Difference between payment institution and electronic money institution

When comparing the licenses of a Payment Institution (PI) and an Electronic Money Institution (EMI), it’s important to understand the regulatory frameworks and specific operational permissions associated with each. The following table provides a detailed comparison:

Feature Payment Institution License Electronic Money Institution License
Primary Authorization Authorized to provide payment services like money transfers, direct debits, and card payments. Authorized to issue and manage electronic money, in addition to providing payment services.
Regulatory Framework Typically regulated under Payment Services Directives (PSD/PSD2 in the European Union). Regulated under Electronic Money Directives (EMD) in the European Union.
Capital Requirements Generally lower initial capital requirements compared to EMIs. Higher initial capital requirements to ensure the stability and security of the electronic money issued.
Scope of Services Limited to facilitating payment transactions without issuing electronic money. Can issue electronic money, which can be used for storage, transfer, or payment purposes, in addition to standard payment services.
Consumer Protection Requirements focus on the security and efficiency of payment transactions. Additional requirements for safeguarding and redeeming electronic money, ensuring consumer protection.
Compliance and Oversight Must adhere to AML (Anti-Money Laundering), KYC (Know Your Customer), and other financial regulations. Along with AML and KYC, must comply with regulations specific to the issuance and management of electronic money.
Operational Complexity Less complex in terms of regulatory compliance compared to EMIs. More complex, given the additional layer of issuing and managing electronic money.
Market Access Access to payment service markets without the ability to create electronic money. Access to both payment service markets and electronic money markets, offering a broader scope of financial services.
Licensing Process Generally a simpler and quicker process than EMI licensing. More stringent and comprehensive, involving closer scrutiny of business models, risk management, and operational readiness.