EMI license
An Electronic Money Institution (EMI) license is a financial services authorization issued by a financial regulator, such as the FCA in the UK or a national competent authority in the EU under the Electronic Money Directive. It permits a business to issue electronic money, maintain customer e-money balances, and provide payment services without a full banking license.
An EMI license is a lighter-touch regulatory authorization than a banking license, designed specifically for businesses providing payment and e-money services. EMIs can issue e-money (digital value stored in accounts), facilitate payment transactions, and provide card issuance services. They cannot take deposits, extend credit, or carry out investment activities without additional licenses.
The EMI license framework was established under the EU's Electronic Money Directive (EMD) and Payment Services Directive (PSD2), with equivalent frameworks in the UK post-Brexit. These frameworks harmonized payment regulation across the EU/EEA, enabling an EMI authorized in one EU country to 'passport' its services to other EU member states, which removes the need for separate national licenses.
Capital requirements for EMIs are significantly lower than for banks: the minimum initial capital for an EMI in the EU is €350,000 for full EMIs, versus €5 million for a bank. EMIs must also hold client funds in safeguarded accounts, ring-fenced from the EMI's own capital, so client funds are protected if the EMI becomes insolvent.
EMI licenses enable payment businesses to operate legally within a regulated framework that provides consumer protections (safeguarding, dispute resolution) and regulatory clarity. For fintechs building payment products in Europe, EMI authorization is the standard regulatory pathway. For businesses building on EMI infrastructure (via BaaS partnerships), the EMI partner's license provides the regulatory foundation.
- EMI authorization processes take 6–18 months in most jurisdictions
- Regulatory capital requirements, including ongoing capital maintenance, constrain business model
- Safeguarding obligations require maintaining segregated client money accounts
- Regulatory compliance costs (reporting, internal audit, compliance staff) are significant
- Post-Brexit, UK and EU EMI licenses no longer passport to each other, requiring separate authorizations for UK and EU operations
A fintech wanting to offer multi-currency accounts, payment cards, and cross-border transfers to European businesses applies for an EMI license in Lithuania (a popular EU licensing jurisdiction). The 10-month authorization process results in an EU EMI license that passports across all EU member states. The fintech launches its product to EU business customers without needing 27 separate national licenses.
Related Concepts
Nium holds EMI licenses and equivalent payment service provider authorizations across key markets globally, including the EU, UK, Singapore, Australia, and other major markets. Clients building on Nium's infrastructure leverage Nium's regulatory authorizations as the licensed layer in their product, without needing to obtain their own licenses in each market.
Answers you didn't know you needed.
What is the difference between an EMI and a bank?
A bank can take deposits (protected by deposit insurance), extend credit, and provide the full range of financial services. An EMI can only issue e-money and provide payment services. It cannot take deposits or extend credit without additional licenses. EMIs are regulated to a lower capital standard than banks.
What is e-money?
E-money (electronic money) is a digital representation of value that is accepted as a means of payment. It is issued against receipt of funds and must be redeemable for cash on demand. E-money is not the same as a bank deposit. It does not earn interest and is not covered by deposit protection schemes.
What is the difference between an EMI and a Payment Institution (PI)?
A Payment Institution can provide payment services but cannot issue e-money. An EMI can both issue e-money and provide payment services. EMIs have higher capital requirements than PIs.
Do UK EMI licenses passport into the EU?
No. Following Brexit, UK and EU regulatory frameworks are separate. An FCA-authorized UK EMI does not automatically have access to EU markets, and an EU EMI license does not automatically grant UK access. Separate authorizations are required for each market.
Does Nium hold EMI licenses?
Yes. Nium holds payment service provider and e-money institution authorizations across multiple markets including the EU, UK, and other key jurisdictions. Nium's licenses provide the regulatory foundation for its payment and card issuing services in each market.