Electronic Money Institution (EMI) License 101: Definition, How It Works, and How to Obtain

The global financial landscape is undergoing a radical transformation. Traditional banking institutions, once the sole gatekeepers of monetary transactions, are increasingly being challenged by agile fintech solutions that prioritise speed, accessibility, and lower costs. This shift is driven by a digital-first generation of consumers and businesses demanding seamless payment experiences. Central to this evolution is the Electronic Money Institution (EMI) license.

An Electronic Money Institution is a specialised financial entity authorised to issue electronic money and provide a wide range of payment services. While they function similarly to banks in the eyes of a consumer, they operate under a distinct regulatory framework that focuses on payment efficiency rather than traditional lending. For entrepreneurs and corporations, securing an EMI license is often the most strategic path toward launching a global fintech company.

At LegalBison, we act as the essential bridge between these complex regulatory frameworks and your vision for a modern financial platform. Navigating the requirements of central banks and financial authorities requires precision and a deep understanding of local laws. This guide provides a comprehensive overview of what an EMI license entails and how you can successfully obtain one to scale your business internationally.

Related: What is a PSD2 License?

What is an EMI license? (definition & scope)

An EMI license is a regulatory authorisation that permits a company to provide payment services and issue e-money, which is a digital representation of fiat currency. This license is the foundation for most modern digital wallets, neobanks, and payment processors.

Core functions of an EMI

An institution holding this license is typically authorised to perform the following activities:

• Issuing electronic money for the purpose of making payment transactions;
• Providing e-wallet services where users can store and manage their funds;
• Issuing payment instruments, such as prepaid or debit cards linked to the user’s account;
• Executing domestic and international fund transfers (wire transfers, SEPA, etc.);
• Facilitating merchant acquiring services, allowing businesses to accept online payments;
• Offering currency exchange services within the digital ecosystem.

EMI vs. banking license

The primary difference between an EMI and a traditional bank lies in the lending component. Unlike a full banking license, EMIs are strictly prohibited from using customer funds to issue loans or mortgages. Furthermore, EMIs cannot offer interest-bearing savings accounts. While a bank operates on a fractional reserve system, an EMI must adhere to a 100% safeguarding rule.

This means that every unit of e-money issued must be backed by an equivalent amount of fiat currency held in a separate, segregated account or protected by an insurance policy. This makes the EMI model significantly less risky from a systemic perspective, as customer funds are never reinvested in the institution’s own ventures.

Also read: PSD2 Regulation Update – Transition Period Ending 2 March 2026, What You Need to Know

The crypto connection and MiCAR

The relevance of the EMI license has surged with the rise of the crypto industry. Many crypto businesses utilise an EMI license to provide fiat on-ramps and off-ramps, allowing users to exchange traditional currency for digital assets. Furthermore, under the new MiCAR regulation, stablecoin issuers (specifically e-money tokens) are generally required to be licensed as either a bank or an Electronic Money Institution. Achieving full MiCAR compliance ensures that the digital asset space operates with the same level of consumer protection as traditional electronic payments.

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AEMI vs. SEMI: choosing the right tier

When applying for a license, particularly within the European Economic Area (EEA), applicants must choose between two primary categories based on their projected transaction volume and geographic goals.

Authorised EMI (AEMI)

The Authorised EMI is the gold standard for fintech companies aiming for global or pan-European reach. It is designed for large-scale operations and offers the following advantages:

• Unrestricted transaction volumes and no limit on the amount of e-money issued;
• The right to passport services across all EEA member states without needing separate licenses in each country;
• Higher prestige and trust among international banking partners;
• An initial capital requirement that is typically set at a minimum of EUR 350,000;

Small EMI (SEMI)

The Small EMI (or Registered EMI) is a lite version of the license intended for startups or companies focusing on a specific local market. The regulatory burden is lower, but the limitations are significant:

• The average outstanding electronic money must not exceed a certain threshold, usually EUR 5 million;
• The license is generally restricted to the country of issuance, meaning no passporting rights;
• Initial capital requirements are often much lower than the AEMI tier;
• It serves as an excellent regulatory sandbox for proof-of-concept projects before upgrading to a full AEMI.

Related reading: How to Ensure Your Crypto Business Aligns With PSD2 Compliance in 2026

How it works: key operational requirements

Operating an EMI is not just about the license acquisition. It requires maintaining a rigorous operational standard that satisfies the ongoing scrutiny of financial regulators. Companies looking to facilitate these operations often collaborate with established payment service providers to ensure robust infrastructure.

Safeguarding funds

The most critical legal requirement for any EMI is the safeguarding of customer funds. Because EMIs are not covered by traditional national deposit insurance schemes (like the ones that protect bank accounts), they must ensure that user money is entirely segregated from the company’s own operational capital. This is achieved in two ways:

1. Segregation: Customer funds are held in a dedicated safeguarding account at a traditional credit institution;
2. Insurance/Guarantee: The institution secures an insurance policy or a bank guarantee that covers 100% of the customer funds in the event of the EMI’s insolvency.

EU passporting rights

One of the most powerful features of an EMI license obtained in an EU member state (such as Malta, Lithuania, or Cyprus) is the ability to passport. Once the license is granted, the EMI can notify its home regulator of its intent to provide services in other EU countries. This allows the company to operate across the entire European single market without the need to establish physical branches or obtain local licenses in every jurisdiction.

IT and security (DORA)

Innovation brings new risks, and regulators are responding with the Digital Operational Resilience Act (DORA). For EMIs, this means an increased emphasis on ICT risk management. Institutions must now prove they have robust systems for:

• Incident reporting and management;
• Digital operational resilience testing;
• Managing third-party ICT service provider risks;
• Advanced cybersecurity protocols to prevent data breaches and financial fraud.

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How to obtain an EMI license (the process)

The journey to obtaining an EMI license is a structured process that requires significant preparation, financial backing, and legal expertise.

Step 1: jurisdiction selection

The first step is deciding where to apply. Each jurisdiction offers different advantages. Lithuania has long been a favourite for its fintech-friendly environment and fast processing times. Malta offers a prestigious financial ecosystem with a strong focus on blockchain integration. Cyprus is often chosen for its favourable tax regime and proximity to Middle Eastern markets.

Step 2: capital requirements

For a full AEMI, the standard initial capital requirement is EUR 350,000. These funds must be fully paid up and must originate from legitimate, provable sources. Regulators will conduct a deep dive into the source of wealth for the shareholders to ensure compliance with Anti-Money Laundering (AML) standards. This level of scrutiny is comparable to that of an investment license application.

Step 3: documentation and personnel

The application package is extensive and typically includes:

• A Program of Operations: A detailed description of the intended services and how they will be executed;
• Business Plan: A 3-year financial forecast detailing expected growth and sustainability;
• Fit and Proper Testing: Extensive background checks for all directors, shareholders, and key personnel;
• Local Presence (Mind and Management): Regulators require the company to have a physical office and key decision-makers (such as the CEO, Compliance Officer, and MLRO) resident in the country of licensing;
• Dual Control: Implementation of the four-eyes principle, where major decisions and financial transactions require at least two authorised individuals.

Step 4: timeline and costs

Obtaining an EMI license is a marathon, not a sprint. The typical timeline ranges from 6 to 12 months, depending on the responsiveness of the regulator and the complexity of the business model. Total costs can be substantial, often ranging from EUR 250,000 to over EUR 1,000,000 when accounting for legal fees, initial capital, local office setup, and the hiring of specialised personnel.

Conclusion

The strategic value of an EMI license cannot be overstated for any company looking to dominate the fintech space. It provides the legal authority to move money globally, issue payment cards, and build a loyal user base without the heavy regulatory weight of a full banking license. However, the path to compliance is demanding and requires a partner who understands the nuances of financial law.

Protecting your investment and ensuring a smooth licensing process is our priority. At LegalBison, we provide the expertise needed to turn complex regulations into a competitive advantage.

Ready to launch your fintech? Contact LegalBison for a free assessment of your EMI eligibility.

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