E-Money Institution licence and digital wallet routes
An E-Money Institution (EMI) authorisation permits the issuance of electronic money and execution of associated payment services. It is the required route for prepaid card issuers, digital wallets, and any business where user funds are held as a stored-value balance redeemable at par.
What an EMI authorisation covers
An EMI licence issued under EMD2 (or an equivalent national framework outside the EEA) authorises the issuance of e-money and a broad set of payment services. The authorisation scope must be declared at application and cannot be extended without variation.
- Issuance of electronic money — monetary value stored electronically, issued on receipt of funds, and redeemable at par on demand.
- Execution of payment transactions funded from e-money accounts, including credit transfers and direct debits.
- Money remittance — transmitting value cross-border on behalf of customers using the e-money float.
- Payment initiation services (PIS) and account information services (AIS) under PSD2.
- Issuance of prepaid payment instruments — cards, tokens, and mobile wallets backed by an e-money balance.
- Currency exchange associated with e-money transactions where disclosed to the user.
An EMI is not permitted to accept deposits or grant credit funded by customer e-money balances. E-money funds must be ring-fenced and cannot be lent or invested beyond permitted safeguarding assets.
Scope boundaries — read before proceeding
The following are firm regulatory limits applicable to all EMI authorisations. Operating outside these boundaries without additional authorisation constitutes an offence in most EEA jurisdictions.
- EMI does not authorise deposit-taking. E-money balances are not deposits and are not covered by deposit guarantee schemes.
- EMI does not permit lending from customer float. Using safeguarded funds to extend credit is prohibited.
- Redemption on demand is a legal right. Customers may redeem any e-money balance at par at any time; fees for redemption are strictly limited.
- EMI does not confer banking status. An EMI cannot describe itself as a bank or imply deposit protection to customers.
- Passporting requires NCA notification — it is not automatic upon authorisation.
EMI vs PI vs Banking — decision matrix
Use this matrix to identify which authorisation route matches your business model before committing to an application.
| Criteria | EMIE-Money Institution | PIPayment Institution | BankCredit Institution |
|---|---|---|---|
| Issue e-money / stored value | |||
| Execute credit transfers | |||
| Accept deposits | |||
| Money remittance | |||
| Issue prepaid cards / wallets | |||
| Payment initiation (PIS) | |||
| Extend credit | |||
| EEA passport | |||
| Minimum initial capital | €350k | €20k–€125k | €5m+ |
| Safeguarding obligation | |||
| Redemption obligation | n/a |
Permitted and excluded activities
The EMI activity scope is defined in EMD2 Article 6. The following breakdown clarifies what is in scope, out of scope, and conditionally permitted.
Covered by this licence
- Issue electronic money
- Operate e-money accounts and wallets
- Execute credit transfers from e-money accounts
- Issue prepaid cards (debit/prepaid, not credit)
- Conduct money remittance
- Provide payment initiation services (PIS)
- Provide account information services (AIS)
- FX conversion tied to transactions
Not covered — separate licence required
- Accept deposits repayable on demandCredit institution licence required
- Extend consumer or business creditCredit institution or lending licence required
- Invest customer float beyond permitted assetsSafeguarding rules restrict asset classes
- Operate as a bank or describe products as depositsMisleading marketing is a regulatory breach
EMI compliance obligations
EMI authorisation carries a defined compliance stack. The following areas must be addressed before and after authorisation is granted.
€350,000 minimum at the point of authorisation, held in eligible liquid assets.
2% of average outstanding e-money volume, reviewed monthly; minimum €350k at all times.
100% of outstanding e-money balances must be safeguarded in segregated accounts or covered by insurance.
Full AML framework including CDD, EDD, transaction monitoring, MLRO, and SARs reporting.
Par-value redemption on demand must be available at all times; redemption fees are strictly capped.
Fit-and-proper management body, risk and compliance function, written policies for all regulated activities.
Periodic returns to the home-state NCA covering e-money volumes, own funds, safeguarding, and incident reporting.
All agents distributing e-money on behalf of the EMI must be registered with the home-state NCA before commencement.
Is an EMI licence right for your project?
EMI authorisation suits businesses whose core model involves holding or transferring user funds as stored value. Evaluate both columns carefully before committing to an application.
Best for
- Digital wallet providers where users can load, hold, and spend a balance.
- Prepaid card issuers targeting consumer or corporate spend management.
- Neobanks and challenger accounts that do not wish to take deposits but need a card-issuing capability.
- Cross-border remittance platforms that settle internally via an e-money float before instructing a transfer.
- B2B payment platforms managing supplier or payroll disbursements from a pre-loaded pool.
- Embedded finance providers offering white-label wallet infrastructure to other businesses.
Not for
- Businesses that only move money without holding a balance — a PI licence is sufficient.
- Lenders or overdraft providers — a credit institution or consumer credit licence is required.
- Crypto-asset custodians — VASP or MiCA authorisation applies, not EMD2.
- Businesses that want deposit protection for their customers — deposits require a banking licence.
- MSBs operating outside the EEA where PSD2 / EMD2 do not apply — local MSB registration may suffice.
Safeguarding obligations
EMIs must safeguard 100% of outstanding e-money liabilities at all times. Two primary methods are available under EMD2; the chosen method must be documented and disclosed to the NCA.
All e-money balances are placed in a segregated account at a credit institution or invested in low-risk, liquid assets (government bonds, money-market funds). Funds must be demonstrably ring-fenced from own funds.
An insurance policy or guarantee from an authorised insurer or credit institution covers the total outstanding e-money liability for at least the equivalent amount at all times.
The EMI must reconcile safeguarded amounts against outstanding e-money liabilities every business day and retain records demonstrating compliance for supervisor review.
Safeguarded funds are ring-fenced from the EMI's general estate in insolvency and are not available to other creditors. This is the principal consumer-protection purpose of the obligation.
Where the segregation method is used via investment, assets must be secure, liquid, and low-risk. High-yield or illiquid assets are not permitted safeguarding vehicles.
Regulators treat safeguarding failures as a priority enforcement matter. An EMI that cannot demonstrate daily segregation of customer funds may face immediate restriction or licence revocation.
Application readiness checklist
Most EMI applications fail or are delayed because of gaps in the areas below. Assess each area before submitting to the NCA.
- Capital adequacyCritical
€350k initial capital must be fully paid up and verifiable at submission. Capital from loans, parent guarantees, or deferred equity is typically not accepted.
- Safeguarding infrastructureCritical
You must have a signed agreement with an EEA credit institution for the segregated safeguarding account before or shortly after authorisation — regulators frequently request evidence.
- AML frameworkCritical
A documented AML/CTF policy, CDD procedures, transaction monitoring methodology, and a named MLRO must be in place before submission. NCAs consistently cite AML gaps as the primary reason for refusals.
- Business plan and financial projectionsCritical
A 3-year financial model showing e-money volumes, revenue assumptions, own-funds trajectory, and safeguarding amounts is required. Projections must be credible and stress-tested.
- Governance structureImportant
Management body composition, fit-and-proper declarations, and organisational chart with segregated duties must be finalised. At least one director with relevant regulated-industry experience is expected.
- IT and operational controlsImportant
Evidence of technology infrastructure, outsourcing arrangements, information security controls, and business continuity plans — regulators are increasingly focused on operational resilience.
- Programme of operationsImportant
A detailed narrative describing every payment service to be offered, target customer segments, distribution model, and proposed jurisdictions of operation.
- Substance in the jurisdictionAdvisory
Some NCAs require physical presence (local directors, local staff) or exclude applicants whose operations are entirely outsourced. Confirm substance requirements with the target NCA before applying.
Incomplete applications reset the NCA review clock. Address all critical items before submission rather than relying on post-submission supplementation.
EMI vs PI — where the boundary sits
PI and EMI are frequently confused because both sit under PSD2 for payment services. The distinction is the issuance of stored value.
- Payment Institution (PI)Covers: Moves money on behalf of customers. Does not hold a customer balance that can be redeemed. PI payment accounts are transaction vehicles, not stored-value wallets.Not for: Any model where users load a balance and can spend or redeem it at will — that stored value is e-money.
- E-Money Institution (EMI)Covers: Issues e-money: monetary value stored electronically in exchange for funds received, redeemable at par on demand. EMI can also provide all PI payment services.Not for: Deposit-taking, lending, or providing banking-equivalent products requiring a credit institution licence.
Agent and distributor model
EMIs may distribute e-money and payment services through registered agents without those agents holding their own EMI authorisation. The EMI remains fully liable for agent conduct.
How the model works
- 1
Contract and due diligence
The EMI enters a written distribution agreement with the agent. Prior to registration, the EMI must conduct fit-and-proper due diligence on the agent's principals and beneficial owners.
- 2
Home-state NCA registration
The EMI notifies the home-state NCA of the agent, providing required identification, ownership, and fitness information. The agent may not commence activity until registration is confirmed.
- 3
Passport extension
Registered agents are automatically covered by the EMI's EEA passport. If the agent operates in a host member state, the EMI must complete host-state notification before commencement.
- 4
Ongoing oversight
The EMI must monitor agent activity continuously, apply equivalent AML controls, and ensure agents remain fit and proper. Agent register must be maintained and reported to the NCA.
PI obligations toward agents
- Register all agents with the home-state NCA before they commence e-money distribution.
- Apply AML and KYC controls to agent-originated transactions equivalent to own-channel standards.
- Train agents on safeguarding, AML, and customer protection obligations.
- Maintain a live register of all agents and their operational jurisdictions.
- Notify the NCA promptly of any material change to agent status, ownership, or cessation.
- Include agent volumes in own-funds and safeguarding calculations.
The EMI bears full regulatory liability for its agents. Systemic agent-network failures can result in licence revocation, regardless of the EMI's own direct-channel compliance record.
Related authorisation routes
If your model does not fit the EMI scope, one of the following routes may be more appropriate.
Businesses executing payment transactions without holding a customer balance. Lower capital requirement (€20k–€125k).
PI cannot issue e-money or prepaid instruments where value is held in a redeemable balance.
Businesses that need deposit-taking, lending, or the ability to market themselves as a bank.
Capital requirements typically start at €5m and supervisory timelines are 12–24 months.
Remittance and currency exchange operators in jurisdictions outside the EEA where EMD2 does not apply.
Frequently asked questions
Electronic money is monetary value stored digitally, issued by an EMI in exchange for funds received, and redeemable at par on demand. Unlike a bank deposit, e-money is not protected by deposit guarantee schemes and the EMI is prohibited from using it to extend credit. The key distinction is safeguarding: EMI funds are ring-fenced, not intermediated.
No. Accepting deposits repayable on demand is reserved for credit institutions (banks). An EMI issues e-money, which is a distinct legal instrument. Describing e-money balances as 'deposits' or implying deposit protection is a regulatory breach in most EEA jurisdictions.
Lithuania, Ireland, Luxembourg, and Malta are frequently chosen for EEA EMI authorisations due to processing predictability and banking access. Lithuania in particular has a well-developed digital-finance regulatory framework. The optimal jurisdiction depends on target markets, substance requirements, and banking partner availability.
EEA EMI passporting no longer applies in the UK. UK-facing businesses require authorisation from the Financial Conduct Authority (FCA) under the UK Electronic Money Regulations 2011. Some EEA-authorised EMIs operate in the UK via temporary permissions or local subsidiaries.
Statutory timelines are typically three months from receipt of a complete application, but in practice timelines range from six months to 18 months depending on the NCA, the completeness of the application, and the complexity of the business model. Lithuania's Bank of Lithuania has historically been among the faster EEA processors.
An EMI licence does not authorise crypto-asset services such as custody, trading, or exchange. Businesses offering both e-money services and crypto-asset services require a separate MiCA CASP authorisation (EU) or equivalent VASP registration in their target jurisdiction.
These answers are informational only. Regulatory requirements vary by jurisdiction and are subject to change. Consult a licenced adviser before making application decisions.