PSD Bond - Safeguarding Insurance

Pioneered and offered exclusively by Howden

PSD Bond Safeguarding Insurance for payment service providers

By using PSD Bond Safeguarding Insurance as a complementary safeguarding method, your payment service provider business can:

Save money
Improve capital efficiency
Alleviate regulatory risk
Strengthen consumer protection

Pioneered and offered exclusively by Howden (who acquired Protean Risk) , PSD Bond is underwritten by major insurers, (including Lloyd's of London), all of whom offer the Standard & Poor’s (or equivalent) ‘A’ rated financial security.

It is being used by an increasing number of APIs and EMIs, including some of the world's largest and well-known brands. With a credible and acceptable insurance option on the table, payment service providers are well advised to re-examine their safeguarding alternatives.

Howden’s PSD Bond is the first and currently only insurance contract to meet the safeguarding requirements of the revised Payment Services Directive (PSD2) and second Electronic Money Directive (EMD). It was launched mid-2019 in the United Kingdom and has since been accepted for use in Lithuania and Ireland. We are continuing to expand into overseas territories where the regulations permit insurance as a form of safeguarding.

A Howden PSD Bond can help you:

Reduce operational costs
Improve capital efficiency
Alleviate regulatory risk and help you solve some of the more challenging aspects of segregating capital
Retain your flexibility, and give you the ability to move to a different option in the future
Strengthen consumer protection by transferring risk to the right insurer to suit the specific needs of your business
Enhances regulatory compliance through underwriting due diligence

Overcoming key challenges

Double safeguarding

If there is uncertainty or complexity associated with your payment flow (through banks, agents or distributors), then it can be difficult to efficiently and effectively segregate capital. You may find yourself having to tie up as much as double the capital you really need to. Our PSD2 bond can help you avoid this, and free up more of your capital so you can utilise it more effectively.

Commingling

As the payments and E-money universe becomes more complex, it is becoming harder to know with 100% confidence which funds you need to segregate, and for how long. Again, our PSD2 can help you free up more of your capital while still ensuring you meet any regulatory requirements, even in more complex areas, such as foreign exchange or in situations involving non-EEA balances.

What our clients say

"We have been comprehensively supported by Hugo Thorp and Fergus Bracher from the Fintech and Payment Services team and together with their assistance we have developed a strong relationship with our primary insurers. The PSD Bond in the UK is invaluable to us to meet our safeguarding requirements and this method of safeguarding will support the future growth of our business in the UK.”
- Martin Boden, Chief Financial Officer, Small World

"PSD Bond safeguarding insurance has been invaluable in allowing WEX to offer flexible customer solutions whilst meeting its regulatory obligations. [The team] provided us with a practical, tailored solution to meet our requirements. Their subject-matter expertise and understanding of the product was first rate from the outset."
- Senior Legal Counsel, WEX

business people shaking hands in the office

PSD Bond safeguarding insurance guide

PSD Bond safeguarding insurance has been developed to alleviate regulatory risk, reduce operational costs and improve captial efficiency.

You can find out more about our offering by downloading our guide

Download our PSD guide