Our lives have become easier thanks to electronic money, or e-money, as the fintech sector creates new technology to make it easier to buy products and services. As an Electronic Money Institution (EMI), let’s say you wish to provide payment services throughout Europe. If so, you must submit an application to a financial authority to get licensed to operate an electronic money institution. The Fintech Harbor wants you to be aware of the following information on obtaining an EMI license in Europe and offers its fintech solicitors to help you!
So, what exactly is an EMI?
Prepaid cards, electronic wallets, and other types of e-money that people and companies may use to make payments are all considered to be part of an EMI.
According to Article 2(2) of Directive 2009/110/EC, “Electronic Money” (e-money) is defined as “Monetary Value Stored Electronically, Including Magnetically, Representing a Claim on the Issuer,” which is issued upon the issuer’s receipt of funds for the purpose of making payment transactions and is accepted by a natural or legal person other than the issuer of the electronic money.
Why is an E-Money Institution license required in Europe?
According to EU Directive 2015/2366, EMIs need a license in order to operate in Europe. This Directive’s main goal is to safeguard consumers when they make secure and safe e-money transfers. Its secondary objective is to foster fair competition in the e-money payment sector. The guidelines for EMIs offering payment services are established by this Directive. EU Directive 2015/2366 stipulates that EMIs must get an EMI license as one of its criteria.
Once it has a license, an EMI is able to operate all throughout Europe and beyond. Customers may use the EMI to issue them electronic money, which they can then save in the e-wallets the EMI provides. Customers may then use the money in their e-wallets to make purchases. When their e-wallet is empty, they may add additional money by converting cash into e-money.
What is Needed to Get an EMI License in Europe?
An EMI must fulfill a number of standards before being granted a license in Europe. These prerequisites consist of:
- establishing a physical office and local personnel as part of an operational presence in a European nation
- having enough resources, both financial and non-financial, to manage and run the EMI
- demonstrating the necessary managerial and personnel expertise to run the EMI
- having EUR 350,000 in immediately accessible startup money in a bank account in the nation where the EMI is submitting the licensing application
How can I get a license for an EMI in Europe?
An EMI will encounter regulatory scrutiny while submitting a licensing application in various EU nations. At least two of the EMI’s management must live in the EU. To manage the EMI, they must demonstrate their professional credentials. In addition to the necessary EU Directive 2015/2366, each EU member state is permitted to enact additional regulations.
An EMI must show that it has a solid technical infrastructure and high-quality software. To maintain payment security and stop fraud, they must implement internal controls, security precautions, and a strategy to manage operational risks. When submitting a license application, the EMI also has to have a number of pieces of information. Some of the details included within are:
- Financial forecasts and a company strategy.
- The layout of the EMI’s management structure
- Security incident and customer service request monitoring, resolution, and follow-up procedures
- Standard operating procedures for fighting money laundering and the funding of terrorism
- Some examples of what an EMI has to do to get their license are listed above. Getting a license is difficult for every kind of EMI for different reasons. For an EMI to get their license, it takes about six months on average.
Advantages of an EMI License
For all EMI electronic money transactions, an EMI must have a license, which also enables them to provide other financial services. These services provide:
- accounts for debit and credit cards
- Services provided by merchants for debit, credit, and e-wallet transactions
- Transferring money internationally for payments
- Customers may use payment initiation services to start payments via their bank accounts.
- Customers with centralized account data in one location
