What happens to your money if an EMI fails? Safeguarding, explained
E-money isn't covered by a deposit guarantee scheme. If an electronic money institution (EMI) fails, a separate regime called safeguarding is what stands between you and your balance, and it works nothing like the €100,000 cover on a bank deposit.
Safeguarding is the legal mechanism that protects the money you hold with an electronic money institution (EMI) if that institution fails. It works differently from the deposit guarantee scheme that sits behind a bank account. In the EU, deposit guarantee schemes cover eligible bank deposits up to €100,000 per person, per institution, and they do not cover e-money. An EMI instead has to ring-fence customer funds so they sit apart from the firm's own money and can be returned to customers in an insolvency, with no statutory cap on the amount, though the costs of running that insolvency can be deducted before funds are returned.TL;DR
- E-money held at an EMI is not covered by a deposit guarantee scheme. A different regime, safeguarding, applies.
- Deposit guarantee schemes in the EU cover eligible bank deposits up to €100,000 per depositor, per institution. Safeguarding has no statutory cap and covers the full pool of customer funds.
- Safeguarding is not an insurance-style payout. In a failure, an administrator or liquidator returns identified customer funds, and insolvency costs can be deducted first, so the timeline is longer and recovery may be less than the full balance.
- Two dated cases show how this plays out: Intergiro (Sweden, 2025) and Guavapay (UK, 2025–26).
- Before you onboard, ask which safeguarding method a provider uses and where the funds sit.
What is safeguarding?
Safeguarding is the requirement, under the EU E-Money Directive (Directive 2009/110/EC, "EMD2") and the Payment Services Directive (PSD2), for an EMI to protect the customer funds it holds, known as relevant funds, so they are not exposed to the firm's own creditors if it fails.An EMI can meet the requirement in one of two ways. It can segregate relevant funds, holding them in a separate account at a credit institution or investing them in secure, low-risk assets, kept apart from its operating money. Or it can cover the funds with an insurance policy or a comparable guarantee from an authorised insurer or credit institution. Firms reconcile these funds regularly so the amount held matches what customers are owed.The point of the mechanism is narrow and specific: keep customer money outside the firm's insolvency estate so it can be identified and returned, rather than swept up with everything else the firm owes.Why deposit guarantee schemes don't cover e-money
E-money is not a deposit, and an EMI is not a bank. Deposit guarantee schemes exist to protect deposits at credit institutions. In the EU, the Deposit Guarantee Schemes Directive (Directive 2014/49/EU) sets a harmonised cover level of €100,000 per depositor, per credit institution. EMIs don't take deposits and don't lend against customer balances, so they sit outside that framework. Safeguarding is the substitute, and the two work on different logic.)
What actually happens when an EMI fails
Two recent, regulator-documented cases show the mechanics in practice.Intergiro Intl AB (publ), a Swedish EMI, had its authorisation to issue electronic money withdrawn by Sweden's financial supervisor, Finansinspektionen, on 18 June 2025, over serious anti-money-laundering failings. The regulator ordered the business wound down, and the company was declared bankrupt on 31 July 2025 (Finansinspektionen decision, June 2025). As an EMI, Intergiro was not part of a deposit guarantee scheme, so customer balances fell to the safeguarding and wind-down process rather than to scheme compensation.Guavapay Limited, a UK e-money institution, agreed a voluntary requirement with the Financial Conduct Authority (FCA) on 17 September 2025 that restricted its activity, then entered compulsory liquidation on 21 January 2026. The FCA's own guidance to customers was blunt about the position: the Financial Services Compensation Scheme does not cover payment services, safeguarding is the protection that applies, and the liquidators would return identified customer funds subject to the deduction of costs (FCA, January 2026). The UK operates its own e-money rules (the Electronic Money Regulations 2011), so the scheme names differ from the EU, but the underlying model, safeguarding rather than deposit cover, is the same.Neither case is offered here as a comparison or a recommendation. They are the clearest public record of how the regime behaves when a firm stops operating.Segregation vs insurance-based safeguarding
Both methods are legal under EMD2 and PSD2, and they fail differently, which is why it's worth knowing which one covers you.Under the segregation method, relevant funds sit in a separate account at a credit institution, or in secure low-risk assets, kept apart from the firm's own money. If the EMI fails, the administrator works out which funds in that pool belong to customers and distributes them. Recovery depends on the pool reconciling cleanly and on the costs of the process.Under the insurance or guarantee method, an insurance policy or comparable guarantee is meant to pay out to cover customer funds if the firm fails. Here the question shifts to the strength and terms of that policy and the insurer behind it.The practical takeaway is a single question worth asking any provider: which method do you use, and where do the funds sit?)
Five questions to ask any EMI before you onboard
- Which safeguarding method do you use, segregation or insurance and guarantee? A good answer names one of the two clearly. A weak answer is vague, or conflates safeguarding with deposit guarantee cover.
- Which credit institution holds the safeguarded funds, and in which country? A good answer names the arrangement and the jurisdiction. A weak answer treats it as confidential with no explanation.
- How often are safeguarded funds reconciled? A good answer describes a regular, documented reconciliation. A weak answer can't say, or points only to an annual audit.
- Who is your regulator, and what is your licence number? A good answer gives the supervisor and a registration number you can check on a public register. A weak answer gestures at being "regulated" without specifics.
- In an insolvency, what costs could be deducted before funds are returned, and who runs that process? A good answer acknowledges that administration costs can be deducted and explains who would manage the return. A weak answer implies the balance is guaranteed in full.
How to map your accounts in an hour
Build a two-column list of every provider you hold money with, and next to each, its protection mechanism. The exercise takes about an hour and tends to surface at least one account nobody had thought about.For each row, note the regulator and licence number, and where the funds sit. When you're done, you can see at a glance which balances are capped, which are safeguarded, and which you can't yet account for. The gaps are the follow-ups.For instance:)
Who holds your funds can change under you
Ownership of payment providers moves through mergers and acquisitions, and the entity holding your money can change without you moving a euro. In June 2026, Nuvei agreed to acquire Payoneer for about $2.75 billion, announced 15 June 2026 and expected to close in mid-2027. When a provider is acquired, restructured or re-licensed, the legal entity behind your account, and the protections attached to it, can shift. That's a reason to treat account mapping as a periodic review rather than a one-off.Where Narvi stands
If you're carrying out due diligence on Narvi, you can review the EMI licence and permissions, read about Narvi Payments, or open a dedicated euro IBAN account. To ask the five questions above directly, talk to the Narvi team.Frequently Asked Questions
Neither is simply safer than the other; they protect money through different mechanisms with different trade-offs. A bank deposit is covered by a deposit guarantee scheme up to €100,000, paid out quickly. E-money at an EMI is safeguarded with no statutory cap on the amount, but recovery in a failure runs through an insolvency process, can take longer, and may have costs deducted first. The right choice depends on your balances and priorities.
There's no fixed timeline. Unlike a deposit guarantee scheme, which aims to pay a capped amount within days, safeguarded funds are returned by an administrator or liquidator once they've identified which money belongs to customers. That process is typically longer, and administration costs can be deducted from the pool before funds are returned, so recovery may be less than the full balance.
No. The Markets in Crypto-Assets Regulation (MiCA) governs crypto-asset services, and its transitional period for crypto-asset service providers ended on 1 July 2026. It is a separate regime from EMD2 e-money safeguarding. A firm can be authorised under one and not the other, so a MiCA reference tells you about crypto-asset services, not about how your e-money balance is protected. Check the e-money licence and the safeguarding arrangement separately.
Both must safeguard customer funds under EU rules, and neither is a bank. The main difference is that an EMI can issue electronic money (a stored balance you can spend), while a payment institution provides payment services without issuing e-money. For safeguarding purposes, the protection mechanism is broadly the same; the licences differ in what the firm is permitted to do.
Yes. Safeguarding has no statutory cap on the amount protected, but it isn't an insurance-style guarantee of full return. When an EMI enters insolvency, the administrator or liquidator can deduct the costs of the process from the safeguarded pool before returning funds to customers, so the amount you receive may be less than your balance.
Originally published July 10, 2026DisclaimerThis publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Narvi Payments Oy Ab or its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
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Ratkaisut
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