Article
Why investment brokers need to rethink their infrastructure for payments
Modern investment funding is exposing compliance and liquidity challenges that traditional payment infrastructure wasn't designed to solve.
Until recently, retail investors would typically fund their account via a bank transfer, usually once a year before the end of March. However, thanks to a growing investment appetite among millennials and Gen Z, plus initiatives like the UK government reducing the cash ISA allowance, new investors are entering the market. With them comes new behaviours and expectations.
These investors aren't thinking in terms of a single annual deposit. Instead, they’re funding their accounts more regularly, investing smaller amounts whenever they have the funds available. They expect to use their preferred payment method, whether that's a card, Apple Pay, or another digital wallet, and invest as soon as the payment has been captured. Like any other instant, digital experience funding should feel seamless: a single tap, immediate confirmation, and no unnecessary waiting.
The problem is that most of the infrastructure underneath investment platforms wasn't built for this, and the cracks are beginning to show.
In this article, I’ll share why card payments create liquidity and compliance challenges that most traditional payment providers weren’t designed to solve. I’ll also explain what changes when payments, safeguarding, and settlement run through a single platform, and why that matters for investment brokers. I’ll cover:
The challenge of balancing client satisfaction with compliance and liquidity
Why a fragmented infrastructure is holding brokers back
How Adyen consolidates payments, client money, settlement, and payouts
If you're exploring how to introduce or scale card payments without those trade-offs, we'd be glad to walk you through how Adyen approaches this in practice. Get in touch to learn more.
The challenge of balancing client satisfaction with compliance and liquidity
Investors expect their experience with a trading platform to match every other app on their phone. But the way most platforms handle funding, settlement, and compliance hasn't caught up yet. Here’s a breakdown of the challenges investment brokers face when trying to keep this new wave of investors happy:
Investors want to fund their accounts quickly with cards or wallets
Investors are used to paying with a single tap via cards or digital wallets like Apple Pay. Some are even thinking in terms of a subscription, funding their account with a set amount each month straight after payday. They also expect their payment to go through quickly with no unnecessary steps such as repeated, avoidable authentication flows.
Funding has become part of the product experience. Any friction at this stage shapes how investors perceive your platform before they’ve even made their first investment.
Investors expect to be able to invest as soon as they’ve funded their account
When an investor funds their account, they want to be free to invest as soon as the payment is captured. But from the broker's side, this means funding the investment before the client's payment has settled into your account.
Card payments introduce an additional timing challenge. Client money rules, such as CASS 7 in the UK, require client funds to be segregated the moment a payment is captured. Since most PSPs take two or more days to settle, brokers end up fronting both the investment and the client money segregation requirement from their own capital.
That buffer can be substantial. 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. These requirements increase further over weekends when clearing networks pause and the settlement window extends.
It also creates an ongoing compliance burden. Firms still need to demonstrate accurate reconciliation between client money owed and client money held at any point. The more capital moving through that buffer to plug the timing gap, the more there is to track, and the greater the exposure to reconciliation errors.
Why a fragmented infrastructure is holding brokers back
Liquidity strain, compliance burden, and operational drag look like separate problems because they're owned by different teams. But they all trace back to the same root cause: disconnected infrastructure. For example, a typical setup might look something like this:
Card payments are acquired by your PSP
The money is transferred to your banking partner
Your client money account sits with a different provider
Your operational capital goes somewhere else
Money has to move between all four before a transaction is complete, and each leg of that journey runs on its own settlement timeline.
When an investor wants to withdraw funds, the payout has to travel back through multiple providers often via a different provider than the one that processed the original deposit. Each handoff adds time, and the investor is left waiting.
Reconciling all of this is equally complex. There's no single record showing acquired funds, client money balances, and pre-financed positions. Instead, your team must manually match figures across systems, every single day, with the risk of error rising in line with your transaction volume.
None of this is any one provider's fault. It's the natural outcome of stitching together acquiring, banking, and treasury functions from separate vendors, each optimised for their own role rather than the full flow of money through an investment platform.
Benefits of a single platform solution
If you’re processing card payments and managing capital through separate providers, the solution isn’t a bigger capital buffer or more sophisticated spreadsheet. It's removing the gaps between providers in the first place.
Unlike many payment providers, Adyen holds a banking license in the EU, UK, and US. That means we’re a credit institution and the reason we can offer investment brokers something a lot of PSPs can’t: a single platform to accept cards, hold client funds, and manage money flows. Here’s what you can expect if you partner with us:
Reduce capital tied up in settlement delays
If your PSP takes two more days to settle, you’ll end up funding trades and client money segregation from your own operational capital. Adyen typically settles funds into your account on the same day, reducing the prudent segregation buffer required and freeing up working capital that would otherwise remain tied up.
Protect client money from the moment a payment is captured
Standard PSPs create a gap between payment capture and settlement leaving client money unprotected while it passes through a separate acquiring provider. This causes compliance issues, going against regulations such as CASS 7.
However, with Adyen, acquiring and client money accounts sit on the same platform. This means funds can be segregated into a dedicated account as soon as a payment is captured, closing the gap and keeping you compliant.
Simplify reconciliation with a single source of truth
When acquiring, client money, and settlement sit with separate providers, someone has to manually match acquired funds, client money balances, and pre-financed positions across systems. But, with everything running through one platform, that data is already in one place, making reconciliation much easier.
Put idle capital to work
When the right infrastructure is in place, a balance sitting in a client account can generate interest. In some cases, this can result in a partial offset of the cost of processing card payments, turning what was previously a pure compliance cost into a revenue stream.
Card payments are not the challenge, the supporting infrastructure is
The pressure to accept cards, and to do it well, will only grow as new investors enter the market.
The question is whether the partners you choose to work with can keep pace, without eating into your liquidity, stretching your compliance team, or adding operational risk.
Most standard PSPs weren’t built to answer that. They can take a card payment, but they can't hold your client money, settle on your timeline, or give you a single view of where your funds are at any point. That's a structural limitation, which is why bolting on more reconciliation processes or a bigger capital buffer only goes so far.
As card funding becomes a bigger part of the investment experience, infrastructure matters just as much as payment acceptance. Bringing acquiring, banking, safeguarding, and settlement together can reduce operational complexity while giving firms more flexibility to grow.
If you're exploring how to introduce or scale card payments without those trade-offs, we'd be glad to walk you through how Adyen approaches this in practice. Get in touch to learn more.