Electronic money institution
EMIAlso called e-money institution, e-money issuer
An electronic money institution is a firm authorised to issue electronic money, a stored monetary value that customers pay in and can spend or transfer. EMIs can also provide payment services. They are not banks: they cannot lend customer funds or offer deposit protection, so they must safeguard the money customers hand over.
How it works
A customer pays funds to the EMI and receives an equal amount of e-money, held in an account, card or wallet. The EMI must issue e-money at par and redeem it at par on request. Many fintech accounts, prepaid cards and payment apps run on EMI licences. In the UK, firms apply to the FCA for authorisation, and small EMIs with limited outstanding e-money can register under a lighter regime.
Because e-money is not a deposit, the customer is protected through safeguarding. The EMI either holds the funds in a segregated account at a bank or invests them in approved secure assets, or covers them with insurance or a guarantee. In the UK, rules in force since 7 May 2026 require daily reconciliations, a resolution pack and annual safeguarding audits. EMIs also follow money laundering rules, including customer due diligence.
The rules
Sets authorisation, capital, issuance and redemption at par and safeguarding requirements for e-money issuers, supervised by the FCA.
Authorised and small electronic money institutions in the UKSets the EU licensing, capital and safeguarding regime for EMIs and allows a licensed EMI to passport its services across member states.
Electronic money institutions in the EUAdds daily safeguarding reconciliations, a resolution pack, safeguarding audits and monthly returns to the existing safeguarding rules.
Authorised and small EMIs, authorised payment institutions and credit unions issuing e-moneyCommission proposals to fold the E-Money Directive into the payment services framework, making EMIs a type of payment institution; not yet published in the Official Journal.
Payment service providers, e-money institutions and banks in the EUCommon questions
Is an EMI the same as a bank?
No. An EMI can hold and move customer money but cannot lend it or pay interest on it, and balances are not covered by deposit guarantee schemes such as the FSCS. Customer funds are protected by safeguarding instead.
What is the difference between an EMI and a payment institution?
A payment institution can execute payments but cannot issue stored value. An EMI can issue e-money that customers hold over time, and it can also provide payment services.
What happens to customer money if an EMI fails?
Safeguarded funds are kept apart from the firm's own assets and returned to customers through an insolvency process, after the costs of distributing them. This is why regulators focus on safeguarding reconciliations and resolution packs.
