EMI vs Payment Institution Licence: What Fits?

A common point of failure in payments-led businesses is choosing a licence based on what you want to sell, rather than what you actually do operationally. The gap shows up later - at banking onboarding, scheme due diligence, audits, or when a regulator reads your flow diagram and realises your permissions do not match your customer journey.

If you are deciding between an electronic money institution (EMI) authorisation and a payment institution (PI) authorisation, treat it as a product architecture decision, not a legal tick-box. It will shape how you hold client funds, how you generate revenue, what partners will work with you, and how fast you can go live.

EMI licence vs payment institution licence: the decision that drives bankability

Both authorisations sit under the EU payments framework (PSD2 and the Electronic Money Directive concepts), and both can be used to build serious cross-border payment products. But they are not interchangeable.

A PI is fundamentally about executing payment transactions. You can provide payment services - for example, card acquiring, money remittance, account information services, payment initiation, and issuing payment instruments - depending on the permissions you apply for.

An EMI can do all the payment services a PI can (subject to scope), and also issue electronic money. That single capability changes the commercial model: you can store value for customers in an e-money account or wallet, and you can support longer-lived balances rather than “payment in, payment out” flows.

The practical question is not “Which licence is better?” It is “Do we need to hold value as e-money, or do we only need to move money?”

What you are allowed to do - and what regulators expect you to prove

Payment Institution: payments, not stored value

A PI is suited to businesses where funds are received for the sole purpose of executing a payment transaction. In a clean PI model, client funds are transient - they arrive, you process, they leave. You can still provide accounts (payment accounts in the PSD2 sense) and offer IBANs through certain structures, but you are not issuing e-money.

Regulators will look closely at whether you are unintentionally creating stored value. If customers can keep funds with you beyond what is operationally necessary, or if your terms and product design encourage “parking” money, your PI framing can become hard to defend.

EMI: issuing e-money and running wallets

An EMI authorisation supports a wallet or account model where customers hold a balance you issue as electronic money. That is particularly relevant for:

• multi-currency wallets

• corporate spend products

• platforms holding user funds for staged settlement

• certain crypto and iGaming adjacent flows where value sits in an account before being used

The catch is that issuing e-money comes with sharper expectations around safeguarding, governance, and ongoing compliance discipline. The regulator will expect you to understand your issuance, redemption, complaints, chargebacks (where relevant), and product risk end-to-end.

Safeguarding: the same word, different operational consequences

Both EMIs and PIs must safeguard customer funds. In practice, the detail of your safeguarding architecture is one of the first areas where applications get delayed.

For a PI, safeguarding usually centres around segregating relevant client funds and ensuring they are protected from insolvency risk. For an EMI, safeguarding links to issued e-money balances and redemption rights. That usually means more complex reconciliation, reporting, and customer-facing documentation.

Operationally, regulators and banking partners will test whether:

• your safeguarding account structure is correct for your flows and jurisdictions

• reconciliations are daily (or more frequent where needed) and provable

• you can evidence control over access, approvals, and incident response

• your T&Cs accurately describe how funds are held and redeemed

If your business relies on partners (BIN sponsors, acquirers, FX providers, e-money agents, programme managers), you also need clean contractual allocation of safeguarding and operational responsibilities. “The partner handles it” is not a control framework.

Capital and own funds: the cost of permissioning

Both models require initial capital and ongoing own funds, calculated based on the nature and volume of activities. An EMI typically faces higher expectations because issuing e-money introduces additional prudential considerations.

This matters for founders because capital is not just a number you show at authorisation. Regulators want a credible financial model, stress scenarios, and evidence that the business can survive operational shocks - fraud spikes, scheme fines, partner termination, or remediation programmes.

A PI can be the leaner route if your model is genuinely transactional and you can keep balances off your books. An EMI can be commercially stronger if your product needs stored value and recurring account-based revenue, but you should budget for a heavier compliance and finance function from day one.

Compliance workload: where teams underestimate the build

The authorisation label does not do the work. Your policies, controls, and people do.

For both EMIs and PIs, regulators will scrutinise your AML/CTF framework, transaction monitoring logic, sanctions screening, fraud controls, outsourcing governance, complaints handling, and operational resilience.

The difference is that an EMI’s product design often creates more monitoring complexity: more internal movements, more balance management, more edge cases (partial redemption, dormant balances, negative balances if fees are misapplied, and customer disputes over stored funds). If you want an EMI because it “sounds more bankable”, you can end up buying a governance burden you do not have the team to run.

This is where fast-moving sectors get caught. Crypto businesses, marketplaces, and iGaming-adjacent platforms tend to have high-risk typologies and partners that demand mature controls. If your compliance stack is thin, an EMI authorisation can become a slow grind of remediation.

Timelines and approval risk: what actually slows you down

Founders often ask which licence is faster. The honest answer: it depends less on the label and more on execution quality.

Applications stall when:

• the business plan and flow diagrams do not match the permissions requested

• safeguarding is described at a high level without operational proof

• outsourcing and partner reliance are not mapped and governed

• AML risk assessment looks generic rather than tailored to products and markets

• key function holders lack relevant payments track record

A PI application can move quickly if the model is narrow, the volumes are credible, and the organisation is built to run controls. An EMI application can also move quickly when the issuer has a clear wallet model, strong governance, and a realistic financial plan. In both cases, regulators punish fiction. If the product roadmap assumes features you cannot support compliantly, it will surface during review.

Use-case fit: choosing the licence that matches your revenue model

When a PI tends to fit

A PI is often the right tool if you are building acquiring, money remittance, or payment processing rails where funds are not meant to sit with you. It also fits certain B2B payment orchestration plays where you are initiating or routing payments but not issuing stored value.

If your primary revenue is transaction fees and you can keep the customer experience “pay and move” rather than “store and spend”, a PI may be commercially efficient.

When an EMI tends to fit

An EMI is usually the better fit when the product needs a wallet-like balance, multi-currency holding, staged settlement, or account-based features that inherently create stored value.

It is also relevant when partners, merchants, or enterprise clients expect an issuer model with clearer balance handling and redemption rights, particularly for programme structures.

Crypto, iGaming, and high-risk verticals: the licence is only half the argument

In high-regulation industries, the licensing choice is often driven by who will bank you and who will process you.

Banks and schemes will look past the authorisation type and focus on your exposure: source of funds, customer geography, chargeback and fraud risk, VASP connections, and operational resilience. A perfectly drafted EMI application does not compensate for weak transaction monitoring or an opaque partner chain.

If you serve crypto clients (even indirectly), expect deeper scrutiny on blockchain analytics, wallet screening where relevant, enhanced due diligence triggers, and clear policies on exposure to mixers, privacy coins, and high-risk jurisdictions. If you serve iGaming, expect scrutiny on player protection flows, merchant due diligence, and how you handle refunds and chargebacks.

The practical takeaway: choose the licence that fits your product mechanics, then build controls that match your risk reality. Do not assume an EMI badge will reduce friction.

Building vs buying: the route-to-market question founders avoid

If your go-live date is tied to fundraising, merchant contracts, or market windows, your biggest risk is not picking the “wrong” licence. It is underestimating how long it takes to become operationally credible.

There are two viable routes:

• Build from scratch: clean for long-term design, but slower and more resource-heavy.

• Acquire a ready-made regulated vehicle: faster time-to-market, but only valuable if the entity is genuinely compliant, has clean history, and can be re-profiled to your model without triggering regulator issues.

This is where due diligence needs to be forensic: historical transactions, safeguarding history, audits, complaints, outsourcing contracts, and whether the permissions match your intended activities. Buying an EMI that cannot support your flows is just a more expensive delay.

If you want a single partner to run jurisdiction selection, licence scoping, documentation, AML framework build, and execution through approval, NUR Legal typically supports both fresh applications and ready-made solutions, with a focus on regulator-facing delivery rather than advisory-only output.

How to decide quickly without stepping into a re-authorisation later

Start with your customer journey and write it like a regulator: where does money come from, where does it sit, when does it move, and what legal relationship exists at each point. If customers can hold value with you, or if you need wallet balances, you are already leaning towards EMI territory.

Next, pressure-test your partner stack. If you need BIN sponsorship, acquiring, safeguarding accounts, or local compliance support, confirm early what authorisation type those partners will accept and what they will require in terms of governance, reporting, and audit rights.

Finally, be honest about operating maturity. A PI can be the right tactical choice if you are early-stage and want to launch a narrow product with tight controls. An EMI can be the right strategic choice if stored value is central and you can staff and fund the compliance function properly.

Your best licensing decision is the one you can defend in writing, operate in real life, and scale without rebuilding the compliance framework every six months.

The helpful way to think about it is simple: pick the authorisation that matches your money flow today, then design your roadmap so the next product expansion does not force a regulator conversation you are not ready to have.