An electronic money institution (EMI) or payment institution licence grants access to the payment market across the entire European Union under a single authorisation. You issue electronic money, open e-wallets for customers, process payments and operate in all EEA countries without needing separate licences in each one. In return, you are subject to a regime of financial supervision: paid-up capital, segregation of client funds, suitability assessments for senior management, risk management and ongoing reporting to the Financial Supervisory Authority.
We start with two questions that define the entire project. What licence do you need — a full-fledged EMI requiring €350,000 in capital, or a payment institution, where the requirements start at a significantly lower level, whilst for some business models a narrow licence for payment initiation or access to account information is sufficient? And will the model stand up to scrutiny? Submitting an application in which the segregation of client funds has not been properly addressed and a partner bank has not been identified means wasting half a year.
If the answers are positive, we manage the entire project: the legal entity structure, capital, policies, preparing senior management for the assessment, submitting applications to the regulator via the portal, and correspondence until a decision is reached.
| Topic | Practical guidance |
|---|---|
| Regulator | Finantsinspektsioon (Financial Supervision Authority) |
| Legal framework | The Law on Payment Institutions and Electronic Money Institutions (MERAS), PSD2, EMD2 |
| EMI capital | €350,000 |
| Capital of the payment institution | €125,000 for a full range of payment services |
| Narrow licences | €50,000 for payment initiation; €20,000 for account information services |
| Submission of applications | From 18 March 2026 — only via the Financial Inspectorate’s application portal |
| Decision timeframe | Within 3 months of receipt of all necessary documents and no later than 6 months from the date of application |
| Actual processing time | 4–6 months if the application is well prepared; longer if preparation is required |
| Authorisation | Right to work in all EEA countries under a notification procedure |
| Segregation of client funds | Mandatory: segregation into separate accounts, or insurance or a guarantee |
| Validity | The licence is indefinite but subject to ongoing supervision |
| Crypto and payments | For some business models, both a CASP authorisation under MiCA and a payment licence may be required |
If you have any questions, our managers are always on hand and ready to help! If you’re not sure whether your model requires a licence at all, simply describe your cash flow, and we’ll provide a preliminary assessment free of charge.
The difference between the two models runs into hundreds of thousands of euros, and is determined not by the product’s name, but by what happens to customers’ money.
Electronic Money Institution (EMI). Required if you issue e-money: the customer deposits funds and receives an electronic balance in return, which is stored and can be spent or refunded. E-wallets, prepaid cards, in-app balances. Capital requirement: €350,000. An EMI is also authorised to provide payment services.
Payment Institution (PI). Required if you process payments but do not issue electronic money: transfers, acquiring, execution of payment orders, money transfers. Capital required for the full range of services: €125,000.
Narrow licences. For initiating payments: €50,000, with a requirement for professional indemnity insurance; for account information services — €20,000 or insurance. Many fintech products, which founders habitually refer to as ‘we need an EMI’, actually fall within these categories.
When no licence is required at all. If you do not handle clients’ money: pure software, an interface built on top of a licensed provider, operating as an agent or distributor for a licensed institution, separate restricted networks and a limited range of products. This needs to be checked before, rather than after, the budget has been approved.
Formally, you are putting together a set of documents. In reality, success depends on two things that are not included in the list of requirements.
Firstly, a partner bank to segregate client funds. The law requires client funds to be kept separate from the business’s own funds: either held in separate accounts at a credit institution or covered by insurance or a bank guarantee. In practice, this means you need a bank willing to open a segregated account for a licensed payment service provider — and finding one is harder than drafting policies. The regulator, for its part, wants to see a realistic segregation model, not just a statement of intent. You need to start negotiations with banks whilst preparing your application, not after the licence has been granted.
Secondly, there is the matter of senior management undergoing suitability assessments. The regulator assesses the competence, reputation and experience of each senior manager and qualified shareholder, conducts interviews and does not grant authorisation until the assessment is complete. A team cobbled together at the last minute from people with no relevant experience in payments and compliance is the most common reason for project delays.
Hence the rule of thumb: first the bank and the people, then the paperwork. Projects that proceed in the reverse order are usually what create the gap between the ‘three months required by law’ and the ‘one year in practice’.
The Act sets out a clear framework: a decision to grant or refuse a licence must be taken within three months of receiving all the necessary documents and information, but no later than six months from the date the application was submitted. We would like to highlight a recent change: from 18 March 2026, applications for licences for payment institutions and electronic money institutions must be submitted exclusively via the Financial Inspectorate’s application portal.
Why does the actual processing time take 4–6 months or longer?
Realistic planning: from project launch to a fully operational, licensed company takes around a year, of which the review process accounts for less than half.
A licence is the top layer of an operating company. If the corporate framework has been put together carelessly – with vague descriptions of activities, a lack of accounting records, or a random address – this will come to light during the dossier assessment stage and cause months of delay.
| Section | What is included |
|---|---|
| Corporate | Articles of Association and amendments thereto, ownership structure, information on beneficial owners, organisational chart |
| Financial | Confirmation of paid-up capital, calculation of own funds, business plan with a model and stress tests |
| Management | Information on board members and key personnel, suitability questionnaires, allocation of responsibilities |
| Operational | Description of payment services and cash flow diagrams, model for the segregation of client funds, outsourcing, agency network |
| Compliance | AML/CFT, sanctions screening, transaction monitoring, internal controls, audit |
| Technology | ICT risks and cyber resilience in accordance with DORA, testing, incident management, business continuity plan |
| Client-related | Client agreements, disclosure of information, fees, complaints handling procedures |
This is at the heart of payment regulation and the regulator’s primary focus. Client funds do not belong to the institution and must not be commingled with its own: they are either held in segregated accounts at a credit institution or covered by insurance or a guarantee. In practice, it is not only the policies that are scrutinised, but also the operational procedures: how funds are identified, how daily reconciliation is carried out, what happens in the event of the institution’s insolvency, and who has access to the segregated accounts.
A separate licence is not required in each country. The institution notifies its home regulator of its intention to provide services in other EEA countries — either directly or through agents or a branch — the regulator then forwards the information to the host authorities, after which the institution may operate in those markets. The procedure is a notification-based one, but it is substantive: the range of services must correspond to the licence issued, whilst client documentation and marketing must comply with the rules of the host countries.
The licence is valid throughout the EEA, so the country of application determines not the market, but the cost and speed of entry. Lithuania has historically attracted payment projects due to the volume of licences issued and the speed of the process, but at the same time has tightened its supervision. Estonia is a regulator with experience in supervising banks and investment firms, applying the same standard to the payments sector: this is a plus for reputation but a minus for speed. It is worth comparing regulators in terms of their practical experience and workload, the language of communication, requirements for local staff, the availability of partner banks, and the cost of maintaining the organisational structure. We carry out such a comparison during the model audit stage.
If the model involves both payments and crypto-assets — for example, a wallet with conversion functionality or settlements in tokens pegged to a currency — a situation requiring dual authorisation may arise: both CASP authorisation under MiCA and a payment licence. The boundaries between these regimes were clarified by European authorities in 2026, but were not fully delineated. This is a case where auditing the model before the project begins saves not months, but years.
Authorisation marks the start of a supervisory relationship: regular reporting, external audits, compliance with requirements regarding own funds and segregation, updating of policies, notifications of material changes, and supervisory inspections. Non-compliance leads to corrective orders, fines, restrictions on operations and licence revocation. For the payments industry, losing a licence means not a pause but a complete halt – which is why compliance is embedded in the operational model rather than imposed from above.
Please describe the flow of funds: who pays whom, where clients’ money ends up, whether you issue e-money, and where your users are located. Within one working day, we’ll provide a preliminary assessment of the scope, set out a realistic budget and timeline, and let you know if there’s a quicker route for your model.
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