What an electronic money institution may do
An electronic money institution issues e-money at face value when it receives funds, and must redeem the balance at face value whenever the holder asks (E-Money Directive, Article 11). It may also provide payment services such as transfers, card issuing and acquiring (Article 6).
An EMI is not a bank. In the EU it may not take deposits, the funds it receives are not deposits, and it may not grant interest or any other benefit tied to how long a balance is held (Articles 6 and 12). It safeguards the funds it receives instead.
Capital, and where the licence is valid
- EU: initial capital of at least EUR 350,000 (E-Money Directive, Article 4).
- EU: own funds of at least 2% of average outstanding e-money (Article 5).
- EU: one authorisation is valid in every Member State, after a notification through the home authority (PSD2, Articles 11 and 28).
- EU, where a Member State offers it: a lighter regime up to EUR 5 million of average outstanding e-money, without that cross-border right (Article 9).
- UK: an authorised EMI holds at least EUR 350,000, a figure the regulations set in euro (Schedule 2).
- UK: a small EMI has at most EUR 5 million of average outstanding e-money, and holds 2% of it as capital from EUR 500,000.
A UK small EMI also keeps its other payment transactions to a monthly average of EUR 3 million, and may not offer payment initiation or account information services (regulation 13).
Who needs an electronic money institution
A balance that customers top up and spend later, as in a wallet, a neobank account or a prepaid card, is electronic money. Issuing it takes an authorisation, so a product built on such a balance runs on an EMI's licence, its own or a partner's, or on a bank's.
A business that only moves money, such as remittance or card acquiring, can run on a payment institution licence. Its initial capital in the EU is EUR 20,000, EUR 50,000 or EUR 125,000, depending on the service (PSD2, Article 7).
What is changing: PSD3
The EU has agreed a third Payment Services Directive (PSD3) but has not adopted it. On 13 October 2026 the text was awaiting the Council's first-reading position.
In the agreed text, issuing e-money becomes a payment service and the E-Money Directive is repealed. Existing EMIs become payment institutions after a review by their authority, and the initial capital amounts change.
EMI, payment institution or bank?
- Payment institution
- Provides payment services but may not issue e-money. Its payment accounts may be used only for payment transactions (PSD2, Article 18).
- Bank
- Takes deposits and may pay interest on them, which an EMI may not. An EMI protects customers' money by safeguarding it.
- Small EMI
- A registration with lower limits and no cross-border right: at most EUR 5 million of average outstanding e-money, in the EU and in the UK.
- EMI agent
- Provides payment services on behalf of an EMI, under the EMI's licence and liability. An agent holds no licence and may not issue e-money.
Where an electronic money institution shows up in a platform
Modules that do the work
- Accounts & IBANsCustomer accounts with their own IBANs, on the partner bank and the rails you choose.
- LedgerThe double-entry book of record behind every balance, fee and transfer.
- Card issuingVirtual and physical cards, wallets and controls, on the issuer processor you choose.
- Compliance reportingTransaction monitoring, the Travel Rule and regulatory reports, ready for your regulator.
Platforms that need it
Guides that go deeper
- EMI or payment institution licence in the EU, and the agent routeWhat an e-money institution and a payment institution may do in the EU, the capital each needs, safeguarding, passporting, and launching as an agent first.
- EMI or payment institution licence in the UK, or launch under a partnerE-money or payments, authorised or small: what the FCA asks for in capital, safeguarding and people, how long it takes, and when an agent or banking partner is the faster route.
- How to launch a neobank without a banking licenceYour own e-money licence, an EMI's agent, a partner bank or a bank licence: how each route works, who holds the money, and what safeguarding and deposit protection cover.
Where it is written
The laws and standards this page's facts come from.
- Directive 2009/110/EC, the E-Money Directive, consolidated (EUR-Lex)
- Directive (EU) 2015/2366, PSD2, consolidated (EUR-Lex)
- Electronic Money Regulations 2011 (legislation.gov.uk)
- PSD3, text agreed in negotiations, 5 May 2026 (European Parliament)
- PSD3, procedure 2023/0209(COD) (European Parliament, Legislative Observatory)
General information, not legal advice: what applies to you depends on your services and your market.