Paying Agent Services
Paying agent services: one payment in, every payee verified and paid, with proof.
A paying agent is a neutral, FCA-regulated intermediary that receives one payment, verifies every payee, and distributes the money with a full audit trail.
The market, in numbers
What is a paying agent?
It exists because the obvious alternative does not scale. A law firm closing a company sale cannot push, say, £25m to 42 shareholders through its client account, because the SRA bars firms from using client accounts as a banking facility.
The agent is not a bank and not a law firm. In the UK it is normally a payment institution authorised by the Financial Conduct Authority, which means client funds must be safeguarded in segregated accounts, separate from the provider’s own money.
The decision that trips people up is not whether to use one. It is choosing between a paying agent, an escrow arrangement and a third-party managed account. These three get used interchangeably in conversation, yet they are legally distinct.
We compared the UK providers below from their own published terms and the FCA register. If you already know you need one for a company sale specifically, our M&A paying agent guide goes deeper on completion mechanics.
How much do paying agent services cost?
A fee measured in basis points, not risk. Almost nobody publishes prices, so the market is quote-driven and negotiable. The one public anchor: dospay’s escrow and TPMA engagements start from £5,000 + VAT.
Worked example
Caxton, Shieldpay, ZEDRA and TMF Group all price case by case, based on transaction complexity, payee count, currencies and how long the account stays open.
Set that fraction against the cost of one misdirected seven-figure payment, or a partner spending completion week chasing bank details. The real comparison is the agent’s fee versus the internal cost and risk of running verification and distribution yourself.
Watch the FX margin. On an international distribution, the exchange rate applied to each payout can cost payees more than the agent’s headline fee. Compare it against the mid-market rate the same way you would for any corporate FX decision.
A paying agent, or something else?
The common thread is one pot of money, many payees, and a professional on the hook for getting it right. It is not always the right tool, and we will tell you when it is not.
- ◆Company sales and M&A. The buyer pays the agent once; the agent distributes proceeds to every shareholder. Caxton has acted as paying agent on deals advised by Charles Russell Speechlys and Dentons.
- ◆Litigation and arbitration settlements. A defendant pays a settlement sum; the agent distributes it to claimants. In group actions that can mean thousands of verified payees.
- ◆Shareholder distributions and share buybacks outside a sale, where a registrar-style payout is needed without the registrar overhead.
- ◆Probate and estate distributions, where an executor needs beneficiaries paid without money passing through personal or firm accounts.
- ◆Asset sales with multiple sellers or lenders to redeem: property portfolios, marine and aviation deals, art.
- ◆You need money held until conditions are met, then released. That is escrow, not a paying agent.
- ◆There is a single seller and a single payment, where a specialist transfer may be all it takes.
- ◆The funds properly connect to regulated legal work your firm is doing and can pass through the client account within SRA rules.
Paying agent vs escrow vs TPMA
These three get blurred constantly, including by people who should know better. The differences decide which service your transaction actually needs.
| Paying agent | Escrow | TPMA | |
|---|---|---|---|
| Core function | Receives funds, verifies payees, distributes | Holds funds until agreed conditions are met, then releases | A regulated account a firm uses instead of its client account |
| Defining feature | One-to-many distribution | Conditional holding | The firm never holds the money |
| Typical trigger | Completion funds, settlements, distributions | Holdbacks, earn-outs, milestone payments, deposits | SRA client-money rules; banking-facility restrictions |
| Protects | Payer (clean discharge trail) and payees (verified payment) | Both sides of a conditional deal | The law firm and its clients |
Why the labels blur
Caxton brands its paying agent service as a third-party managed account and is explicit that it does not offer escrow; the TPMA structure is its alternative. dospay files escrow and M&A paying agent work under one TPMA umbrella, while Shieldpay sells all three as separate products.
The label on the website matters less than whether the mechanics fit your transaction. For law firms, the SRA expects a TPMA provider to be an FCA-authorised payment institution, and firms must notify the SRA when they use one.
How a paying agent works
One payment in. Verified payments out.
Engage & open
The parties instruct the agent and an account is opened for the specific transaction. dospay says straightforward structures can open same-day; delays come from missing onboarding information.
Funds in & verify
The paying party sends the full amount, held segregated from the moment it lands. Every recipient passes identity, bank-detail and sanctions checks. Shieldpay adds Confirmation of Payee.
Distribute
Payments go out per the agreed schedule. Multi-currency capability varies: Caxton distributes in 28+ currencies, Shieldpay reaches payees in 86+ jurisdictions.
Report
The audit trail, statements per payee, timestamps and confirmations, is arguably the product. It lets a payer prove they paid and an adviser close the file.
Who carries the compliance risk?
On KYC, AML and KYB, the market genuinely disagrees with itself, and you should notice. Both positions can be commercially true at once.
What Caxton says
The agent absorbs the checks
Caxton markets its service as taking on the AML, KYC and KYB checks, positioning the agent as the party that absorbs the compliance work.
What Shieldpay says
The firm keeps the duty
Shieldpay’s own FAQ states the opposite emphasis: the law firm retains responsibility for its AML obligations, even when the agent runs the verification infrastructure.
Our read
One describes who does the work; the other, who holds the legal duty. We would not let a sales page settle a regulatory question.
If you are a firm’s COLP or COFA, get the division of AML responsibility stated in the engagement terms, and check it against your own supervisor’s expectations before relying on it.
If instructions are disputed
Funds stay put. dospay will not release without the paying party’s consent, so an unclear instruction cannot move money.
If the provider itself failed
Safeguarding rules mean segregated client funds do not form part of its estate; administrators would be expected to transfer arrangements to a replacement agent.
UK paying agent providers, side by side
Verified from provider websites and the FCA register. Capabilities change, so confirm directly before instructing anyone.
| Provider | FCA status | Escrow too? | Worth knowing |
|---|---|---|---|
| CaxtonCaxton Payments Ltd · FRN 431844 / 900663 ↗ | Authorised PI | No, TPMA is its alternative | Distribution in 28+ currencies; 2,500+ professional firms served; also a full business FX provider, so proceeds can be converted at the point of payout. |
| ShieldpayShieldpay Ltd · FRN 770210 ↗ | Authorised PI | Yes | Legal-sector specialist; payouts to 86+ jurisdictions; Confirmation of Payee on verification. |
| dospayDOS & Co. Ltd · FRN 1041318 ↗ | Authorised PI | Yes | GBP funds held at the Bank of England (its own description); published fee floor of £5,000 + VAT; GBP, EUR, USD, CHF. |
| ZEDRAZedra Trust Company (UK) Ltd · FRN 119184 ↗ | Authorised | Yes | Trust-company heritage; escrow and paying agent offered as an integrated service for M&A, property and settlements. |
Where each fits is more useful than a ranking. Caxton suits transactions where FX is part of the job: international shareholders, multi-currency payouts, and firms that want one provider for both the distribution and their wider payment work.
Caxton is not the right fit if you need true conditional escrow, because it does not offer one.
Shieldpay has the deepest legal-sector footprint of the four. dospay is our pick for bespoke, unusual structures and for parties who want the Bank of England holding story. ZEDRA covers escrow and paying agent as one integrated service.
Important — read before you send
Safeguarding is not the same as FSCS protection.
One point matters more than any other. Money held by a payment institution is safeguarded in segregated accounts under FCA rules, kept separate from the provider’s own money. That is real protection, and different in kind from a bank deposit.
The Financial Services Compensation Scheme covers deposits at banks and building societies up to £120,000 per person. Money held by a payment institution sits outside that scheme, whatever the amount.
Any provider that lets you believe otherwise is one to question, and the FCA tightened the safeguarding regime significantly from May 2026.
Six checks before you choose
These do most of the filtering work. Run them before funds move, not the week of completion.
- 01
Confirm the legal entity and its FRN. Look it up on the FCA register yourself rather than taking the sales deck’s word.
- 02
Establish where safeguarded funds physically sit, and whether anything about the arrangement is discretionary.
- 03
Get the division of AML responsibility stated in the engagement terms, not in marketing copy.
- 04
Agree what happens to funds if instructions are disputed, and who can trigger a release.
- 05
Demand the full fee picture: setup, per-payee, per-currency, monthly charges, and the FX margin if conversion is involved.
- 06
Test how fast the account can open, and what onboarding information they need from you this week to hit completion.
Common questions
Is a paying agent regulated? +
The provider should be an FCA-authorised payment institution, and the SRA expects exactly that when law firms use one as a TPMA. But no standalone “paying agent licence” exists; the regulation attaches to the payment services, so verifying the FRN is your check.
Is my money FSCS-protected with a paying agent? +
No. Payment institutions safeguard funds in segregated accounts under FCA rules. The FSCS £120,000 deposit scheme applies to banks and building societies, not to safeguarded payment accounts. The protections are different in kind, not just in amount.
How long does setup take? +
Simple structures can open within a day; Shieldpay quotes three to five business days for escrow accounts. Complex multi-party arrangements take longer, so engage the agent when the transaction timetable is set, not the week of completion.
Do law firms have to tell the SRA they are using a TPMA? +
Yes. No permission is needed, but the firm must notify the SRA once per provider. The firm also keeps duties around client understanding, statements and records.
Can a paying agent handle payees in other countries? +
Yes, and this is where providers differ most. Ask specifically about the currencies and jurisdictions on your payee list, and about the FX rate applied to converted payouts.
What is the difference between a paying agent and an escrow agent? +
An escrow agent holds money until conditions are met. A paying agent receives money and pays it out to verified recipients. Some transactions need both, an escrow holdback alongside a completion distribution, and some providers run the two together.
Tell us about the transaction.
Share the shape of the payout, its value, currencies and timetable, and we will introduce you to the provider that fits, and be straight about the one that does not. No cost, no obligation.