How to become an electronic money institution (EMI): license, requirements & setup

Over 310 electronic money institutions (EMIs) are operating in the United Kingdom, the highest number in Europe. To give you some context, the second on the list is Lithuania, with 85 institutions, and the total for the region is almost 700. And the number is constantly growing, driven by immense demand. According to EY data, nearly 75% of consumers across 27 global markets use an e-money or fintech service.

In this article, we'll explore how to enter this booming market and the potential challenges and pitfalls that may arise. We'll learn how to establish an e-money business efficiently and get an electronic money institution license.

But first, let's define an electronic money institution (EMI) and explain how it differs from related concepts.

What is an electronic money institution?

To discern the hidden meaning of the EMI term, we should define e-money.

Electronic money is a digital monetary value we can use to make payments. A digestible example of e-money is funds on PayPal or plastic gift vouchers that you can use in stores.

Types of e-money institutions: authorised vs small

In the European Economic Area and the UK, companies looking to issue electronic money and provide payment services can choose between two main types of e-money institution licenses: authorised EMIs and small EMIs. While both permit e-money issuance, they differ significantly in scope, obligations, and strategic potential.

Authorised EMIs

An authorised electronic money institution is the full-scale version of an EMI. This license allows the institution to issue e-money and offer a broad range of payment services, including:

• Execution of payment transactions (direct debit, credit transfer, card-based payments)
• Issuing and acquiring payment instruments
• Payment initiation services (PIS)
• Account information services (AIS)
• Money remittance
• Operating payment accounts and storing clients’ funds

Authorised EMIs must meet rigorous regulatory requirements, such as maintaining a minimum initial capital of €350,000, ensuring robust safeguarding measures, and implementing AML/CFT policies. This license is typically suitable for fintechs looking to scale, serve clients across borders, or build proprietary products like cards and wallets.

Small EMIs

Small electronic money institutions, also known as “registered EMIs,” are a simplified version of the authorised license. These entities can also issue e-money and provide a limited range of payment services — excluding payment initiation and account information services.

To register as a small e-money institution, a company must:

• Operate below defined thresholds (e.g., total outstanding e-money not exceeding €5 million)
• Primarily serve within one country (cross-border services are often restricted)
• Demonstrate a sound business model and adequate internal controls
• Show proof of relevant previous business activity or background in financial services

Small EMIs are not required to hold the same level of capital or comply with all the full-scale EMI requirements, making them a more accessible entry point for startups or businesses testing the market.

However, the trade-off is limited scalability and growth. Many companies that start as small EMIs later upgrade to authorised status as their volumes and ambitions grow.

How does an electronic money institution work?

An EMI is authorised to issue digital monetary value, also known as electronic money. Customers can then use this money to make purchases at other parties.

An institution stores e-money in a central accounting system or an electronic carrier. In other words, EMI may use servers or electronic chips.

Wondering if an electronic money institution is a bank or a payment institution? The quick answer is none of the above, but let's learn how they differ.

Electronic money institution vs Bank

E-money licenses and banking licenses are two completely different licensing regimes.

The essence and allure of the e-money license lie in allowing non-banks to provide payment and financial services and store clients' funds. Yet, the list of banking activities available to authorised electronic money institutions is limited. Namely, unlike banks, electronic money institutions can't provide investment, deposit, and credit services.

In their turn, banking license holders are authorised to act as EMIs to pursue the business of a credit institution.

EMIs are also more flexible and faster than traditional banks. For customers, this means an opportunity to get an account quickly and without going to the physical branch.

Electronic money institution vs Payment institution

A payment institution license is more limited than an EMI license. Payment institutions can provide services like payment initiation, processing and remittances. But they can't issue e-money or hold customers' funds without an identifiable payment order.

This limitation makes the PI market easier to enter than the EMI. Notably, electronic money institutions need higher initial capital, and their regulation is stricter.

Still, some companies that start with a PI license may later opt to apply for an EMI license. This happens when there's a need to expand the range of services. For instance, when they want to issue their own cards.

What can an e-money institution do?

The EU regulation allows EMIs to offer such services as:

• Issuance of e-money
• Topping up and withdrawing cash from a payment account
• Performing transactions with e-money (remittances, transfers, etc.)
• Issuing payment instruments or acquiring payment transactions
• Payment initiation and account information services, etc.

Please see Directive 2009/110/EC for the exhaustive list of activities that EMIs are allowed to perform. Each EMI specifies what it would like to do in its application, and then only those activities are authorised.

Simply put, EMIs can usually open SWIFT, IBAN and SEPA accounts, remotely register banking accounts and issue cards for them, make and accept SWIFT payments, and much more.

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Examples of authorised electronic money institutions

Let's look at several electronic money institution examples to better grasp what they do. These are five widely known companies holding EMI licenses:

How to start your own e-money institution

Now that we've brushed up on our knowledge of the e-money market and electronic money institutions, we're ready to segue into practice and learn how to become an EMI.

You'll have to undergo several steps with different levels of complexity. Here's the generalised and simplified list:

1. You'll need payment software to function as an EMI. Plenty of time and resources are necessary to develop one, so you should start hiring developers and planning your future solution as soon as possible. Remember that if you plan to deal with card transactions, your software and infrastructure have to be PCI DSS-compliant.
2. Find a licensing specialist or a third-party agency assisting with EMI licensing. They'll help you prepare all the documents needed for electronic money institution licence application in your jurisdiction and ensure compliance with regulations. At least it's a must to have a lawyer who can help you with all the paperwork and interpretation of regulations.
3. Learn the local regulations on EMIs, requirements, and how the authorisation procedure happens. You must have a minimum initial capital, safeguard your clients' funds, and have insurance. Most EU regulators require EMI license applicants to have top managers residing in the EU with financial or economic education. You may face other requirements related to AML, risk management, your technological base, etc. All in all, dive into the local peculiarities of the chosen country.
4. Have the pre-application meeting with the regulator's representatives. They'll ask you many questions about your future EMI, but your work on the previous step will help you have all the answers.
5. Prepare and submit your application. You'll have to pay the fee to file your EMI license application, collect all the requested documents, show a detailed business plan, and elaborate on the activities you'd perform and internal procedures. You'll have to provide documented evidence of meeting all the requirements and describe the company's organisational structure, security measures, accounting systems, etc.
6. Wait for the regulator to assess your application. Before approval, you may undergo several rounds of the regulator's comments and your respective changes. The process usually takes at least 3 months. When your application is approved, your company becomes an authorised electronic money institution.

EMI license requirements and eligibility

Below is a breakdown of the key eligibility and licensing requirements to obtain an electronic money institution (EMI) license in the UK or EU:

• Legal entity & Jurisdiction. Your business must be a registered legal entity in the country where you seek authorisation. In the UK, that’s a limited liability company registered with Companies House. In the EU, the company must be incorporated and have its head office and at least part of its operations within the licensing country.
• Initial capital. Authorised EMI requires a minimum of €350,000 in initial capital. Small EMIs (UK/EU) are exempt from this fixed amount but must operate within limited thresholds, such as an average outstanding e-money balance not exceeding €5 million.
• Directors & Governance. At least two directors must have sufficient experience in financial services, risk management, or compliance. Most regulators also require “mind and management” to be located locally — meaning key decision-makers must reside in the same country. The organisational structure must be well-documented, including clear reporting lines and risk controls.
• Safeguarding of client funds. EMIs must ensure customer funds are fully safeguarded, either by segregating funds in a separate account with an authorised bank, or using an insurance policy or comparable guarantee from a third party.
• AML/CTF framework. A complete anti-money laundering and counter-terrorist financing policy is required, as well as the appointment of a Money Laundering Reporting Officer (MLRO). You must also show procedures for Know Your Customer (KYC), transaction monitoring, and suspicious activity reporting.
• Business plan & Financial projections. You should submit a complete business plan, typically covering the services offered, target customers and markets, risk assessment and mitigation strategies, detailed financial forecasts (usually 3 years), and operational models and staffing. Most regulators assess whether the plan is sustainable and aligns with your declared capital and compliance capacity.
• IT systems & Infrastructure. You must outline your technology stack and information security setup, including transaction processing capabilities, data protection (aligned with GDPR), disaster recovery and business continuity plans, and PCI DSS compliance if card data is handled.

Costs and timelines to get an EMI license

Launching an EMI is not only a regulatory hurdle but also a significant financial and time investment. Understanding the realistic costs and licensing timeline can help you plan your go-to-market strategy with fewer surprises.

Here’s what to expect in terms of fees:

Aside from these fees, you’ll need to invest into personnel and technology.

Hiring qualified compliance officers, MLROs, and operations managers can be costly — especially if required to reside in the jurisdiction.

Building EMI-ready infrastructure from scratch may exceed €250,000 and take 12+ months. Alternatives like Corefy’s white-label payment infrastructure can reduce costs and go-to-market time.

As for the licensing timeline, here are some estimates for key steps:

3 challenges you may face

You'll likely face certain pitfalls on a journey to becoming an EMI. Forewarned is forearmed, so let's learn about the three most common challenges and how to deal with them.

1. Legal complexities

Firstly, filing an application for the EMI license isn't a piece of cake. You have to prepare piles of documents and cover dozens of requirements.

Secondly, there are certain restrictions for EMIs on daily transaction size and number.

We highly recommend hiring a specialist who can guide you through legal peculiarities. It will save you tons of time and help you do everything correctly.

2. Market disturbance

With the EMI market boom came allegations of money laundering and other financial wrongdoings. According to Transparency International UK, over one-third of EMIs authorised by the FCA have red flags related to their activities, owners, or directors.

Of course, you won't be the subject of such scandals if you are not involved in fraudulent or money laundering schemes. Still, the fact that there can be perpetrators among licensed EMIs stains the market's reputation and affects clients' trust.

Double-check all the companies you'll do business with to avoid being dragged into trouble.

3. Development hassles

You should have payment software and infrastructure to operate as EMI, which may be resource-draining. The cost of developing your own payment solution will likely be measured in hundreds of thousands of euros. Speaking of time, you'll need at least half a year for the MVP and about a dozen months to move from basic functionality to a competitive product.

The good news is that you don't need to waste so much time and invest so much money to have a robust, full-fledged payment product. You can opt for a white-label payment solution and receive advanced payment capabilities in a snap, with plenty of value-added features and services.

For instance, by choosing Corefy's white-label payment provider, you receive the following: