.

🍓 DPT is a separate regulated service for cryptocurrencies. MAS issues it very restrictively: as of end 2025, fewer than thirty companies in the public registry. Among them FOMO Pay, DBS Vickers, Independent Reserve, Coinbase Singapore, Crypto.com.

Stablecoins and client protection. MAS finalized the stablecoin regime in August 2023 (100% reserves, redemption at par within five business days, prohibition on lending by issuer). From September 2024, protection measures for DPT providers apply: client asset segregation, about 90% in cold storage, prohibition on lending and staking retail assets.

📎 Who operates under this regime. Airwallex Singapore Pte. Ltd. (MPI), Wise Asia-Pacific Pte. Ltd. (MPI), Statrys Singapore Pte. Ltd. (MPI), Payoneer Singapore Pte. Ltd. (MPI), FOMO Pay Pte. Ltd. (MPI + DPT).

🇺🇸 USA — money transmitter licences and partner banking

In the USA, payment providers are licensed at the state level. To cover the entire country, money transmitter licenses are needed in all fifty states plus District of Columbia, plus federal registration with FinCEN as money services business. Obtaining full coverage typically takes three to five years and over ten million dollars in regulatory costs. Full coverage is held by Wise US Inc., Payoneer Inc., Stripe Payments Company. PingPong Global Solutions LLC has most states, exact list published in FinCEN MSB Registrant Search.

Partner bank model. The fintech company has neither money transmitter license nor banking license. It operates as an interface on top of one or more real US banks that have master accounts at the Federal Reserve. The client formally has an account at the partner bank, deposits up to $250k per partner bank are covered by FDIC. Externally the client sees a regular neobank account. Legally it is a bank deposit arranged through the fintech company's interface.

Who on which bank. Mercury—Choice Financial Group, Evolve Bank & Trust. Brex—Column N.A., JPMorgan Chase. Cash App Business—Sutton Bank, Lincoln Savings Bank. Bluevine—Coastal Community Bank. Chime—The Bancorp Bank, Stride Bank.

⚠️ The partner bank model does not insure against intermediary operational collapse. The Synapse case (2024) showed: even correctly accounted funds at the partner bank can become inaccessible for months due to accounting discrepancies. In response, FDIC proposed in October 2024 the Recordkeeping for Custodial Accounts rule (named beneficiary accounting, daily reconciliation); as of 2026 it remains at the proposal stage. Regulators meanwhile placed responsibility on sponsor banks—series of consent orders (Evolve, Lineage, Blue Ridge, Cross River).

🇨🇦 Canada — FINTRAC MSB and RPAA

Federal registration with Financial Transactions and Reports Analysis Centre as money services business (AML). From 2024, Payment Service Provider registration with Bank of Canada under Retail Payment Activities Act (RPAA) was added: application window—November 2024, transitional period until September 8, 2025, after which operational risk management and client fund safeguarding are mandatory. First PSP registry (about 300 companies) published in September 2025. RPAA does not require minimum capital and does not provide deposit insurance.

Additionally, in Quebec, Autorité des marchés financiers license is needed, in British Columbia—registration with BC Financial Services Authority. There is no separate full payment institution license at the federal level—many Canadian neobanks operate through partner bank model.

Providers. KOHO issues cards and maintains accounts through Peoples Trust Company (registered as PSP in 2025), Wealthsimple Cash—through partner banks (in first PSP registry). EQ Bank—full digital bank (Equitable Bank, OSFI license), deposits covered by CDIC up to CAD 100k. Wise joined Payments Canada in 2026; Revolut entered the Canadian market but shut down operations in 2021.

🇵🇷 Puerto Rico — International Financial Entity

Regulator—Office of the Commissioner of Financial Institutions (OCIF). Special International Financial Entity license under Act 273-2012—this is a banking license (not payment institution) with three structural differences from a regular US bank. IFE serves only non-residents of Puerto Rico. Corporate tax is preferential—4% instead of standard 21% under US federal law. IFE deposits are not FDIC-insured. Minimum capital raised by 2024 amendments (around $10 million).

📎 Providers. FV Bank—operating IFE with separate authorization for digital asset custody and acceptance of USDT/USDC/PYUSD with conversion to dollars. Euro Pacific Bank was an IFE and was liquidated by OCIF in 2022 for compliance violations. BancoTrans—another IFE with long history.

🇬🇪 Georgia — National Bank of Georgia (bank or PSP)

National Bank of Georgia issues two different types of licenses that are often confused.

Commercial banking licence—full banking functionality, deposits, loans. Deposits insured by Georgian Deposit Insurance up to 30,000 lari per depositor (from January 1, 2024; increase to 50,000 lari from April 1, 2026).

Payment Service Provider—transfers and payments without deposit-taking. No insurance.

🍓 Pave Bank—this is a bank with NBG banking license (No. 305, issued December 2023), not PSP. Launched in 2024, focus on fintech companies and funds, with separate authorization for digital asset operations; investors include Tether and Wintermute.

🇦🇺 Australia — ASIC AFSL (PSP reform)

Australian Securities and Investments Commission issues Australian Financial Services Licence (AFSL). Under this license operate payment providers, acquirers, FX businesses (plus AUSTRAC registration). Full banking license—Authorised Deposit-taking Institution (ADI)—issued separately by Australian Prudential Regulation Authority.

Where it's heading. In 2024–2025, Treasury launched Payments System Modernisation reform: separate PSP licensing regime based on modified AFSL with seven payment functions (including stored-value) and APRA prudential supervision, including for stablecoin issuers. Draft (Tranche 1A) published October 9, 2025; transitional period—18 months.

📎 Providers. Airwallex Pty Ltd (AFSL 487221), Wise Australia, Revolut Australia, WorldFirst.

🇰🇿 Kazakhstan — AIFC / AFSA (Providing Money Services)

Astana International Financial Centre—separate jurisdiction within Kazakhstan with English-based law. Regulator—Astana Financial Services Authority (AFSA). Providing Money Services regime introduced in phases: phase 1 (definitions, capital requirements, digital asset use)—from October 13, 2025; phase 2 (client protection, cyber resilience)—from January 13, 2026. At launch—about ten licensed providers.

📎 Collect-Pay—provider within AIFC perimeter. In parallel, in regular Kazakhstan jurisdiction operates Freedom Bank Kazakhstan—full commercial bank under ARDFM supervision, not AIFC.

🇨🇳 Mainland China — PBOC + SAFE

External access to the Chinese banking system is restricted by foreign exchange control through State Administration of Foreign Exchange, special rules for non-residents, and strict international transfer control regime. Non-bank payment organization licenses are issued by PBOC: from May 1, 2024, updated Provisions on Non-bank Payment Organizations apply, basic registered capital—from CNY 100 million. Foreign providers typically operate through licensed Chinese partners.

Providers. Lianlian Pay has Chinese payment license from PBOC plus money transmitter licenses in USA and UK FCA registration. WorldFirst from 2019 is part of Ant International, the group around Alipay. Among Chinese regional banks for foreign companies with import-export flows, Zhejiang Chouzhou Commercial Bank (CZCB) is available—bank from Yiwu city, historical center of wholesale trade with worldwide exports.

🏝️ Offshore banking centers

Dominica, Saint Lucia, Saint Vincent, Bahamas, British Virgin Islands issue banking licenses, but regulatory supervision is weaker, correspondent relationships are limited, and most tier-1 banks worldwide treat them with caution.

📎 EQI Bank and The Kingdom Bank—Dominica. Suitable for niche tasks (crypto-asset storage, multi-currency accounts without European KYC). Not suitable as replacement for tier-1 banks.

Neobank ratings

Tier reflects scale of operations, breadth of licenses, and quality of fund protection; segment—primary use case.

🍓 Tier I—global scale (from $100B turnover), audited or public reporting, licenses in major jurisdictions. Tier II—strong regional players with multiple licenses. Tier III—niche, young, or offshore providers with one license or MSB/VASP registration and without comparable fund protection.

Bold indicates official private.law partners. Revolut, N26, Starling, EQ Bank, Pave Bank—these are already banks with full licenses, not payment institutions; included for reference. Stripe—acquiring infrastructure, not business account.

Private.law partners by task. All providers below are official private.law partners. Applications go through partner channel with priority in compliance queue.

Universal

• Airwallex—multi-currency account + acquiring + Yield. Strongest in e-commerce and multi-entity treasury.
• Wise Business—most transparent FX (0.43%). Best choice for freelancers and SME with simple international settlements.

Hong Kong and SEA

• Statrys—Hong Kong account for SME with custodian at DBS Bank Hong Kong. Details appear as DBS bank account.
• Aspire—Singapore / Hong Kong for venture-backed startups. Built-in expense management with 1% cashback on SaaS/ads.
• Currenxie—Hong Kong MSO. Strongest in marketplace revenue and settlements with Chinese suppliers.

Marketplace and e-commerce

• Payoneer—direct integrations with Amazon, eBay, AliExpress, Walmart, Upwork, Fiverr. Default choice for marketplace sellers.

United Kingdom and FX

• Equals Money—public UK fintech on AIM. Personal accounts for US persons with FX operations + UK/EU SME with forward contracts.
• 3S Money—UK account for cross-border business. Rare currencies (PLN, CZK, AED) + RUB acceptance from Raiffeisen in Russia.

USA

• Mercury—banking for US LLC through partner banks. FDIC coverage up to $5M through sweep. Default for Y Combinator and non-US founders through Stripe Atlas / doola.

Full comparison table. Analysis of all known providers by SWIFT support, SEPA access, cryptocurrency operations, correspondent bank composition, pricing model, average account opening speed, and typical rejection reasons—large file, does not fit wiki article format without overload. We send by email upon request. Order form—on neobank ratings page.

Related materials

• Banks: multi-hub by jurisdictions
• Payment institutions: MSO, SVF, MPI and EMI licenses
• Payment institutions and electronic money (EMI): non-bank account ratings
• Crypto payments, payment institution and bank: where the legal boundary lies
• 🇭🇰 Money Service Operator (MSO)—Hong Kong license
• SVF license in Hong Kong: stored value, wallet and bank boundary
• Private banking: jurisdiction, capital and source of funds
• Personal account abroad: bank, payment institution and source of funds
• Opening account in Hong Kong banks
• UAE company and bank account: why registration does not create banking history
• Apostille, certified copy and legalization: document for bank and residence
• OFAC sanctions removal: asset unblocking procedure
• Over-the-counter crypto settlement (OTC), USDT and bank control

Key factual claims

• Therefore, starting in 2007, regulators began introducing lighter regimes—payment and e-money licenses with reduced requirements for capital, team, and reporting.
• Wirecard (2020).
• Banking Circle (2022).
• Synapse (2024).
• European Union: PSD3 + PSR and MiCA.
• Bold indicates official private.law partners.
• Private.law partners by task.