What is an EMI license, and how to obtain one?

What is an Electronic Money Institution (EMI)?

An Electronic Money Institution (EMI) is a legal entity authorized to issue electronic money. Electronic money represents monetary value stored in electronic form and constitutes a claim by the holder against the issuer. It is issued upon receipt of funds and must be accepted by parties other than the issuer itself.

In practice, an EMI serves as a regulated infrastructure for digital wallets, payment accounts, cards, money transfers, and other financial products. Depending on the scope of its authorization, an EMI may combine the issuance of electronic money with various payment services.

How does an electronic money institution work?

The mechanism is based on exchanging received funds for electronic money. The customer transfers funds to the EMI, after which the corresponding amount is issued electronically and credited to a wallet or payment account. When the electronic money is redeemed, the EMI returns its monetary value to the holder.

Customer funds received in connection with the issuance of electronic money must be safeguarded in accordance with applicable law. This fundamentally distinguishes an EMI from a bank: customer funds do not become ordinary deposit resources that the institution can use for lending.

An EMI may also provide payment services not directly related to the issuance of electronic money. The specific list of such services is determined by the license and national legislation.

What can and cannot an EMI do?

An EMI may issue electronic money, manage e-wallets and payment accounts, execute transfers, provide certain acquiring and payment processing services, issue cards through relevant payment schemes, and provide other authorized payment services.

However, an EMI does not automatically receive banking authority.

It cannot accept deposits in the banking sense and use them to extend loans solely on the basis of an EMI license. A corresponding banking license is required for banking operations.

What is an EMI license?

The significance of an EMI license lies in the regulator’s authorization, which grants a legal entity the right to operate as an electronic money institution within the scope established by law. To answer the question of what an EMI license is in simple terms, it is not merely a permit to handle payments, but a specific financial status with requirements regarding capital, management, protection of customer funds, and risk control.

In the EU, the regulatory framework is based on EMD2—Directive 2009/110/EC. It establishes rules for the market entry of EMIs and for prudential supervision. Payment services provided by EMIs in addition to issuing electronic money are regulated by PSD2.

This is precisely why an electronic money institution license should be viewed as a separate category of financial authorization, rather than a type of banking license. The term “EMI banking license” is sometimes used, but it is legally incorrect: EMIs and banks have different powers and are subject to different regulatory regimes.

EMI vs. Payment Institution vs. Bank

Let’s examine the differences between these types of institutions:

Criterion	Payment Institution (PI)	EMI	Bank
Primary function	Provision of regulated payment services	Payment services + issuance of electronic money	A wide range of banking and payment services
Issuance of electronic money	No	Yes	Yes, as part of banking activities
Acceptance of deposits	No	No	Yes
Lending	Limited to the scope of payment services	Limited to the scope of authorized activities	Yes
Wallets and stored monetary value	Limited capabilities	Suitable for such products	Yes
Minimum capital in the EU	€20,000, €50,000, or €125,000— depending on services	€350,000	Significantly higher; it depends on the type of bank and jurisdiction
Suitable for	Businesses that need standalone payment services	Fintech products involving e-money, wallets, and payments	Companies that require a full-fledged banking model
Key difference	A narrower license without the right to issue e-money	Combines payment services and the issuance of e-money	The broadest range of permitted operations

Types of EMI Licenses

Under European regulations, there is a distinction between full EMI authorization and a simplified regime for small operators.

Full EMI license services are intended for companies that plan to issue electronic money and scale their payment business without the restrictions typical of the simplified regime. It requires an initial capital of at least €350,000 and a full authorization process.

Individual countries may apply a simplified regime for small electronic money institutions based on the exceptions provided for in EMD2. Each country sets its own threshold, but the average volume of electronic money issued cannot exceed €5 million. If a company exceeds this limit, it must transition to full authorization.

Thus, services for obtaining an EMI license may include preparing both a full EMI application and a structure tailored for small businesses, provided the chosen jurisdiction offers the corresponding regime.

How is the EMI license regulated?

In the EU, EMIs are regulated by national competent authorities in accordance with the pan-European EMD2 requirements and the PSD2 regulations governing payment services. The regulator does not limit itself to verifying the registered company; it assesses whether the organization is capable of safely conducting its stated activities after receiving authorization.

Supervision continues even after the license is issued. An EMI is required to maintain the required level of own funds, comply with rules on the protection of client funds, AML — including KYC — risk management, and corporate governance, and meet reporting EMI license requirements.

For EMIs in the EU, the minimum initial capital is set at €350,000. In addition, capital requirements apply to the institution. For electronic money issuance activities, EMD2 specifies Method D: own funds must amount to at least 2% of the average volume of electronic money in circulation. At the same time, the amount of own funds must be at least the established minimum initial capital.

Advantages of an EMI License

Before discussing the advantages of an EMI license, it is worth highlighting several practical opportunities it offers businesses:

• Proprietary payment infrastructure. An EMI license allows companies to issue electronic money and integrate it with payment products within a single regulated framework, reducing dependence on banks and third-party payment providers.

• A wide range of financial products. For fintech companies, this means the ability to create multi-currency wallets, payment accounts, card products, business solutions, and cross-border payment services. For platforms and infrastructure providers, an EMI license can serve as the foundation for their own payment ecosystem.

• Scaling within the EEA. Once authorized in one EEA country, an EMI can expand its services to other countries through the legally prescribed procedure for cross-border service provision, without having to obtain a separate full-fledged EMI license in each country.

Requirements for Obtaining an EMI License

EMI license requirements vary by jurisdiction, but regulators typically assess capital, business plans, ownership structure, management, risk management, AML compliance, protection of customer funds, IT infrastructure, and regulatory reporting.

The company’s operational readiness is crucial. The applicant must demonstrate how the payment system will operate after obtaining the license: describing the flow of funds, internal procedures, transaction monitoring, data protection, and interactions with external providers. The regulator also reviews the owners and executives, including their business reputation, experience, and the transparency of the ownership structure. AML procedures must be integrated into the company’s operational model.

Specific requirements vary by jurisdiction. They may pertain to local presence, management and staff, compliance functions, internal audit, source of capital, and safeguarding mechanisms. Licensing procedures, documentation requirements, fees, and requirements for auditing, reporting, and interaction with the regulator also differ. Therefore, when preparing for licensing, it is necessary to take into account not only the general EU requirements but also the current regulations of the chosen jurisdiction.

The Process of Applying for an EMI License

How do you obtain an EMI license? Obtaining an EMI license is a multi-stage process that includes preparing the company, gathering the necessary documents, submitting the application, and undergoing regulatory review.

Stage	What happens	Estimated timeframe
Defining the model	Selecting services, jurisdiction, structure, and type of authorization	1–3 weeks
Preparation	A business plan, policies, financial model, and IT and compliance documents are developed	1–3 months
Application submission	Documents are submitted to the regulator for formal and substantive review	1 day after completion
Regulator’s inquiries	The regulator reviews the application and requests clarifications or additional materials	1+ month
Decision	Once the review is complete, a decision is made on whether to grant authorization	depends on the jurisdiction
Launch	License conditions are fulfilled and operational processes are prepared	following authorization

The actual timeframe cannot be determined solely by the statutory maximum; a significant portion depends on the quality of the initial application and the number of rounds of inquiry.

How much does an EMI license cost?

The cost of an EMI license consists of more than just the government fee. The budget must include legal structuring, application preparation, compliance and AML, IT infrastructure, audits and consulting, salaries for key staff, office requirements, and ongoing costs to maintain the license.

Regulatory capital is accounted for separately. A full-fledged EMI license in the EU costs a minimum of €350,000. This is not a “license fee”: the capital remains a company resource but must meet established capital adequacy requirements.

A request to purchase an EMI license also requires caution: buying a ready-made, licensed EMI company is not the same as obtaining a license for a new business model. A change in ownership, management, business activities, or material structural elements may require approval from the regulator.

Jurisdictions for Obtaining an EMI License

In the EU, EMI licensing is handled by national regulators, so conditions vary from country to country. When choosing a jurisdiction, it is important to consider not only price and speed, but also requirements for a local presence, the availability of qualified specialists, the regulator’s attitude toward a specific business model, and the subsequent cost of compliance.

Lithuania. The Bank of Lithuania actively licenses EMIs and sets a minimum initial capital requirement of €350,000 for a full license. The jurisdiction focuses on fintech and permits subsequent cross-border service provision in other EEA countries through the cross-border service provision procedure.

Ireland.

The Central Bank of Ireland applies a comprehensive set of requirements regarding capital, governance, protection of client funds, and operational readiness. The initial capital requirement for EMIs is €350,000. The regulator publishes detailed requirements for the content of the application, which makes the jurisdiction predictable in terms of the process, but does not eliminate the need for significant preparation.

Malta and Cyprus. These jurisdictions are also used for European EMI projects and allow companies to operate within the pan-European regulatory framework. When choosing between them, it is necessary to compare the requirements for the company’s physical presence, management, local functions, processing times, and the cost of ongoing compliance on a case-by-case basis.

Thus, a European EMI license is not a single license issued by a single European authority. It is a national authorization under harmonized EU legislation that allows for the cross-border provision of services, provided the relevant procedures are followed.

EMI License vs. MiCA/CASP Authorization

EMI and CASP represent different regulatory statuses. An EMI regulates the issuance of electronic money and payment activities, whereas CASP authorization under MiCA is intended for the provision of certain services related to crypto-assets.

At the same time, there is a direct link between the two regimes. MiCA stipulates that an issuer of an e-money token must be a credit institution or an EMI and must comply with Its requirements, including preparing and notifying a document containing information about the crypto-asset.

Furthermore, the current version of MiCA permits certain already-licensed financial institutions, including EMIs, to provide services related to crypto-assets, provided they comply with the conditions of the relevant regulatory regime. Therefore, an EMI license does not automatically grant the right to engage in any activity involving crypto-assets, nor is a separate CASP authorization always required for every service. The specific model depends on the type of service and the company’s status.

Conclusion

An EMI license is intended for companies that need to issue electronic money and provide regulated payment services. Unlike a bank, an EMI does not have the right to accept bank deposits or extend credit to customers as a credit institution.

A full license in the EU requires a minimum of €350,000 in initial capital, but capital is only one element of the authorization process. The regulator also evaluates the business model, owners and management, AML compliance, protection of customer funds, risk management, IT systems, and operational readiness.

The choice of jurisdiction should be based on the intended services and business model, not solely on the amount of the licensing fee. For a fintech company, an EMI can serve as the foundation for its own payment infrastructure and subsequent expansion within the EEA.

This material is provided for informational purposes only and should not be construed as financial, investment, trading, or any other professional advice.