If your product accepts, holds or moves client money in Europe, you need a license. Most often the choice is between two permissions: EMI (electronic money) and PI (payment institution). A mistake here costs months, so let's go through the difference before you write any code. If you need a full permission map for your model, it is part of our financial and crypto licenses service.
In short: a PI fits transfers, acquiring and payment services without stored balances. An EMI is needed if clients keep money with you in an account or wallet and you issue cards. An EMI needs more capital (€350,000) but allows far more.
What each license allows
Both licenses sit under the European PSD2 and EMD2 directives and come with a passport for the EEA. The difference is whether you may hold client money as a balance.
- Payment institution (PI): transfers, merchant acquiring, money remittance, payment initiation. Client funds may only be held while a transaction is executed.
- Electronic money institution (EMI): everything a PI does, plus issuing e-money — stored balances in client accounts, wallets, prepaid and debit cards.
Side-by-side comparison
| Parameter | Payment institution | EMI |
|---|---|---|
| Minimum capital | €20,000 – €125,000 depending on services | €350,000 |
| Stored client balances | No | Yes |
| Cards and wallets | Limited | Yes |
| Client fund protection | Segregation or insurance | Segregation or insurance |
| Typical models | Acquiring, transfers, payment links | Neobanks, wallets, card programmes |
How to tell which one you need
- Map the money flow. Where money comes from, where it sits, where it goes and how long it stays with you.
- Check for balances. If clients see "their money" with you and can use it later, that is e-money and you need an EMI.
- Look at partners. It is often smarter to start as an agent of a licensed EMI or via a BaaS provider and apply for your own license once demand is proven.
- Count the full budget. Beyond capital: compliance team, audit, security, insurance and an office in the license country.
Timeline and preparation
Preparing the file — a three-year business plan, AML and risk policies, IT system descriptions, vetting of owners and directors — usually takes 2–4 months. Regulator review ranges from a few months to a year depending on the country and the quality of the file. We choose the country during jurisdiction selection, and until the license arrives you can accept payments through partners — see our payment gateways service.
Frequently asked questions
Can I start with a PI license and upgrade to an EMI later?
Yes, it is a common path. But the upgrade is a new application with higher capital and extended policies, so design the product architecture with the future requirements in mind from day one.
Do I need a license if I work through a BaaS partner?
Often not: the licensed partner covers the regulated part and you act as an agent or technology provider. Responsibility for the client experience and contractual compliance still stays with you.
What if my product works with crypto?
Then MiCA applies on top of the payment license. See our article on the CASP license.
Not sure which license your product needs? Send a request on the financial and crypto licenses page: we will map product functions to permissions and build a requirements, budget and timeline map together with specialist lawyers.
This article is for information only and is not legal advice.