Claim your money back from a failed payment firm

The short version

• The compensation scheme that protects bank savings doesn't cover money held by a payment app or prepaid card firm that isn't a bank.
• Most of these firms must keep your money separate from their own. If yours did and it goes bust, you should get most of your money back.
• Getting your money back can take time, and you might not get the full amount.
• Check the firm's website for who's running its closure, and keep your own record of your balance.
• If someone contacts you out of the blue offering to get your money back, end all contact and don't pay them.

What the law says

This guide is for you if a firm that isn't a bank or building society holds your money, such as a payment app or prepaid card firm.

Most of these firms are e-money firms or payment firms. They must keep the money you've paid in separate from their own, or insure it. This is set out in the Electronic Money Regulations 2011 and regulation 23 of the Payment Services Regulations 2017.

Small payment firms don't have to keep your money separate, unless they choose to. If you use one, the Financial Conduct Authority (FCA) says you should ask the firm what protections it has in place. The protections below only cover money a firm kept separate.

Money held with these firms isn't protected by the Financial Services Compensation Scheme, which covers money in banks, building societies and credit unions. This means the scheme won't pay you if some of your money is missing. If your app holds your money with a bank, check whether that bank is covered.

If the firm goes bust, the money it kept separate is paid back to customers before anyone else the firm owes. The costs of paying it out come out first. This is set out in regulation 24 of the Electronic Money Regulations and regulation 23(14) of the Payment Services Regulations.

If the firm holding your money has gone bust

Check the firm's website for updates. The FCA says the firm should publish answers to common questions, including who is running its closure. This is usually an administrator, and you'll need to contact them to get your money back.

To protect your claim:

• keep your own record of your balance, such as statements or screenshots
• keep any emails or letters from the firm or the administrator
• follow the administrator's instructions to claim
• send your claim before any deadline the administrator sets
• tell the administrator if you think their figure for your balance is wrong

If the firm goes into the special insolvency process for payment firms, the administrator must return customers' money as soon as they reasonably can. They might set a deadline for claims. If they do, they must publish it and give you a reasonable time to claim. If there isn't enough money for everyone, each customer's payout is cut by the same share.

If someone offers to get your money back

End the call or ignore the message. Fraudsters contact people who've lost money and offer to get it back.

• Don't pay a fee to anyone who offers to get your money back. The FCA says these fraudsters usually ask for money upfront, sometimes calling it a tax or an admin fee.
• Don't give your banking details to anyone who contacts you out of the blue.
• Check any firm that contacts you with the FCA Firm Checker.

What you can do

Contact the administrator using the details on the firm's website.

If you've lost money to a scam in England, Wales or Northern Ireland, report it to Report Fraud, then report it to the FCA. In Scotland, report it to Police Scotland on 101, then to the FCA.

If you're worried about money while you wait, you can get free help from MoneyHelper.

Contact the Citizens Advice consumer service if you're not sure what to do next. In Scotland, get consumer help from Advice Direct Scotland. In Northern Ireland, contact Consumerline.