How an EU e-money institution is structured
An e-money institution (EMI) is a licensed company that can hold customers' money and issue e-money, like many payment apps. This guide shows how the group around it is built, where customers' money actually sits, how much capital you need, how one licence reaches the whole EEA, and what the next EU rules (PSD3) will change.
The licensed company is kept deliberately lean and clean: the regulator licenses that one company, so nothing unrelated is allowed inside it.
- Customer funds in
- Money received for e-money issued goes into the safeguarding account by the end of the next business day.
- Revenue
- Fees and card income are the EMI's own money and sit outside the safeguarded funds — the line between the two is the first thing regulators check.
- Insolvency
- If the EMI goes bust, safeguarded money is protected for customers ahead of other creditors. That's the point of the whole arrangement.
- Expansion
- New EEA countries are opened by notifying your home regulator (a 'passport'), not by getting a new licence.
Why the licensed company is kept lean
A regulator licenses one specific company with one specific business plan. Everything else the group does — building software, marketing, side ventures, lending between group companies — belongs above or beside the EMI, never inside it. A licensed company doing unrelated things gets extra attention from the regulator and makes its capital calculations messier.
So the holding company employs the group's staff, owns the platform's software and takes in investment, and licenses the technology to the EMI at a fair market price.
Safeguarding is the heart of the application
Safeguarding isn't just a bank account with the right name. It's a daily routine. Money received for e-money goes to a credit institution by the end of the next business day, it's kept apart from the company's own money, and it's checked against the records every day. The checks are kept as evidence, and the line between customers' money and the company's income is clearly drawn.
Getting this wrong is what shuts payment companies down. Regulators ask for the daily checks before they ask for anything else.
Passporting, and what it doesn't give you
Once licensed, an EMI tells its home regulator it plans to serve other EEA countries, either from home or through a local branch. That opens those markets without a second licence.
What it doesn't do is remove each country's own conduct rules, its anti-money-laundering expectations or, most importantly, your need for local banks and card schemes to work with you. Groups that treat the passport as a business solution rather than just a legal permission usually find this out when they try to sign up merchants.
What's changing
The PSD3 and Payment Services Regulation package will replace today's rules (PSD2 and EMD2). Much of it will become EU law that applies directly in every country, and the payment and e-money rules will be merged. The timing was still moving through 2025 and 2026, so build any application to today's rules, with the switchover planned rather than assumed.
Separately, instant payment duties are now live, and Lithuania brought in new requirements for firms that take part in payment systems from 9 April 2025.
- Treating safeguarding as an account name instead of a daily checking process.
- A business plan and financial model that don't match the licence applied for — the most common reason applications stall.
- Unclear ownership above the EMI, which delays or sinks the regulator's checks on the owners.
- Local managers in name only, with the real decisions made somewhere else.
- Capital worked out with the wrong method, leaving a shortfall at the regulator's first review.
- Assuming the passport also brings local banking, merchant acquiring and card-scheme access.
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