Electronic Money Institution (EMI)
A firm authorized in the United Kingdom or in an EU member state to issue electronic money and to provide payment services. The e-money it issues is a claim its holders have against the institution, redeemable at par and expressly not a deposit, which is why the funds behind it must be safeguarded.
Also called: electronic money institution · e-money institution · EMI · EMI licence · authorised electronic money institution · AEMI
An electronic money institution sits between a payment institution and a bank. Like a payment institution it can move money; unlike one it can also issue a stored balance customers hold and spend later. Unlike a bank it cannot lend that balance out or pay interest on it, and the money behind it is not deposits — e-money is stored monetary value representing a claim on the issuer, held under safeguarding rules rather than covered by deposit protection.
The UK and the EU are not one regime
In the United Kingdom the FCA authorizes an electronic money institution under the e-money regulations, with initial capital of at least EUR 350,000 — the UK instrument still states its figures in euro — and an authorized EMI may provide payment services without a separate authorization under the payment services rules. A small EMI is registered rather than authorized: its business must not generate average outstanding electronic money above EUR 5,000,000, and it may not provide account information or payment initiation services. No UK firm of either kind has held EEA passporting rights since the end of 2020.
In the EU an electronic money institution is authorized under the second e-money directive with initial capital of not less than EUR 350,000. A member state may, but need not, operate a waiver regime for small issuers, capped at average outstanding electronic money of EUR 5,000,000, and a waived issuer has no passport. There is therefore no single “UK or EU small EMI”, and the shorthand “EMI license” hides which status, in which country, a firm actually holds.
In practice
E-money is a stored claim against the issuer, expressly not a deposit, which is why safeguarding rules attach to it rather than deposit protection. “EMI” covers two statuses that must not be treated as equivalent: an authorized electronic money institution, and a small EMI, which is registered rather than authorized, capped by the volume of e-money it has outstanding, and barred from account information and payment initiation services. Ask which one, and in which country.
Commonly confused with
| Term | How it differs |
|---|---|
| Payment Institution | A payment institution can move money but cannot issue e-money; an electronic money institution can do both. |
See also
- Payment InstitutionA payment institution is a firm authorized in the United Kingdom or a European Union member state to provide payment services — transfers, acquiring, remittance, payment initiation — but not to issue electronic money. It may hold customer funds in payment accounts used only for payment transactions; those funds are neither deposits nor e-money.
- SafeguardingSafeguarding is the statutory requirement that an authorized payment or e-money firm keep customer funds apart from its own money, by a method the rules prescribe, so the funds are identifiable and returnable to customers if the firm fails. It is a licensing condition, not best practice.
- Small Electronic Money InstitutionA small electronic money institution is a UK firm registered by the FCA to issue electronic money below a set limit, rather than authorized. It is a separate status from an authorized EMI, not a smaller version of one: lighter prudential requirements, a cap on outstanding e-money, and narrower permissions.
- EMI AgentA firm through which an electronic money institution provides payment services in the UK. The EMI applies for the agent’s registration and the FCA registers it; the agent holds no authorization of its own, acts under the institution’s permissions, and the EMI remains responsible for everything the agent does or fails to do.