What Is an EU EMI/PI License? Electronic Money and Payment Institutions Explained

The EU splits non-bank payment firms into two categories. A PI (Payment Institution), licensed under PSD2, can provide payment services such as acquiring, money remittance, account information (AIS) and payment initiation (PIS), but cannot issue electronic money. An EMI (Electronic Money Institution), licensed under EMD2, can do everything a PI can and can also issue electronic money, meaning wallet and prepaid card products that accept top-ups and hold customer balances. A large share of European fintechs (wallets, virtual IBAN providers, crypto card issuers) sit on an EMI license.

The regime's biggest selling point is passporting: once licensed in any member state, a firm can operate across the entire European Economic Area (the 27 EU states plus Norway, Iceland and Liechtenstein) through a notification procedure, with no need for country-by-country applications. This is why licensing hubs such as Lithuania emerged.

Initial capital is tiered by business type: EUR 350,000 for an EMI; for a PI, three tiers by service scope, EUR 20,000 for money remittance only, EUR 50,000 for payment initiation only, and EUR 125,000 for other payment services. Beyond capital, the common conditions include a registered entity in the licensing country with real local management (regulators explicitly reject letterbox companies; the head office and management must be in the licensing country), sound governance and risk controls, safeguarding of customer funds, an AML/CFT framework, and fit-and-proper reviews of shareholders and management.

There is no single EU-wide application portal, fee schedule or approval deadline: licensing authority sits with each member state's NCA, and fees and timelines are set nationally. Choosing the licensing country is the first strategic decision for an EMI. Lithuania, Ireland, Luxembourg and the Netherlands each have different ecosystems, and the choice should weigh target markets, talent and the cost of dealing with the regulator.

The current PSD2 + EMD2 framework is being replaced by PSD3/PSR. The European Commission proposed the legislative package in June 2023; the Council and Parliament reached a provisional political agreement on 27 November 2025; COREPER endorsed the text on 22 April 2026; and Parliament is expected to complete its vote within 2026. After entry into force, the PSR (a regulation) applies directly about 21 months later and PSD3 (a directive) must be transposed within 18 months. EMD2 will be repealed and EMIs folded into a single payment institution framework.

For firms applying now or already licensed, this means a re-authorization or transition exercise within the next two to three years. New applicants still file under PSD2/EMD2 for now, but should design their structure with room to migrate to PSD3.