Electronic money institution (EMI) license
Obtaining an EMI license in Europe is a crucial step for fintech innovation, providing companies with the opportunity to implement advanced payment solutions and access to the vast EU market. With the support of Gofaizen & Sherle, you will be provided with a full range of e-money license services, from initial consultation to successful authorization.
Get Electronic Money Licenses in European Countries
EMI license is an authorization to issue electronic currency for legal entities and individuals. When registering this type of license, a company receives the rights that classic payment companies use. Such an organization will be able to make offline/online payments and provide sub-accounts within a bank account, which provides the ability to create electronic wallets and provide individual IBANs.
Users can use the exchange of cash for electronic money issued by the company and use financial storage services. In addition, users will be able to pay for services or goods with electronic currency or perform various payment operations.
It is possible to register an EMI license almost all over the world, but the most popular is the EU license. They allow you to cover a large market, using the reliable and stable reputation of the European economy, and also provide access to SEPA translations.
The most popular countries in jurisdictions where this license can be registered are Lithuania, the United Kingdom, Malta, the Czech Republic, Cyprus, etc.
What gives an EMI license
SPI (Small-Scale Payment Institution)
- Payment system management
- Provision and implementation of payment services/money remittance
- Carrying out activities with the provision of loans (using equity capital only)
The maximum turnover for 12 months on sub-accounts of users of the payment system cannot exceed 36 million EUR (based on 3 million EUR per month)
The payment institution has the right to provide services only in the territory of the country of registration. However, it does not prohibit having Clients from any country in the world.
PSP (Payment Service Provider)
- Payment system management
- Provision and implementation of payment services/money remittance
- Carrying out activities with the provision of loans (using equity capital only)
The maximum turnover on sub-accounts of users of the payment system is unlimited
The payment institution has the right to provide services through out the EEA and have the users from any country in the world.
EMI (Electronic Money Institution)
- Emission of electronic money
- Services allowing the use of issued electronic money as a payment instrument
- Exchange of emitted electronic money for fiat currency
- Payment system management
- Provision and implementation of payment services / money remittance
- Carrying out activities with the provision of loans (using equity capital only)
What is Electronic Money Institution
EMI (Electronic Money Institution) is a legal company or a person who has the right to create electronic money, quasi-money, and in addition, can make payments on these assets.
Many people confuse an EMI with a classic bank, but this is a misnomer. The main difference between EMIs and standard banks is that an Electronic Money Institution has no legal right to hold deposits or issue loans. They were originally invented to pay and service businesses and individuals.
The limitation on sub-account transactions, in most cases, depends on the level of customer identification and differs depending on the specifics of the jurisdiction. Statutory provisions that govern this issue are constantly changing around the world, so it is recommended to conduct separate clarification studies for each new project.
Full list of Capabilities
EMI
- Emission of electronic money
- Possibility of using e-money by users as a unit of account for payment for services/goods of third parties
- Exchange of emitted electronic money for fiat currenc
EMI, PSP, SP
- Opening sub-accounts for Clients inside a corporate account of a Payment Service Provider
- Services allowing users placing cash on a current account
- Services allowing users to withdraw cash from a current account
- Execution of payment transactions and money transfers/money remittance (including between payment accounts of users of a payment institution)
- Account information services
- Provision of loans. The loan cannot be provided from funds that have been entrusted to the payment institution for the payment transaction and the equity capital must be equivalent to the total amount of the loan provided. The loan must be repaid by the borrower within one calendar year. Issuance and/or purchase of payment instruments
- Assign existing payment bank cards to Client sub-accounts and issue cards of major vendors (VISA, MC)
The difference between EMI and PI
PI (Payment Institution) license allows companies to provide financial and intermediary services not only for Internet business. For Example opening and closing of accounts, provision of account replenishment services by other payment systems; withdrawal of funds from individual and personal accounts; various payment operations between customer accounts; money transfers; creation of own and involvement of third-party payment instruments, etc.
The main difference between EMI and PI is that EMI has the right to issue electronic currency and store client money for a longer period, while PI does not have the right to issue electronic funds. EMI can produce payment cards, e-wallets, and other payment instruments that provide for the storage of client funds.
The list of services of the electronic payment system corresponds to the services offered by traditional banks. In addition, EMI allows the use of innovative developments and the speed of transactions, which implies a reduction in payment fees and leads to an increase in customer loyalty.
Request more information about EMI licenses
Types of EMI licenses
There are two types of European e-money licenses: Small EMI licenses and EMI licenses. The two license types do not differ functionally or in terms of validity (both are not time-limited and do not require renewal). The main difference between the two relates to minimum initial capital requirements and transaction limits.
Under the Electronic Money Rules 2011 and EMD 2, EMI and Small EMI are defined as follows:
- Small Electronic Money Institution License (Small EMI)
Small EMI, or small electronic money institution license, is one of the two types of licenses governing electronic finance activities. This license is issued to institutions whose electronic money activities are at a small level of transaction volume and capital.
- Minimum initial capital: Institutions holding a Small EMI license are required to maintain an initial capital of at least 2% of the e-money volume they generate. If the financial history of the company does not allow for a standardized calculation of virtual currencies, an assessment should be made based on the business project of the company and taking into account all requirements prescribed by the Financial Regulator and the supervisory authority.
- Transaction Limit: To maintain Small EMI status, the total amount of transactions per month, averaged over the year before application, must not exceed a certain level. For example, the average e-money balance before registration should not exceed €5,000,000 and the total transactions per month should not exceed €3,000,000.
If a Small EMI exceeds the prescribed limits, it must apply for EMI status within a certain timeframe.
The Small EMI provides the prospect for small electronic money institutions to operate in compliance with regulatory requirements, fostering competition and innovation in the financial sector.
Electronic Money Institution License (EMI)
Emi licenses are issued to companies that issue electronic money and provide financial services on a larger scale than small e-money institutions.
- Minimum initial capital: EMI-licensed institutions are required to maintain a certain minimum initial capital by regulatory requirements. For example, the required minimum initial capital requirement may be €350,000 or 2% of EMI capital.
- Unlimited transaction volumes: Unlike Small EMIs, EMI-licensed companies have no limit on the number of transactions and e-money they can process.
EMI represents a key element of the financial infrastructure, providing the ability for large institutions to issue and manage e-money, which promotes the digital economy and financial inclusion.
In many European Union countries, the regulator conducts a thorough check on all company founders who apply for an EMI license.
Requirements may vary from jurisdiction to jurisdiction, but as a general rule, a company must:
- Have at least 2 executives residing in the EU
- Prove relevant education and professional experience of employees in the financial sector
- Contribute a minimum share capital ( usually from €350k)
- All managerial positions must have an impeccable reputation and a clean criminal record
- Open a local office
Rules and regulations are set by different jurisdictions, but there are necessary and generally accepted PSD2 guidelines:
- The company must have the appropriate software
- Implementation of procedures to monitor different risks
- Implementation of AML policies
- Transparent and secure customer identification procedures
- Existence of technology bases and separate client accounts
- Mandatory accounting records
- Ability to obtain SWIFT
- Institution clients receive IBAN accounts
- Ability to open accounts remotely
- Issuance of Visa or MasterCard payment card for clients
- The company can transfer payments with global banks in different currencies
- In-house AML department
- The company can make its own payment decisions and open accounts. In addition, correspondent accounts all over the world.
- Providing services for cash deposit or withdrawal and all operations necessary for payment account operation.
- Access to the Single Euro Payments Area (SEPA), facilitating cross-border transactions in 36 countries.
- Emi license is valid in 30 EEA jurisdictions, allowing you to offer services in different countries without obtaining additional licenses.
- Reliability and transparency through compliance with European regulatory standards.
- The license allows you to support clients with international payment needs.
- Access to a thriving European fintech ecosystem, including technical talent and strategic partnerships.
Business climate
Currently, the Czech Republic and Lithuania are the most attractive jurisdictions in the EU for establishing a company in order to obtain an electronic money institution or payment service provider license, as evidenced by the map above. By 2021, 40 PSP / EMI and 104 small-scale payment institutions are registered in the Czech Republic, while in Lithuania there are 112 full-scale payment systems. The growth in Lithuania has almost doubled since 2018 when the number of full-scale PSP / EMI was 63.
Interest in the Czech Republic and Lithuania jurisdictions caused by the relatively low cost of labor in the EU, a convenient regulatory system and transparent tax system. The speed of processing the application by the regulator is also significant. While in Germany, Malta and other EU jurisdictions, the process can take from 6 to 12 months, in the Czech It should also be noted that in Lithuania an application for a license could be submitted without setting up a company.
Since the requirements are almost the same in all EEA countries for EMI/PSP license acquisition (except small formalities), the steps needed to be undertaken also does not vary significantly.
Sequence of the steps
Company formation in the jurisdiction of choice
Address of registration and virtual box service for one year
Shareholders and Management Board Members/Directors due diligence
Assistance with preparation of application documents
Completing a License Application
Submitting the application to the Financial Authority and following it up until finalized
We are working directly with the following regulators
FSA
Financial Supervisory Authority of Estonia
FIU
Estonian Financial Intelligence Unit
CBN
Czech National Bank
Bank of Lithuania
Lithuanian Central Bank
CBI
Central Bank of Ireland
BaFin
Federal Financial Supervisory Authority (FFSA) of Germany
FCIS
Financial Crime Investigation Service
GFSC
Gibraltar Financial Services Commission
Gofaizen & Sherle will provide professional assistance in jurisdiction choice and with PSP or EMI license acquisition, including preparation required documents for application, company formation, search for personnel, support with Bank account opening, consulting on IT issues and full compliance with applicable regulations. Upon licensing process completion Gofaizen & Sherle will provide corresponding maintenance (accounting and reporting and legal support of current activities).
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