Business current account vs e-money account

A business current account is provided by a bank or building society, and your deposits are protected by the FSCS up to £120,000. An e-money account is provided by an e-money institution, which must keep your money separate from its own but is not covered by the FSCS and cannot pay interest. Both let you take card payments, pay suppliers and connect to accounting software, so the choice comes down to protection, lending and how much cash you hold.

What is the difference between e-money and a bank account?

The difference is the legal status of the provider. A bank holds your money as a deposit and can lend it on. An e-money institution (EMI) issues e-money in exchange for your funds and must not lend them; it is authorised by the FCA under the Electronic Money Regulations 2011.

Many apps look the same on your phone. The difference only shows in the small print, so check the provider’s footer or terms.

How is money protected in each type?

Bank accounts. The FSCS protects up to £120,000 per eligible person, per authorised firm, for failures on or after 1 December 2025. Brands sharing one banking licence share one limit. Temporary high balances, such as sale proceeds, are protected up to £1.4 million for six months.

E-money accounts. The FCA says your money is not FSCS protected. Instead, the EMI must safeguard it, either in a separate account at a bank or with an insurance policy or guarantee. If the firm fails, you should get most of your money back, but it may take time and costs of the administrator may reduce it.

For more detail on the limits for companies, sole traders and partnerships, see FSCS and e-money explained.

What changed for e-money firms in 2026?

New FCA safeguarding rules took effect on 7 May 2026. They require:

• daily checks that the right amount is safeguarded
• monthly reporting to the FCA
• annual safeguarding audits, unless the firm holds under £100,000 of customer funds
• better plans to return money quickly if the firm fails

The FCA brought in the rules after finding that payment firms that went insolvent between 2018 and 2023 had average shortfalls of 65% of customer funds. The rules reduce that risk; they do not turn e-money into a protected deposit.

Which providers are banks and which are e-money?

Check each provider’s own wording. On 6 November 2026:

• Starling says it is authorised by the Prudential Regulation Authority, so its business accounts are bank accounts.
• Tide says its current accounts are provided by ClearBank Ltd and are FSCS protected, but some members hold e-money accounts with PrePay Technologies Limited, which are safeguarded. The e-money accounts use sort code 23-69-72.
• Wise says it is authorised by the FCA under the Electronic Money Regulations 2011, so Wise Business balances are e-money.

Some providers move customers between e-money and banking entities, so check which one holds your balance. You can confirm any firm’s status on the FCA’s Financial Services Register. Compare individual providers in Tide vs Starling vs Monzo and our Revolut Business review.

Can you switch an e-money account with the Current Account Switch Service?

Usually not, because the service is built for bank accounts; ask your new provider whether it takes part. The Current Account Switch Service lists more than 50 UK banks and building societies, and covers businesses with turnover up to £6.5 million and fewer than 50 employees. The switch date must be at least seven working days after the new account opens.

Any overdraft must be agreed with the new bank, and payment app permissions must be set up again. See how to switch business bank account.

Which applies to you?

• If you hold more than a few weeks of costs, keep the surplus in an FSCS-protected bank account.
• If you need an overdraft or want interest on balances, start with a bank account; e-money issuers cannot pay interest on e-money.
• If you mostly pay and receive in foreign currencies, compare FX fees across both types, and use any e-money account as a working account.
• If you deposit cash, check fees: Starling charges 0.7% with a £3 minimum for Post Office deposits.
• If a lender or landlord asks for a bank account, check whether they accept e-money details.

What to do now

1. Read your provider’s footer or terms to see whether you hold a deposit or e-money.
2. Look up the firm on the FCA register.
3. Add up balances across brands that share a banking licence.
4. Move surplus cash above working needs into a protected account.
5. Compare business bank account fees before switching.

Frequently asked questions

Is an e-money account a real bank account?

No. It works like one for payments, but the provider is an e-money institution, not a bank, so the money is safeguarded rather than FSCS protected.

Is my money safe in an e-money account?

It must be safeguarded under FCA rules tightened on 7 May 2026. If the firm fails you should get most of it back, but it may take time and may not be the full amount.

Do e-money accounts pay interest?

No. Regulation 45 of the Electronic Money Regulations 2011 bans e-money issuers from paying interest, or any other benefit linked to how long you hold the money.

How much does the FSCS protect in a business bank account?

Up to £120,000 per eligible depositor, per banking licence, for bank failures on or after 1 December 2025. A limited company gets its own limit, separate from its directors.

Can a limited company use an e-money account?

Yes. Many e-money providers offer accounts to limited companies. Directors should weigh the lack of FSCS cover against the features before holding large balances there.