CASS 7 and card payments: A guide for UK investment brokers

CASS 7 is the Financial Conduct Authority's Client Assets Sourcebook for regulated firms that carry out designated investment business. Its core requirement is that client money is segregated from a firm's own money as soon as it’s received. In the case of cards, this receipt is when a payment is authorised, not when it’s settled.

In practice, this means firms need to hold client funds in dedicated accounts that are ringfenced from operational capital and protected in the event of insolvency. Firms are also required to maintain thorough record-keeping to demonstrate compliance at any point.

CASS 7 covers client money specifically. Custody assets fall under CASS 6, which operates under separate custody rules. If you are subject to both regimes, CASS 7 sets out the rules that apply to firms in that position.

You can read more about the regulation in the FCA's CASS 7 sourcebook.

CASS 7 was created when most investors funded their accounts via bank transfers. In this case, funds arrive, the firm segregates them, and the obligation is met.

Cards work differently. When an investor pays by card, those funds don’t land with the broker directly. They pass through an acquiring provider first, where they sit in a settlement account for up to two days before being paid out. This results in a gap between your internal books and your actual cash position.

This structural problem can’t be solved by standard payment providers. The settlement lag is simply a feature of how they operate.

To bridge the gap, most brokers rely on prudent segregation. They top up their CASS account with their own operational capital to keep the two figures aligned. 

It works, but it’s expensive. For example, if your firm processes around £300 million in card payments over a 30-day period, the minimum rolling balance required can reach £10 million. Over weekends, when clearing networks pause and the settlement window extends, this requirement grows even higher.

On top of that, since acquiring and the client money account sit with two separate providers, both internal client money reconciliation and external client money reconciliation have to be managed across both. This is typically a manual and time-consuming task that makes maintaining a clean audit trail harder than it needs to be.

All of this was manageable when cards were a secondary funding method. It’s becoming harder to ignore as card payments move toward the mainstream. 

Younger investors are digitally native and expect to fund an investment account the same way they pay for everything else. Additionally, the UK government's decision to reduce the cash ISA allowance to £12,000 is bringing a new wave of investors to market.

Brokers that can meet those expectations will capture a larger share of this growth.

The core challenge is that your acquiring and client money protection sit in two different places. You can solve this by bringing them together under a single provider with the banking infrastructure that functions as a credit institution, and a PSP. 

Here's what changes when they sit on the same platform:

1. Your liquidity improves: If your provider holds a banking licence, they can open a dedicated client money account for you directly. Acquired funds can settle on the same day, rather than passing through a PSP first. That closes the funding gap and can remove the need for a prudent segregation buffer

2. Reconciliation is easier: When acquiring and the client money account sit on the same platform, the data flows from pay-in to settlement to account in one place. That reduces operational overhead and the audit risk that comes with manual reconciliation.

3. You benefit from potential interest yields: Balances held in a client money account can generate interest yield, potentially offsetting a portion of your card processing costs over time.

Unlike standard payment providers, Adyen holds a UK banking license. That makes us a credit institution and is the reason we can offer investment brokers something a PSP cannot: Card acquiring and a CASS-structured client money account through a single integration.

We work with investment brokers and platforms to help them accept card payments in a way that works within their CASS rules obligations, without tying up operational capital in the process. 

Here’s what that means in practice:

Segregate your funds with dedicated CASS accounts

Adyen offers dedicated CASS-structured accounts that automatically segregate regulatory funds from operational capital at the point of receipt. Because they sit on the same platform as acquiring, there’s no funding gap.

Free up your capital with fast settlement (T+0 wherever possible)

Adyen aims to settle the full transaction amount directly into your Client Bank Account on the same day, without netting fees out of the client money pool. This directly reduces the capital you need to lock down.

Simplify fund management with just one platform, from pay-in to payout

Because acquiring and the client money account run on the same platform, reconciliation flows through a single source of truth. There's no manual process of matching data across two separate providers, and no associated audit risk. Real-time API-based payouts mean that when investors withdraw funds, those can be processed through the same integration.

This is part of how Adyen approaches cash management, giving you greater control over how, when, and where your money moves. Learn more about Intelligent Money Movement >

Get started without a full infrastructure overhaul

Fixing client money infrastructure does not have to mean a disruptive, multi-month rebuild. We support a staged approach: transition your card acquiring first to capture immediate benefits on settlement and reconciliation, then layer on the Client Bank Account once the integration is established. 

The compliance and treasury infrastructure sits within Adyen's platform, so it does not require re-engineering your internal systems. Our team is experienced in working directly with CASS officers, treasury teams, and auditors, and can support the due diligence process your compliance function will need to carry out.

Cards are becoming a mainstream funding method for investment platforms, as are the regulatory and operational questions that come with them. The answer lies in the right infrastructure rather than a bigger capital buffer.

By working with a provider that can act as both a payment processor and a credit institution, you can segregate your client assets in a way that works within the client money rules, without tying up potentially millions in working capital.

If you're exploring how to introduce card payments within your CASS framework, we would be glad to walk you through how we approach this in practice. Speak to our team