Procedure to apply for the UK EMI Electronic Money Institution or Payment Institution license

This article looks at obtaining an Electronic Money Institution (e-money) or Authorised Payment Institution license in the United Kingdom. If you wish to become an electronic money institution or a payment institution in the UK then you must prepare and submit an electronic money institution license application in the UK to the Financial Conduct Authority.

Below we will look at the process of becoming an electronic money institution or an authorised payment institution in the UK as well as discussing the key regulatory requirements.

In this article, we will look at:

  1. The second Payment Service Directive (PSD2) and its significance to payment services and electronic money.

  2. The UK regulator

  3. The Authorised Payment Institution license

  4. Authorised Payment Institution permissions

  5. What is electronic money?

  6. Authorised Electronic Money license application

  7. Apply to become an Authorised Electronic Money Institution in the UK

  8. How to prepare a strong electronic money institution or payment institution license application

  9. Passporting

  10. Apply to become an authorised payment institution or electronic money institution in the UK

  11. Initial capital requirements for an electronic money institution or payment institution

  12. Next steps

1. The second Payment Service Directive (PSD2) and its significance to payment services and electronic money

PSD2, or the Payment Service Directive 2, is an EU Directive (Directive 2015/2366) which sets requirements for businesses that provide payment services. It applies to banks, building societies, payment institutions, e-money institutions and their customers.

PSD aims to promote innovation within the payments sector. Furthermore, it aims to improve protection for consumers and make payments both safer and more secure.

2. The UK regulator

The Financial Conduct Authority in the UK regulates firms that provide regulated services, including, consumer credit, payment services, e-money, lending, insurance and investment services.

If you wish to issue electronic money services in the UK, such as prepaid cards or electronic wallets, you will require an Electronic Money Institution license from the Financial Conduct Authority by submitting an electronic money institution license application.

The Financial Conduct Authority expects firms to meet a range of requirements before it allows them to provide regulated financial services as an electronic money institution. When an applicant firm submits an application seeking authorisation as an electronic money institution, the Financial Conduct Authority will review their business plans, risks, budget, resources, systems, controls and people.

3. The Authorised Payment Institution license

An authorised payment institution license enables a business to provide payment services across the European Economic Area.

4. Authorised Payment Institution permissions

Let’s look at the payment services a payment institution license holder is able to provide to its users.

1. Payment accounts. Examples of a payment account include debit cards and payment cards. The user is able to place and withdraw cash on such accounts as well as use the account card to make a payment transaction, using the card to buy goods and services. Users are also able to set up direct debits standing orders as well as transferring funds.

2. Merchant services. Holders of the payment institution license are able to provide merchant services. This can include acting as a master merchant and offering merchants the ability to accept card payments.

3. Money remittance. Money remittance or transfer is another service payment institutions are able to offer. This service enables the payment service provider to enable users to make cross border payments, internationally.

​4. Payment initiation services. Under this model, an initiator I.e. as a payment service provider under the payment institution license, subject to the user's consent, is able to initiate a payment directly from the user's bank account and transfer the amount directly to the merchant retailer’s bank account, removing the Visa and Mastercard networks from the payment process.

​5. Account information services. Under this permission, subject to the user's consent, a payment service provider is able to provide access to a user’s accounts and enable them to view consolidated account information in one place.

5. What is electronic money?

As per Article 2(2) of Directive 2009/110/EC, “e-money” means “electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transaction, and which is accepted by a natural or legal person other than the electronic money issuer”. Prepaid cards and electronic wallets are examples of electronic money.

6. Authorised Electronic Money license application

As part of your e-money license application, you will be required to submit a number of documents, policies and procedures, including, a business plan, your safeguarding measures (how you will keep your client money separated and ring-fenced), your governance arrangements and risk management, your procedures for managing and handling security incidents and customer complaints, your security policy and your measures against financial crime, including AML. These policy and procedural documents must be specific to your firm and adequately address key aspects as set out by the regulator. Submitting templated documents will not be accepted and will cause delay, and potential rejection of your application. This is why it is important to prepare policies and procedures that are well thought-through and adequately address the regulator’s requirements and what it expects to see.

An important part of your e-money license application is to ensure you meet the regulator’s basic conditions. Think of the basic condition as the basic requirements you must have in place. For example, your employees must be located in the United Kingdom. You will need to demonstrate through your application that you have appropriate resources to operate your business. This includes having sufficient financial, management, staff, and systems to manage your business. Your team should be suitable and competent in their roles.

As part of your electronic money institution license application, you will need to provide details of your IT systems, including both core systems and any support systems. The regulator will expect to see that you have these in place before it issues your electronic money institution license.

7. Apply to become an Authorised Electronic Money Institution in the UK

As part of your Authorised Electronic Money Institution (e-money) license application, you will be required to provide the following information as part of your application:

  • company identification details

  • programme of operations

  • business plan and financial forecasts

  • a description of your business’s organisation structure

  • evidence of your initial capital

  • your measures to safeguard funds of your users

  • your compliance & governance arrangements and internal controls

  • your procedure for monitoring, handling, and following up on security incidents and security-related customer complaints

  • your processes for filing, monitoring, tracking and restricting access to sensitive payment data

  • your business continuity measures

  • the principles and definitions applicable to the collection of statistical data on performance, transaction and fraud

  • security policy

  • your internal control mechanisms to comply with obligations in relation to money laundering and terrorist financing (AML/CTF obligations)

  • details of your qualifying holdings (shareholders)

  • details of any outsourcing arrangements

8. How to prepare a strong electronic money institution or payment institution license application

You will need to demonstrate that you have your mind and management as well as operational setup and presence in the UK. This means establishing a physical base, including a physical office.

​Furthermore, you must have adequate resources in place. This includes financial resources, i.e. possessing sufficient funds to manage and operate the business. You will be required to demonstrate that you have suitable and experienced management and employees to manage the business. Firms must also demonstrate that they adequate IT systems and internal controls to ensure the safety of payments and manage fraud adequately and effectively.

You must provide policies and procedural documents that clearly demonstrate that you understand your business risks. Firms should prepare a risk framework and address how they will mitigate their risks, including operational, security and money laundering risks.

9. Passporting

If you are authorised as a regulated financial service firm within a country inside the European Economic Area, you can provide your regulated services, as a payment service provider or electronic money provider across the rest of the countries within the European Economic Area without requiring additional licenses in those countries.

The EEA states are Austria, Belgium, Bulgaria, Croatia, Cyprus (Republic of), Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden.

Accordingly, if you were regulated in the UK, you would be able to provide regulated services within the above countries without requiring additional licenses in those countries. To achieve this, you would need to apply for a ‘passport’ to do so.

With passporting, you are able to set up a branch in an EEA state and/or provide cross-border services or advice.

10. How long does it take to obtain the electronic money institution or payment institution license in the UK?

The Financial Conduct Authority must make a decision within three months of receiving a complete application. In reality, it takes, on average, around 4-5 months to obtain the license.

11. Initial capital requirement

The following will apply with regards to the initial capital.

Authorised Electronic Money Institution - €350,000

Authorised Payment institution –

  • Payment accounts i.e. debit cards - €125,000

  • Merchant acquiring/payment processing - €125,000

  • Money remittance - €20,000

Next steps

Buckingham Capital Consulting is a leading international consulting firm, specialising in payment services, electronic money, banking and investment services. We are able to advise you on the best course of action and strategy based upon your business plan and financial product or service. We can help you with licencing, compliance, operational setup and related services, including, obtaining banking facilities. For more information, visit our website on

Call us today on 020 7866 2512 or 0800 689 0501. Alternatively, please send an email to to arrange a telephone call or to discuss your requirements and plan. We are also able to arrange calls or conference calls using Skype. Our Skype ID is BCC54321. If you wish, we can arrange a meeting at one of our offices.

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