What Is an EMI License?

What Is an Electronic Money Institution (EMI)?

Electronic Money Institutions are regulated financial entities authorized under an emi license to provide payment services and hold client funds in segregated safeguarding accounts. In simple terms, when asking what is an emi license, it refers to the official approval that allows such institutions to issue electronic money and operate legally. EMIs are generally more flexible than traditional banks, offering faster onboarding, simplified documentation procedures, and remote account opening without the need for physical presence. Clients can obtain an IBAN within a short timeframe and immediately start sending and receiving payments in a secure digital environment.

Broadly speaking, the concepts behind emi license meaning relate to companies that specialize in electronic money issuance and payment infrastructure. Many well-known fintech brands operate under an emi banking license framework (although technically distinct from a bank license), enabling them to provide wallets, card programs, and transfer services. Their activities must comply with strict emi license requirements, including safeguarding of funds and AML controls

Core Services EMIs Provide

Electronic Money Institutions typically offer a wide range of digital financial services, including:

• Issuing electronic wallets

• Providing dedicated IBAN accounts

• Enabling domestic and international transfers

• Offering prepaid or debit card programs

• Processing merchant payments

• Supporting fintech platforms with payment infrastructure

• Currency exchange services

  
  

An emi license allows companies to deliver these services across selected jurisdictions, depending on regulatory scope and passporting rules.

EMI vs Bank (One Clear Comparison Block)

Although EMIs and banks may appear similar to customers, their legal status differs significantly. The term emi banking license is sometimes used informally, but EMIs do not hold a full banking license.

Differences	Bank Account	EMI Account
Purpose of Opening an Account	A bank account is a financial account maintained by a bank or other financial institution, where financial transactions between the bank and the client are recorded. A bank account may be savings, current, credit, or any other type offered by the institution.	An EMI account is an alternative to a traditional bank account for companies that prefer a faster and more flexible solution or face difficulties opening an account with a bank. It provides a functional equivalent for sending and receiving electronic payments.
Storage of Funds	✅ A bank is authorized to maintain current accounts and hold client funds without limitation.	✅ An EMI is authorized to maintain payment accounts and safeguard client funds in segregated accounts as required by regulation.
Provision of Credit Products (mortgages, overdrafts, business loans, factoring, credit cards)	✅ Banks are authorized to provide lending and credit products.	❌ EMIs cannot provide loans or credit products. They may issue prepaid or debit cards only.
Opening Deposit Accounts	✅ Banks may open deposit accounts.	❌ EMIs are not allowed to accept deposits.
Acceptance of Online Payments (Payment Processing)	✅ Banks may provide merchant acquiring services either directly or through affiliated entities.	✅ Some EMIs provide online payment acceptance services

EMI License Types

In the European Union, the regulatory framework distinguishes between Small Electronic Money Institutions (SEMI) and Authorized Electronic Money Institutions (AEMI). What is the difference between these two licenses?

Full (Authorized) EMI

An AEMI (Authorized Electronic Money Institution) license requires minimum initial capital to be paid up prior to authorization. In addition, you will need to provide detailed information on how you will ensure the safety of user funds, as well as information on shareholders and a management team that meets regulatory requirements, typically including at least two qualified directors and appropriate key function holders. Obtaining an AEMI license takes longer and can take up to 7 months. However, after all the procedures, you will be authorized to provide payment services and issue electronic money within the scope of your regulatory approval.

This option is suitable for fintech companies aiming to operate internationally and offer comprehensive digital payment solutions.

It is important not to confuse financial authorization with an emi mechanical license, which relates to music copyright royalties and has no connection to financial regulation.

Small EMI

A Small EMI license is designed for startups or companies with limited turnover. A SEMI (Small Electronic Money Institution) license allows limited provision of payment services and e-money issuance with reduced capital requirements, but AML compliance obligations still apply. Obtaining a Small EMI is faster: the average licensing time is 3 to 4 months. The restrictions are on the amount of money for which the business can provide payment services or the amount of money issued. Under the EU framework, Small EMI status generally applies where average outstanding e-money does not exceed €5,000,000, and additional thresholds and limitations may apply depending on jurisdiction and local implementation of the EMD framework.

Many fintech businesses begin with this model before expanding and applying for full authorization once operations scale.

Agents & Distributors (How They Work)

The e-money ecosystem includes not only e-money institutions themselves, but also e-money agents and e-money distributors. The involvement of agents and distributors increases access to financial services. It also provides these third parties with a less complex route into the e-money market than setting up a licensed EMI.

These entities operate under a “principal-agent” model, acting on behalf of a licensed EMI. 

Emi agents do not need a license. Agents may perform specific activities explicitly delegated by the licensed EMI, but always act on behalf of and under the responsibility of the principal EMI. In particular, this means that registered agents may assist in onboarding, but payment accounts are legally opened and held by the licensed EMI; the accounts of customers belong to the primary EMI. In turn, distributors can distribute and/or redeem e-money, but cannot provide payment services. EMI distributors can include corner shops or gas stations that sell prepaid e-money products.

Key EMI License Requirements

Obtaining authorization involves a detailed regulatory review. The emi license requirements vary depending on jurisdiction but generally cover capital adequacy, governance standards, compliance procedures, and operational readiness.

Capital & Safeguarding of Client Funds

Applicants must demonstrate sufficient initial capital and maintain safeguarding mechanisms to protect customer funds. Typically, client money must be held in segregated accounts with reputable financial institutions or covered by insurance arrangements.

Regulators carefully assess financial projections and liquidity management before granting an emi license. The capital requirements for EMIs vary by jurisdiction and the specific activities of the institution. For example, in the European Union (EU), EMIs are required to maintain a minimum capital requirement of €350,000. This capital must be fully paid up and unencumbered and must be sufficient to cover the institution's operating costs and risks.

Governance (Fit & Proper, Management, Ownership)

Directors and shareholders must satisfy “fit and proper” criteria. Authorities review professional experience, reputation, and transparency of ownership structure.

A clearly defined management framework and internal control system are essential components of successful EMI authorization.

AML/CTF & Compliance Framework

The applicant must demonstrate compliance with relevant regulations, including anti-money laundering (AML) and know-your-customer (KYC) requirements.

Operational Readiness (IT, Security, Reporting, Outsourcing)

Applicants must prove technological capability and operational preparedness. This includes secure IT infrastructure, cybersecurity safeguards, data protection measures, and reliable regulatory reporting systems.

Even when outsourcing certain functions, the licensed EMI remains fully responsible for compliance and oversight.

Real-World EMI Examples

Wallet + Account/IBAN Setup

Many fintech platforms operate under an emi license to provide users with digital wallets and individual IBAN accounts. Customers can send and receive payments globally while their funds are safeguarded in segregated accounts rather than used for lending activities.

A well-known example of this model is Wise, which offers multi-currency accounts with local IBAN details in different jurisdictions. Similarly, Revolut initially operated under an EMI authorization in several jurisdictions before obtaining banking licenses in certain markets. 

Card Program Model

Companies frequently launch prepaid or debit card programs linked to electronic wallets. In this structure, the institution operating under an emi license issues electronic money and maintains customer balances, while international card schemes process transactions and enable global acceptance.

A practical example of this model is Payoneer, which provides business clients with multi-currency payment accounts and prepaid Mastercard cards connected to their balances.

Users can receive funds from international marketplaces, withdraw money to local bank accounts, or spend directly using their issued cards.

Payments for Merchants (PSP Use Case)

Some EMIs provide acquiring or payment initiation services similar to PSPs, depending on their authorization scope. At the same time, not all PSPs are authorized to open payment accounts for clients, as this depends on the scope of their regulatory authorization.A practical example is Unlimit, which combines EMI infrastructure with merchant acquiring solutions to support online businesses globally. 

EMI License FAQ

Who Needs an EMI License?

Any company intending to issue electronic money, operate digital wallets, provide IBAN accounts, or process regulated payment services requires an emi license. Conducting such activities without proper authorization may lead to regulatory penalties.

Is an EMI License the Same as a Bank License?

No. Despite the informal term emi banking license, EMIs cannot accept deposits for lending or offer traditional credit products. Their activities are limited to electronic money issuance and payment services.

What Are EMI Agents and When Do You Need Them?

EMI agents may resell/promote EMI services, which has authorized them to do so. This model is useful for expanding into new markets or increasing distribution channels without establishing additional licensed entities.