EMI (Electronic Money Institution) is a firm authorised to issue e-money, a stored monetary value customers pay for in advance and spend through cards, transfers or wallets, and to provide payment services. EMIs power most app-based accounts, prepaid cards and multi-currency wallets, but they cannot lend client money and their accounts carry no deposit insurance. Under EMD2, initial capital is at least €350,000, own funds at least 2% of average outstanding e-money, and client funds must be safeguarded within five business days of issuance. One authorisation passports across the EEA. PSD3 will fold e-money into the payment institution framework, and buyers acquire the licensed company subject to regulatory approval.
What can an EMI do
An EMI can issue e-money, open payment accounts with IBANs, issue cards, execute transfers and acquire card payments. Under the Electronic Money Directive 2009/110/EC (EMD2), it may grant credit only in connection with payment services and never from the funds received in exchange for e-money, and it may not pay interest or any other benefit tied to how long a customer holds e-money. An EMI authorised in one EU member state can passport its services across the European Economic Area.
EMI capital and safeguarding requirements
EMD2 sets initial capital of at least €350,000. Ongoing own funds for e-money issuance must be at least 2% of average outstanding e-money. Funds received for e-money must be safeguarded no later than five business days after issuance, either by holding them in a segregated account with a credit institution or in low-risk assets, or by covering them with an insurance policy or bank guarantee.
The UK applies the same model through the Electronic Money Regulations 2011, with tighter FCA rules on top: daily reconciliations, monthly safeguarding returns filed within 15 business days of month-end, and resolution packs that would let an administrator return client funds quickly.
EMI vs payment institution
A payment institution can move money but cannot issue e-money or hold balances beyond what is needed to execute a payment. An EMI can hold customer balances indefinitely as e-money, which is what makes a wallet or account product possible. In exchange, EMIs carry higher capital and more demanding safeguarding obligations.
This split is ending in the EU. PSD3 and the Payment Services Regulation, whose texts were agreed in 2026, repeal EMD2 and turn e-money issuance into a regulated service within the payment institution framework, with transitional periods for existing EMIs to demonstrate compliance and continue operating.
A worked example
An illustrative EMI with €40 million of average outstanding e-money needs own funds of at least €800,000 under the 2% method, more than double the €350,000 initial capital floor. If outstanding balances double during a product launch, so does the own funds requirement, so a growing EMI has to plan capital injections ahead of its customer growth.
Buying an EMI
An EMI licence cannot be sold on its own; a buyer acquires the licensed company. In the UK, acquiring 10% or more requires FCA approval before completion, with up to 60 working days for assessment. Diligence centres on safeguarding reconciliations, AML files, banking and card scheme relationships, and how the firm will move through the PSD3 transition, since a licence with an open remediation plan or a safeguarding shortfall is worth materially less than a clean one.