PI
Payment institutions
All funds received from users (or through another PSP) to execute payment transactions must be safeguarded while you hold them. This includes money remitters, even when the funds are in transit.
Safeguarding of Funds for Payment Institutions and EMIs
The core obligation of every payment institution and EMI: we design your safeguarding system under Article 21 of Royal Decree-law 19/2018 — method, designated accounts, reconciliations and evidence — so that it withstands review by the Bank of Spain.
100% Free
Assessment of your safeguarding
Within 24 h, we tell you whether your funds flow and your safeguarding method meet what the supervisor requires.
- Safeguarding (Royal Decree-law 19/2018)
- Art. 21
- Implementing regulation
- Royal Decree 736/2019
- E-money law
- Law 21/2011
Quick answer
Safeguarding of funds is the obligation of payment institutions and electronic money institutions to protect their clients’ money against a possible insolvency (Article 21 of Royal Decree-law 19/2018). There are two methods: segregating the funds — and, if the institution still holds them at the end of the following business day, depositing them in a separate account at a credit institution or investing them in safe, liquid assets — or covering them with an insurance policy or comparable guarantee from an entity outside the group. The Bank of Spain reviews it at authorization and throughout the life of the institution.
Who it applies to
If you handle client funds, you must safeguard them
Safeguarding is not an annex to your application: it is a condition for getting authorized and for banks to work with you. It applies to every type of institution that receives funds from users.
EMI
Electronic money institutions
Funds received in exchange for electronic money issued are safeguarded from the moment they are received (Law 21/2011). Wallets and prepaid cards depend on this obligation.
EMI-S
Simplified-regime institutions
The simplified regime reduces capital and other requirements, but not safeguarding: client money is protected in exactly the same way.
HYB
Hybrid institutions
If you also carry on another activity (as a hybrid payment institution), the accounting and operational separation of payment funds is even more critical — and it is the first thing the supervisor looks at.
Art. 21 Royal Decree-law 19/2018
The two safeguarding methods (and when each one makes sense)
The rules let you choose a method — or combine them. Your choice shapes your bank agreements, your day-to-day operations and your recurring costs.
| Feature | Method 1 · Segregation and deposit | Method 2 · Insurance or guarantee |
|---|---|---|
| What it involves | Never commingle users’ funds with any other funds and, if you still hold them at the end of the following business day after receipt, deposit them in a separate account at a credit institution or invest them in safe, liquid, low-risk assets. | Cover the amount of the funds with an insurance policy or comparable guarantee from an insurer or credit institution outside your group, payable in the event of insolvency. |
| Insolvency protection | The funds stay outside the insolvency estate: they are protected from the institution’s other creditors. | The insurance or guarantee pays out the equivalent amount if the institution cannot meet its obligations. |
| Day-to-day operations | A designated safeguarding account, frequent reconciliations, control of the “following business day” deadline and traceability of every flow. | Ongoing calculation of the amount covered and adjustment of the cover to the actual volume of funds. |
| Practical difficulty | Getting a bank to open your safeguarding account: this is the real bottleneck in many applications. | Finding a willing insurer and bearing the recurring cost of the premium; less common in Spain. |
| When it makes sense | The standard model: the general practice in the Spanish market and the one the supervisor knows best. | Highly variable volumes or temporary difficulty accessing banking services; also as a reinforcement of method 1. |
Under Article 21 of Royal Decree-law 19/2018 and its implementing rules in Royal Decree 736/2019. For electronic money, Law 21/2011 refers to these same safeguarding requirements.
What the supervisor reviews
Safeguarding is proven through day-to-day operations, not a policy
The Bank of Spain is not satisfied with the document alone: it asks for evidence that the process works every day. These are the points it will audit.
Designated safeguarding account
A separate account at a credit institution, identified as such, with no own funds mixed in and no uses unrelated to payments.
Following-business-day rule
A control ensuring that no client funds remain unsafeguarded beyond the Article 21 deadline.
Reconciliations
Frequent (ideally daily) matching of client balances, the safeguarding account and internal records, with the evidence kept on file.
Traceability of the funds flow
A documented map of the funds flow: where the funds come in, where they are deposited, when they go out and who controls them.
Permitted assets
If you invest instead of depositing: only safe, liquid, low-risk assets, with an approved policy and defined limits.
Incident management
A procedure for mismatches, delays and unavailability of the safeguarding bank, with escalation and logging.
Accounting separation
For hybrid institutions and groups, accounting that ring-fences payment funds from any other line of business.
Reporting and audit
Periodic reporting to the Bank of Spain and review of safeguarding in the institution’s annual audit.
Common mistakes
Where safeguarding arrangements fail (and how to avoid it)
1
Looking for the safeguarding bank last
The application is drafted without a signed bank agreement. This is the No. 1 cause of applications stalling: without a designated account, there is no safeguarding that counts.
How to avoid it: start talks with 2–3 credit institutions in parallel with the program of operations, not afterwards.
2
Confusing safeguarding with own funds
They are different obligations: capital backs your solvency; safeguarding protects the client’s money. Mixing them up in the application undermines its credibility.
How to avoid it: separate policies, separate accounts and separate calculations, with designated owners for each one.
3
Reconciling “when we can”
Without frequent, documented reconciliation, any mismatch surfaces late — and in front of the supervisor, an undetected mismatch is a serious finding.
How to avoid it: automated daily reconciliation wherever possible, with an exceptions log and resolution deadlines.
4
Forgetting safeguarding after authorization
The obligation does not end with the license: growing in volume, adding services or changing banks requires recalibrating the system and notifying the change.
How to avoid it: periodic review of the method, the bank agreement and the limits, built into the institution’s ongoing compliance.
2026 context: the PSD3/PSR proposal — still in the legislative process — would strengthen safeguarding (diversification of custodian banks, more information for clients). Designing to that standard today saves you tomorrow’s adaptation.
Frequently asked questions
Safeguarding of funds: common questions
What is safeguarding of funds?
It is the legal obligation of payment institutions and electronic money institutions to protect their clients’ funds against a possible insolvency of the institution, by keeping them segregated and deposited at a credit institution, invested in safe assets or covered by insurance or a guarantee (Art. 21 Royal Decree-law 19/2018).
What is a safeguarding account?
A separate, designated account at a credit institution where users’ funds are deposited. It cannot be mixed with the institution’s own funds, and the balances are protected from the institution’s other creditors in the event of insolvency proceedings.
When do I have to deposit the funds?
If at the end of the following business day after receipt you still hold the funds and they have not been delivered to the payee or transferred to another provider, they must already be in the separate account or invested in safe, liquid, low-risk assets.
Can I use insurance instead of the separate account?
Yes: the second method lets you cover the funds with an insurance policy or comparable guarantee from an insurer or credit institution outside your group, for an amount equivalent to what would otherwise be segregated. It is a minority option in Spanish practice, but it is useful as an alternative or as a reinforcement.
Does safeguarding apply to money remitters?
Yes. Although in money remittance the funds are in transit and no payment account is opened, they must be protected with the same methods while the institution holds them. A remitter’s funds flow is designed precisely around that time window.
What happens if I breach the safeguarding rules?
It is one of the obligations whose breach is considered most serious: it can lead to immediate supervisory measures, penalties and, in extreme cases, revocation of the authorization — as well as reputational damage with your banks and partners.
Does anything change with PSD3?
The PSD3/PSR proposal (still in the legislative process as of July 2026) keeps safeguarding as a central element and would strengthen it: more detail on designated accounts, diversification of custodian institutions and information for clients. It does not apply yet, but it is wise to design your system with that horizon in mind.
Contact
Book a call
Tell us about your project and we will explain how to design (or fix) your institution’s safeguarding of funds so that it can be defended before the Bank of Spain.
Official resources
Legislation applicable to safeguarding
BOE — Spanish Official State Gazette
Royal Decree-law 19/2018 · Art. 21
The obligation to safeguard funds received from payment service users: methods, deadlines and insolvency protection.
View on the BOE BOE — Spanish Official State GazetteRoyal Decree 736/2019 · legal regime
Implementing regulation for payment services: requirements for separate accounts and the regime applicable to institutions.
View on the BOE Bank of SpainRegister of institutions
Official register of authorized payment institutions and electronic money institutions, which are supervised on safeguarding.
View the registerSafeguarding of funds: the obligation that underpins your license
Safeguarding of funds is the mechanism lawmakers use to protect the money of payment service users: whatever happens to the institution, its clients’ funds are not used to pay its debts. That is why the Bank of Spain scrutinizes it closely in the authorization of a payment institution or of an EMI (an EDE, in Spanish terms), and supervises it throughout the life of the institution.
A system, not a document
A well-drafted safeguarding policy is not enough: the supervisor asks for signed bank agreements, operational designated accounts, documented reconciliations and a traceable funds flow. The greatest practical difficulty is usually opening the safeguarding account — banks apply their own risk appetite — which is why it should be worked on from the initial scoping stage, not at the end of the application.
How we work
We design the safeguarding method suited to your model, draft the policy and the reconciliation procedure, support you in negotiations with the custodian institutions and defend the system in response to the supervisor’s requests for information — both during authorization and in your ongoing compliance afterwards.