Overview
Electronic money is monetary value stored electronically, issued on receipt of funds and accepted by third parties as a means of payment. In the European Economic Area, any firm that issues it must be a credit institution or an authorised EMI under the Second Electronic Money Directive (EMD2), implemented separately in each Member State. An EMI may also provide the payment services listed in PSD2, such as payment accounts, transfers, card issuing and acquiring, and, with additional safeguards, account information and payment initiation services. What an EMI may not do is take deposits or lend customer funds: money received from clients must be safeguarded, not used to finance the business.
The harmonised core is consistent across the EU: EUR 350,000 of initial capital for a full licence, ongoing own funds linked to the e-money in circulation, fit and proper management and shareholders, a credible business plan, robust AML/CFT controls, ICT resilience under DORA, and a genuine head office in the licensing state. Differences lie in supervisory culture, pre-application dialogue, fees, small or restricted licences, language and access to payment infrastructure. Because a licence can be passported across the EEA, the choice of home regulator matters more than the choice of market.
The United Kingdom has run its own regime since leaving the EU. The FCA authorises EMIs under the Electronic Money Regulations 2011, with the same EUR 350,000 capital floor for an authorised EMI and a small EMI category for firms with average outstanding e-money of no more than EUR 5 million. A UK licence no longer gives access to EU customers, and from 7 May 2026 UK firms operate under a tighter safeguarding regime including monthly reporting, daily checks and annual safeguarding audits.
The framework itself is about to change. The EU's PSD3 and Payment Services Regulation reached political agreement in November 2025 and final compromise texts were published in April 2026, with formal adoption and Official Journal publication expected around the turn of 2026 and 2027. Under the agreed approach, EMD2 is repealed and e-money issuance becomes a service within a single payment institution licence. Existing EMIs will need to be re-authorised within a transition window, and safeguarding will move from the current five business days to the end of the business day following receipt. Any firm applying today should build its programme of operations with PSD3 in mind.
Key benefits
- Issue e-money, operate payment accounts and IBANs, and offer cards, wallets and transfers without a banking licence
- Passport services across the EEA from a single EU authorisation through a notification procedure
- Hold client funds directly under a regulated safeguarding framework that protects users in insolvency
- Apply for direct or indirect access to payment systems such as SEPA schemes through central bank or sponsor arrangements
- Lower capital and lighter prudential rules than a credit institution, with no deposit-taking risk on the balance sheet
- A regulated status that supports banking partnerships, card scheme membership and institutional investment
- A clear path into the single payment institution licence that PSD3 will introduce
Requirements
- Initial capital of EUR 350,000 for a full EU EMI, fully paid up and of verifiable lawful origin
- Ongoing own funds of at least 2% of average outstanding e-money, plus PSD2 methods for other payment services
- Registered office and head office in the licensing state, with management that genuinely runs the business locally
- Fit and proper directors and senior managers with payments, compliance and risk experience
- A realistic programme of operations and three-year business plan with financial forecasts
- Safeguarding arrangements for client funds: segregated accounts, secure liquid assets, or insurance or guarantee
- AML/CFT framework: business-wide risk assessment, customer due diligence, transaction monitoring, sanctions screening and a named MLRO
- ICT, security and outsourcing controls aligned with DORA, plus business continuity and wind-down planning
Licence options & capital
Lithuania
EUR 350,000 (restricted licence available)
Bank of Lithuania; three-month statutory review for a full licence and two months for a restricted, Lithuania-only licence capped at EUR 900,000 average monthly outstanding e-money. Established fintech ecosystem and access to the central bank's CENTROlink payment system, with close supervisory focus on AML and capital.
Latvia
EUR 350,000 (registered EMI with no minimum)
Latvijas Banka; published EUR 5,000 application fee, free pre-application consultation, a three-month substantive review and a reduced fee for innovative-only services. A registered EMI regime exists for closed, Latvia-only models up to EUR 2 million average e-money.
Cyprus
EUR 350,000
Central Bank of Cyprus, with a dedicated EMI and PI supervisory directorate. Since 3 August 2026, a mandatory pre-application exploratory stage (EUR 5,000) precedes a formal application, whose fee rose to EUR 10,000. Real local substance is expected.
Netherlands
EUR 350,000
De Nederlandsche Bank; three-month statutory period from a complete file, a structured ten-step process, rigorous fit and proper screening and a detailed systematic integrity risk analysis (SIRA). Day-to-day policymakers must work substantially from the Netherlands.
Spain and Poland
EUR 350,000
Banco de España authorises EMIs under Law 21/2011, with a three-month deadline and refusal by silence; Poland's KNF authorises national EMIs under the Payment Services Act. Both suit firms targeting large domestic markets with local-language teams.
United Kingdom
EUR 350,000 (authorised EMI)
FCA under the Electronic Money Regulations 2011; small EMI registration up to EUR 5 million average outstanding e-money. No EU passport, and an enhanced safeguarding regime in force since 7 May 2026.
Step-by-step process
- 1
Jurisdiction and model review
We map your products, flows of funds, target markets and ownership against each regime to select the home state and the right licence class.
- 2
Pre-application dialogue
Where the regulator offers it, we prepare a concise business presentation for consultation meetings, or for the formal exploratory stage now required in Cyprus.
- 3
Incorporation and substance
A local company is formed, initial capital is evidenced, and key people, premises and outsourcing partners are put in place.
- 4
Application file
Business plan, financial forecasts, safeguarding design, AML/CFT manual, ICT and DORA documentation, governance policies and personal questionnaires are prepared and submitted.
- 5
Regulatory review
We coordinate responses to the regulator's questions and interviews; each information request usually pauses the statutory clock.
- 6
Authorisation and launch
After the licence is granted, passporting notifications, safeguarding accounts, payment system access and ongoing reporting are set up.
Typical documents
- Programme of operations and three-year business plan with financial forecasts
- Evidence of paid-up initial capital and its source of funds
- Ownership chart down to ultimate beneficial owners, with qualifying holder questionnaires
- CVs, criminal record certificates and fit and proper forms for directors and key function holders
- Safeguarding policy and flow of funds diagram
- AML/CFT and sanctions policy, business-wide risk assessment and MLRO appointment
- ICT security, incident management and business continuity documentation aligned with DORA
- Recovery, wind-down and exit plan
How Legal Wealth helps
Legal Wealth approaches every EMI project from the compliance side first: we help you choose a jurisdiction on the basis of your real operating model, ownership and long-term plans rather than on headline timelines, and we build an application file that a supervisor can test line by line. We coordinate incorporation, capital evidence, local substance, safeguarding banks and the AML framework, handle shareholder information with strict discretion, and plan ahead for PSD3 re-authorisation so the licence remains an asset for the long term. Each engagement is scoped individually; contact info@legalwealthglobal.com to arrange a confidential discussion.
Enquire with Legal WealthFrequently asked questions
What is the difference between an EMI and a payment institution?
A payment institution executes payments but cannot issue stored value. An EMI can issue e-money, which lets customers hold balances, and may also provide payment services. Under PSD3 the two categories will merge into a single payment institution licence, with e-money issuance as one of the authorised services.
How much capital do I need?
For a full EU EMI, at least EUR 350,000 of initial capital, plus ongoing own funds of at least 2% of average outstanding e-money. Some countries offer restricted or registered regimes with lower or no initial capital, but these are limited to the domestic market. Regulators also expect enough working capital to cover the business plan.
How long does authorisation take?
Most regimes set a three-month statutory period from a complete application, but the clock pauses every time the regulator asks for more information. Including preparation, a realistic end-to-end timeline is usually six to twelve months, sometimes longer for complex models.
Can a UK EMI serve EU customers?
Not on a passported basis. Since Brexit, UK EMIs need a separate authorisation in an EU Member State to serve EEA clients, and EU EMIs need FCA authorisation to serve UK clients.
How will PSD3 affect a licence obtained now?
Under the agreed texts, existing EMIs must apply for authorisation under the new regime within about 21 months of PSD3 entering into force, and may continue operating during the transition. Firms that already meet the new requirements may be authorised on the basis of information the regulator already holds. Safeguarding timelines and wind-down planning become stricter.
Do I need staff in the licensing country?
Yes. Every regime requires the head office to be in the licensing state, and supervisors expect senior management, compliance and AML functions to operate there. Nominee arrangements are not accepted.
Last reviewed: 2026-10. Requirements, fees and timelines change. Information is general, reviewed on the date shown, and is not legal or tax advice.
Sources
- Bank of Lithuania – Authorisation of electronic money institutions
- Latvijas Banka – Licensed electronic money institution
- FCA – Apply to become an electronic money or payment institution
- Clifford Chance – Impact of PSD3: are you ready? (April 2026)
- Cyprus Mail – Central bank introduces new pre-licensing stage (July 2026)
