An electronic money institution (EMI) is a firm the Financial Conduct Authority (FCA) has authorised or registered to issue electronic money. E-money is monetary value stored electronically, issued when a customer pays in funds, and accepted as payment by people other than the issuer. A prepaid card balance, a multi-currency wallet and a stored balance in a payments app are all e-money.
The licence comes from the Electronic Money Regulations 2011 (EMRs). An EMI can issue and redeem e-money, and it can also provide the payment services listed in the Payment Services Regulations 2017 (PSRs): money transfers, card issuing, merchant acquiring, money remittance and, for an authorised EMI, account information and payment initiation services. That breadth is why most fintechs that hold customer balances choose an EMI licence over a payment institution licence.
Customers can redeem their e-money at par value at any time. Currency conversion that forms part of a payment can be offered as an ancillary service; FX forwards and options are investment products with their own rules. If you are still choosing between licence types, our comparison of API, SPI, RAISP and EMI licences sets out which fits each business model.
There are two routes. An authorised EMI has no volume limits and can provide the full range of payment services. A small EMI is a registration with a lower fee and lighter capital, capped by the size of the business. The FCA assesses both against the same standards of governance, fitness and propriety, and money laundering controls.
| Feature | Authorised EMI | Small EMI |
|---|---|---|
| Legal status | Authorisation | Registration |
| FCA application fee | £5,640 | £1,130 |
| Initial capital | €350,000 | None below €500,000 average outstanding e-money; 2% of that average above it |
| Outstanding e-money | No limit | Average of €5m or less |
| Unrelated payment services | No limit | Monthly average of €3m or less |
| Account information and payment initiation | Permitted | Not permitted |
A small EMI that grows beyond its limits applies for authorisation as a new application, not a variation. Firms that expect to pass €5m of outstanding e-money within their first two to three years usually apply for full authorisation from the outset. Our small EMI guide covers the registration route in detail.
You need an EMI licence if your business issues stored value that customers can spend with third parties. Typical applicants are:
The EMRs exclude limited networks, for example a store card usable only at one retailer's outlets, and certain payments made through electronic communications networks. A firm can also launch through an existing EMI as its agent or distributor, or under a programme run by a licensed partner, and apply for its own licence later. The exclusions are narrow, and firms relying on them notify the FCA once their volumes pass the thresholds set in the regulations.
UK e-money law is now separate from EU law. UK firms lost their passporting rights on 31 December 2020, so a UK EMI serves customers in the European Economic Area only through a separate entity authorised in an EU member state. The rules that apply to a UK EMI today are:
The FCA's guidance document, Payment Services and Electronic Money: Our Approach, explains how it applies these rules and is the first document an applicant should read. HM Treasury has set out plans to reform the payments framework; until new legislation is made, the EMRs and PSRs remain the law.
The FCA grants authorisation when it is satisfied the firm meets the conditions in regulation 6 of the EMRs. In practice the assessment centres on six areas.
The applicant must be a UK company with its head office in the UK, and the people who direct the business day to day must do so from the UK. In practice the FCA expects the CEO and the MLRO to be based in the UK and board meetings to take place here. A virtual office address does not meet this standard; a serviced office with real working space does.
Directors and the people managing the e-money business must be of good repute and have the knowledge and experience to run it. The FCA registers each of them through its individuals form and reviews their CVs, past roles and any regulatory history. A typical leadership team covers a CEO with payments experience, a finance director, a compliance officer and an MLRO, with non-executive directors where the business is larger.
Anyone holding 10% or more of the capital or voting rights, or exercising significant influence, must be fit and proper. The FCA asks for the ownership chain up to the ultimate individuals, the source of the funds being invested and, for corporate owners, their accounts.
The applicant must hold its initial capital before authorisation and show it can meet its own funds requirement as it grows. The FCA asks for a three-year budget forecast with balance sheets and, where applicable, two stress-tested scenarios showing how the firm stays above its capital requirement if growth is slower or costs higher than planned.
Customer funds must be protected from the moment they are received. The application sets out the safeguarding method, the bank or insurer used, how funds are reconciled each day and how they would be returned to customers if the firm closed.
The FCA reviews governance, risk management, IT and security, outsourcing and anti-money laundering controls. Systems do not have to be live at submission, but the application must describe them precisely: which core platform, card processor and screening tools the firm will use, and how it oversees each supplier under a written contract. White-label platforms are acceptable when the firm shows it controls and understands them.
An authorised EMI must hold initial capital of at least €350,000 before it is authorised (EMRs Schedule 2, paragraph 2). The figure is set in euros and the sterling amount moves with the exchange rate, so most firms hold a margin above the minimum.
After authorisation, the firm must hold own funds at least equal to its ongoing requirement. For e-money this is Method D: 2% of average outstanding e-money. Where the EMI also provides payment services not linked to e-money, it adds a requirement under Method A, B or C, as the FCA directs.
| Method | How it is calculated |
|---|---|
| Method D (e-money) | 2% of average outstanding e-money |
| Method A | 10% of the previous year's fixed overheads |
| Method B | A sliding percentage of monthly payment volume, from 4% of the first €5m down to 0.25% |
| Method C | A sliding percentage of income from interest, fees and commissions |
The FCA can direct a firm to hold up to 20% more or less than the calculated figure. A small EMI has no initial capital requirement until its average outstanding e-money reaches €500,000; from that point it must hold at least 2% of that average. The arithmetic, with worked examples, is in our guide to what an FCA PI or EMI licence costs.
Safeguarding is the protection of customer money so that it can be returned in full if the EMI becomes insolvent. The FCA's CASS 15 rules, introduced by Policy Statement PS25/12, came into force on 7 May 2026 and now apply to every EMI alongside the EMRs.
The safeguarding account is one of the first items to secure, because the application names the bank. Our article on the CASS 15 safeguarding regime explains each obligation. Safeheld, the firm's own safeguarding platform, runs the daily reconciliation and prepares the monthly return.
The application is made through the FCA's Connect system. The FCA returns any submission that lacks its minimum information or the correct fee without assessing it, and it expects every policy to be written for the applicant's own business rather than taken from a template. The core documents are:
| Document | What it shows the FCA |
|---|---|
| Programme of operations | Each e-money and payment service, step by step, with the flow of funds |
| Business plan | Market, customers, marketing, pricing and a three-year forecast with stress scenarios |
| Structural organisation | Board, committees, reporting lines, staffing and outsourcing |
| Evidence of initial capital | Funds held in the firm's account and their source |
| Safeguarding procedures | Method, bank, daily reconciliation and the resolution pack |
| Governance and internal controls | Risk framework, compliance monitoring and the three lines of defence |
| AML and counter-terrorist financing | Business-wide risk assessment, customer due diligence and transaction monitoring |
| Security policy and incident procedure | IT risk assessment, data protection and how incidents are reported |
| Business continuity and wind-down plan | How services continue during disruption and how the firm would close in an orderly way |
| Individuals and controllers forms | Fitness and propriety of directors, managers and owners |
Authorised EMIs that offer account information or payment initiation services also need professional indemnity insurance. The main contact named on the application must be an individual at the applicant firm, not an external adviser.
Under regulation 9 of the EMRs, the FCA must decide a complete application within three months of receiving it, and any application within twelve months. When the FCA asks for information it needs to complete the file, the three-month period runs from the date the file is complete, which is why the time from submission to decision is usually longer than three months.
| Stage | Typical duration |
|---|---|
| Case officer allocation | Up to 20 working days |
| Statutory deadline, complete application | 3 months |
| Statutory deadline, any application | 12 months |
| Firm's planning figure, submission to decision | 6 to 8 months |
The firm plans authorised EMI applications at 6 to 8 months from submission. A complete file, a leadership team in place and a safeguarding bank named at submission keep an application at the shorter end. Our guide to FCA PI and EMI timelines covers each stage and what extends it.
The cost has four parts: the FCA application fee, initial capital, the annual FCA fees, and the people and systems the FCA expects to see in place.
| Item | Authorised EMI | Small EMI |
|---|---|---|
| FCA application fee | £5,640 | £1,130 |
| Initial capital | €350,000 | None until €500,000 average outstanding e-money |
| FCA periodic fee 2026/27 | £2,063 minimum, plus £43.40 per £1m of average outstanding e-money above £5m | £1,432 flat |
The periodic fees are the FCA's final rates for 2026/27, set in PS26/14 published on 2 July 2026. In the first year the FCA charges a proportion of the annual fee based on the months remaining in the fee year. Firms also pay smaller levies, including the Financial Ombudsman Service levy.
The business plan shows these costs funded for the forecast period, over and above the capital requirement.
Most EMIs issue cards through a principal member of Visa or Mastercard, known as a BIN sponsor, until they qualify for direct scheme membership. Others use a white-label platform that bundles card processing, ledger and compliance tools. Partner pricing shapes the economics of the business, so the business plan models partners at the rates actually quoted.
Banking is the other dependency. The firm needs an operating account for its own money and a safeguarding account for customer funds, and banks run their own due diligence on payments firms. Starting these conversations before submission shortens the time from authorisation to launch.
Authorisation starts the supervisory relationship. An authorised EMI's continuing obligations include:
A change of control at 10% or more needs FCA approval before it completes, so an EMI can be sold provided the buyer is assessed as fit and proper. An EMI may trade under a brand name if customers can see the regulated entity behind it. EMIs are not under the Senior Managers and Certification Regime. Our related guide to FCA compliance for electronic money institutions covers each obligation in detail.
Buckingham Capital Consulting obtained FCA EMI authorisation for Dzing Finance, Hryze and HFS, and UK EMI authorisation for EuroPanPay. Details of the service are on our UK EMI licence page.
The FCA application fee is £5,640 for an authorised EMI and £1,130 for a small EMI. An authorised EMI also needs €350,000 of initial capital and pays an annual FCA fee from £2,063 in 2026/27.
The FCA must decide a complete application within 3 months and any application within 12 months. The firm plans authorised EMI applications at 6 to 8 months from submission.
An authorised EMI needs initial capital of €350,000 and then own funds of at least 2% of average outstanding e-money. A small EMI needs no initial capital until its average outstanding e-money reaches €500,000.
The applicant must be a UK company with its head office and management in the UK. A foreign group can own the UK EMI, provided the owners are assessed as fit and proper.
Not directly. UK firms lost passporting rights on 31 December 2020, so EEA customers are served through a separate entity authorised in an EU member state.
An EMI can issue e-money and hold customer balances as well as provide payment services. A payment institution provides payment services only and cannot issue stored value.
No. Regulation 45 of the EMRs prohibits interest or any benefit linked to how long a customer holds e-money.
No. EMIs and payment institutions are not under the Senior Managers and Certification Regime; the FCA assesses their directors and managers through the EMI individuals form.
Buckingham Capital Consulting has obtained FCA electronic money institution authorisation for firms including Dzing Finance, Hryze and HFS since 2013, and arranges the safeguarding and operating accounts alongside the application. The firm prepares the full EMI application, from business plan and policies to case officer questions, and supports the EMI through its first years of FCA supervision.
Speak to an expert: WhatsApp +44 7563 115980, Telegram @buckinghamcapital or info@buckinghamcapitalconsulting.co.uk.
This article is general information, reviewed against the regulator’s published requirements on the date shown. It is not legal advice; the regulator’s current publications take precedence.