EMI License

Electronic money has become an integral part of the financial landscape. It simplifies and accelerates payments, offering more flexible ways to manage personal finances. Regulatory authorities in different countries license electronic money institutions to ensure the reliability of transactions and protect users’ funds.

In this material, we will explain what an EMI license is, how to obtain it, and for which types of activities it is required.

What is an Electronic Money Institution (EMI) License?

An EMI (Electronic Money Institution) license is a financial license issued by regulators to non-bank organizations to provide payment services, issue and circulate electronic money.

The EMI license allows legal entities to obtain the status of an Electronic Money Institution, conduct financial transactions on behalf of clients, and operate as issuers of e-money and payment service providers.

Key Characteristics and Functions of Electronic Money Institution License

Obtaining an EMI license opens up broad opportunities for licensees in electronic money operations.

An electronic money license gives companies the right to provide all payment services, issue electronic money, and:

• Perform money transfers.
• Issue physical and virtual cards.
• Create electronic wallets for purchasing goods and services, as well as storing subscriber funds.
• Manage a specially designed payment system.
• Acquire cards.
• Initiate payments. 
• Provide account information services.

Who Issues Electronic Money Institution (EMI) Licenses

The activities of the emi electronic money institution are regulated by the Directive of the European Parliament 2009/110/EC. In each jurisdiction, central banks or financial regulators oversee market participants and the issuance of EMI licenses. In Portugal, this process is overseen by the Central Bank of Portugal, while in Lithuania and Cyprus, it’s managed by their central banks. Licensing in the United Kingdom is regulated by the Financial Conduct Authority (FCA), and in Malta, it falls under the jurisdiction of the Malta Financial Services Authority (MFSA).

Regulators also issue Small EMI licenses, a small e money license, which have slight operational restrictions compared to the full version. Small EMI licenses come with monthly transaction limits, and operations are limited to residents of the country where the license is issued, with no specific capital requirements. SEMI license holders are not eligible for passporting in other European countries. 

Benefits of EMI Electronic Money Institution

While obtaining an EMI license involves strict compliance with regulatory requirements, it offers numerous advantages to businesses:

• Legal operation. All financial operations are carried out in strict compliance with prescribed norms.
• Trust of clients and partners. An electronic money licence signifies adherence to legislation and guarantees the protection of funds.
• Diverse services. Electronic money institution license holders can offer clients various payment services.

The EMI electronic money institution can also expand into new markets, primarily within the European Union. EMI licensees have the right to passport their services, allowing their businesses to operate in other European countries without the need for additional licenses. 

How to Obtain e money License

Electronic money is associated with convenient and accessible financial operations, thanks to the protection of users’ interests and the mandatory EMI licensing procedure. While the norms of regulatory authorities may vary slightly in different countries, there are some general conditions.

Process of Obtaining an Electronic Money Institution Licence

The following stages are required to obtain an electronic money licence

• register your business;
• open an account for the statutory capital and pay it in full;
• lease and register a physical office in the country where operational activities are planned;
• hire staff;
• assemble the required documents;
• submit an application for an EMI license.

A business plan and financial calculations, internal policies and procedures, and software must also be prepared. Shareholders must undergo audits and confirm the sources of funds. 

If the regulator has no objections to the submitted data, and no additional information is requested, a positive decision is issued after a certain period, and the institution receives its EMI license for electronic money issuance.

Required Documents for Obtaining an EMI License

To apply for e money license, you need to prepare: 

• business plan with budget forecasts and future plans;
• anti-money laundering (AML) policy;
• information about a bank account in the same jurisdiction where you plan to obtain the EMI license;
• customer identification procedures;
• statutory documents;
• information about shareholders and controlling parties;
• commitments regarding accounting;
• external audit and internal control mechanisms;
• developed software;
• risk management policy;
• a separate account for keeping client funds;
• risk mitigation measures; 
• PCI DSS certificate, etc.

Regulators have strict requirements for the statutory capital, which must be at least €350,000.

Main Requirements for EMI electronic money institution

There are requirements for potential holders of the electronic money issuer license:

• shareholders must be at least 18 years old, have a good business reputation and experience in the financial sector;
• directors must have a good reputation with no outstanding convictions and financial industry experience;
• beneficiaries must have experience in activities related to payment services or closely related fields.

Certain factors may influence the regulator and its decision, including financial trust. Applicants [shareholders incl.] are required to confirm the source of their funds. The company must undergo internal and external audits, ensure sufficient equity and authorized capital, file reports required by local law, provide necessary documents and information upon request of regulatory authorities, ensure data security, process continuity, and others.

Choosing Right Jurisdiction for Obtaining  e money Issuer License

The United Kingdom is known for its reputation in financial services and regulatory framework. Lithuania offers the possibility of obtaining an EMI license within a relatively short timeframe without overly complex bureaucratic procedures. Gibraltar and Malta also have favorable tax policies. In recent years, an actively evolving financial sector in Spain made this country one of the most optimal European jurisdictions. When choosing a jurisdiction, you need to consider your market. Every regulator wants to see the majority of clients in the country of licensing, as it is a significant contribution of the organization to the country’s economy.

Cost of electronic money issuer license

The price of an EMI license depends on various factors, including the jurisdiction, type of license, and its duration. Service fees during the application process can also affect costs.

Timeline for Obtaining EMI License

The time required to prepare documents and await a final decision depends on the jurisdiction and the licensing authority. On average, the review of information and decision-making process may take six or twelve months.

SBSB provides comprehensive legal support for clients, both before and after the project launch. Our experts help choose the optimal jurisdiction, prepare documentation, calculate tax burdens, assist with payment software development, and select an office location in the country where the license is issued.