EMI license

What is an EMI license?

An EMI license is regulatory permission that allows a company to operate as an electronic money institution and issue electronic money, or e-money – monetary value stored electronically and issued in exchange for funds received from customers. It can be used to make payments, hold balances, transfer funds, or access other payment services, depending on the license scope and local regulation.

What does an EMI license allow?

The exact scope depends on the jurisdiction and regulator. In many cases, this type of license may allow a company to:

• issue electronic money;
• store customer balances electronically;
• provide payment accounts;
• process payments and transfers;
• support card, bank transfer, or wallet-based payments;
• offer merchant payment services;
• provide payouts or money remittance;
• operate digital wallets or prepaid accounts;
• provide related payment services.

An EMI license does not make a company a bank. Electronic money institutions are regulated financial institutions, but they usually cannot use customer funds for lending or deposit-taking in the way banks can.

Who needs an EMI license?

A company may need an EMI license if it wants to issue electronic money or hold customer balances for payment purposes.

This can apply to:

• digital wallet providers;
• prepaid card providers;
• fintech companies;
• neobanks;
• payment service providers;
• marketplaces with stored balances;
• platforms offering embedded financial services;
• companies that want to issue e-money accounts.

Not every payment business needs an EMI license. Some companies operate under a PSP license, as an agent of a licensed institution, or as a technical service provider. The right model depends on whether the company issues e-money, holds customer funds, provides payment accounts, or only supplies payment technology.

EMI license vs banking license

A bank can usually accept deposits, provide loans, and offer a wide range of regulated financial services. Electronic money institutions are more limited. It can issue e-money and provide payment services within the scope of its authorization, but it is not normally allowed to use customer funds for lending or operate like a full bank.

For this reason, EMI licensing can be suitable for fintech and payment businesses that need e-money and payment account capabilities without becoming a bank.

Why EMI licensing matters

EMI licensing matters because issuing e-money involves customer funds, payment risk, financial crime risk, operational resilience, and regulatory responsibility.

An EMI is usually expected to meet requirements related to:

• governance and internal controls;
• safeguarding of customer funds;
• anti-money laundering (AML) controls;
• Know Your Customer (KYC) and Know Your Business (KYB) checks;
• risk management;
• capital requirements;
• operational resilience;
• reporting to regulators;
• data protection and security;
• complaints and dispute handling.

For payment businesses, an EMI license can define what products they can offer, how they handle customer balances, and how they structure relationships with banks, payment networks, merchants, and users.