E-money institution (EMI)

An e-money institution (EMI) is a company authorised under the EU's E-Money Directive to issue electronic money and provide payment services. It can hold client funds and run payment accounts with IBANs, but it can't lend those funds out, pay interest on them or offer deposit guarantee cover. Client money is safeguarded instead.

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What an EMI can do

An EMI's core activity is issuing electronic money. When a client pays in funds, the EMI issues the same amount as e-money, and the client can spend it or redeem it at par value at any time.An EMI can also provide the payment services listed in the Payment Services Directive (PSD2). In practice, that means running payment accounts, executing credit transfers such as SEPA, SEPA Instant and SWIFT payments, and issuing payment cards. A business account at an EMI usually comes with an IBAN in the company's own name, so it receives and sends payments like any other account.
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What an EMI can't do

An EMI can't take deposits. Deposit-taking is reserved for credit institutions, which is the legal term for banks.It can't lend out the money its clients hold. The E-Money Directive (Article 6) lets an EMI offer credit only as a side service to payments, such as a credit line on a payment card, and only under the conditions PSD2 sets in Article 18(4):
  • the credit is ancillary and granted only in connection with executing a payment transaction
  • it's repaid within a short period, never longer than 12 months
  • it isn't funded from money received to execute payments or in exchange for e-money
  • the EMI's own funds stay appropriate for the total credit it has granted, as judged by its supervisor
Consumer credit rules apply on top of these where the borrower is a consumer.It can't pay interest on e-money balances. The E-Money Directive prohibits it.And its clients aren't covered by a deposit guarantee scheme, which protects bank deposits up to EUR 100,000 per depositor. EMI clients are protected through safeguarding instead: client funds are kept apart from the EMI's own money, in segregated accounts at credit institutions or in secure, low-risk assets, so they stay out of reach of the EMI's creditors if it fails. Our article on what happens to your money if an EMI fails explains this from a client's point of view.
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Payment services an EMI can offer

Alongside e-money issuance, an electronic money institution can be authorised for any of the payment services in PSD2, including unrelated payment services that have nothing to do with the e-money it issues:
  • running payment accounts, including multi-currency accounts, and handling cash placed on or withdrawn from them
  • executing payment transactions: credit transfers, direct debits and card payments
  • issuing payment instruments, such as cards, and acquiring payment transactions for merchants
  • money remittance
  • payment initiation services, which initiate payments from an account held elsewhere at the user's request
  • account information services, which collect and show data from a user's accounts at other providers
The supervisor authorises each service separately, so an EMI's licence lists exactly what it may do. The register entry shows that list too.
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EMI vs bank vs payment institution

Bank (credit institution)E-money institutionPayment institution
Takes depositsYesNoNo
Issues e-moneyYesYesNo
Provides payment servicesYesYesYes
How client money is protectedDeposit guarantee, up to EUR 100,000 per depositorSafeguardingSafeguarding
Lends to clientsYesOnly payment-linked credit, never from client fundsOnly payment-linked credit, never from client funds
Pays interest on balancesCanNoNo
Minimum initial capitalEUR 5 millionEUR 350,000EUR 20,000 to 125,000, depending on services
The differences between an EMI and a bank in practice come down to these rows: what happens to your money, and what you can and can't do with it.
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How to get an EMI licence

An EMI licence (often spelled EMI license) is an authorisation from the national competent authority of the EU or EEA country where the firm has its head office. In Finland, that's FIN-FSA; in Ireland, the Central Bank of Ireland; in Lithuania, the Bank of Lithuania. The firm must be a legal person with its head office, and at least part of its e-money business, in the country that licenses it.The application has to show that the firm can run an e-money business soundly from day one. Supervisors typically ask for:
  • a programme of operations, describing the e-money and payment services the firm will offer
  • a business plan with financial projections for the first three years
  • proof of initial capital of at least EUR 350,000
  • a description of the safeguarding arrangements for client funds
  • governance arrangements and internal control mechanisms, including risk management and accounting procedures
  • an anti-money laundering and counter-terrorist financing programme
  • data protection measures, including how the firm will monitor, handle and restrict access to sensitive payment data
  • arrangements for collecting statistical data on performance, transactions and fraud
  • a security policy and an assessment of operational and security risks
  • business continuity arrangements and a description of any outsourcing, agents or distributors
  • the identity of anyone with a qualifying holding, or able to exercise significant influence over the firm, and proof that they're suitable
  • the identity of directors and key function holders, with evidence that they're fit and proper
The supervisor must decide within three months of receiving a complete application. In practice, the whole process often takes longer, because the clock only starts once the file is complete and supervisors usually come back with questions. Firms also need a banking partner willing to open safeguarding accounts before they can be authorised.
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Capital and own funds

Initial capital is the minimum a firm needs to hold when it's authorised: EUR 350,000 for an EMI. After that, it must hold own funds that grow with the business. For e-money, the E-Money Directive sets them at no less than 2% of the average outstanding e-money (Method D). Where the EMI also provides payment services unrelated to issuing e-money, own funds for those services are calculated under the PSD2 methods and added on top. Own funds can never fall below the initial capital.
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Small EMIs and passporting

Member states can let smaller firms operate under a lighter small EMI regime if the e-money they have outstanding stays below a limit, set nationally at no more than EUR 5 million on average. Small EMIs can't operate outside their home country.A fully authorised EMI can passport its licence across the EEA. After notifying its home supervisor, it can serve clients in other member states directly or through branches, without a separate licence in each.
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The UK EMI licence

In the UK, the Financial Conduct Authority authorises EMIs under the Electronic Money Regulations 2011. The structure is similar to the EU's: an authorised EMI needs initial capital of at least EUR 350,000 and safeguarding arrangements, and a small EMI regime exists for firms with average outstanding e-money of no more than EUR 5 million. Since Brexit, UK and EU licences no longer passport into each other, so a firm that wants to serve clients in both markets needs authorisation in each.
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Alternatives to your own EMI licence

Applying for a licence takes capital, people and time, and it brings ongoing supervision. Many companies that need payment accounts or IBANs for their clients work with a licensed institution instead, as an agent or distributor or through a Banking-as-a-Service model, where the licensed partner holds the client funds and runs compliance while the company builds the product.
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What changes under PSD3

In November 2025, EU lawmakers reached a provisional agreement on a new Payment Services Directive (PSD3) and a Payment Services Regulation. Under it, the E-Money Directive is folded into PSD3 and e-money institutions become a type of payment institution, licensed under one framework. Existing EMIs and payment institutions are expected to go through a transitional process to confirm they meet the new rules. At the time of writing, the texts were still going through formal adoption, with the new rules expected to apply around 2028.
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How to check whether a firm is an authorised EMI

Every EU supervisor keeps a public register of the institutions it authorises. In Finland, that's FIN-FSA (Finanssivalvonta). The European Banking Authority also runs a central register of payment and e-money institutions across the EU. A firm that calls itself an EMI should appear in both.
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Example: Narvi

Narvi Payments Oy Ab is an e-money institution authorised and supervised by FIN-FSA in Finland, business ID 3190214-6. It provides business accounts with dedicated IBANs and SEPA, SEPA Instant and SWIFT payments to companies across the EEA.
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FAQ

No. An EMI can't take deposits or lend client funds, and its clients aren't covered by a deposit guarantee scheme. It's authorised under a different licence, with safeguarding protecting client money instead.

Client funds at an EMI must be safeguarded: kept separate from the EMI's own money and protected from its creditors if it becomes insolvent. That's a different protection from the deposit guarantee that covers bank deposits.

Yes. EMIs run payment accounts, and a business account at an EMI usually has an IBAN in the company's own name. It works for receiving and sending SEPA and SWIFT payments like any other IBAN.

At least EUR 350,000 in initial capital, and then own funds of at least 2% of average outstanding e-money, plus more for any other payment services.

The supervisor must decide within three months of a complete application, but preparing the file and answering questions usually makes the full process longer.

Both can provide payment services and both safeguard client funds. Only an EMI can issue e-money, which is why it needs more initial capital: EUR 350,000, against EUR 20,000 to 125,000 for a payment institution.

A fully authorised EMI can passport its licence to other EEA countries after notifying its home supervisor. Small EMIs can't.
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Related terms and sources

Electronic money · Safeguarding account · FIN-FSA · Qualifying holding · Payment service provider · Verification of Payee · Browse the full glossary
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Last reviewed November 2, 2026Disclaimer
This 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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Narvi Payments Oy Ab is an Authorized Electronic Money Institution (EMI). Narvi’s EMI license is granted by the Finnish Financial Supervisory Authority (FIN FSA) with the registration number 3190214-6. Narvi’s license is passportised to all European Union countries.
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