Creation of a payment system (EMI license)

Organization of payment acceptance on the international market

Personal selection of payment system
Assistance with obtaining a license
Legal support of the procedure

Creation of a payment system (EMI license)

Available countries

Payment system license UK

Payment system license Spain

Payment system license Cyprus

Payment system license Switzerland

Payment system license Austria

Payment system license Belgium

Payment system license Germany

Payment system license Ireland

Payment system license USA

Payment system license Canada

Creation of a payment system

The financial technology (Fintech) industry is currently undergoing a period of transformation and improvement, as evidenced by the growing number of companies providing online banking and digital transfer services. This is why payment licenses are such a sought-after option in different regions of the world. It is important to distinguish between Electronic Money Institution (EMI) licenses and Money Transfer Licenses (MTL). Each of these licenses serves an important function in the aspect of legitimizing digital transfers and offers innovative financial tools for businesses. Below we elaborate on the essence and differences of these licenses, their functions in today’s Fintech market and the growth of this industry in different regions of the world – the United States, Canada and European countries.

Peculiarities of opening foreign accounts

Electronic Money Institution (EMI) is an institution, which can be represented by a legal entity or an individual, that has the right to create, issue and cash its own currency (near cash). This organization can act as an intermediary, while providing payments in various business areas.
Unlike banks, e-money institutions do not have the right to issue credit lines or offer to hold capital in the form of deposits. Their main function is to service current payments for corporate and private customers.
The regulations governing EMIs may differ in each state, so it is worthwhile to familiarize yourself with the current legislation in the field of online banking before registering. In the countries of the European Union, the activity of organizations responsible for issuing licenses for EMI is regulated by Directive 2009/110/EC. This is the main regulatory document for the states of the association, which regulates the issuance of electronic currency.

Peculiarities of opening foreign accounts

A Payment Institution (PI) license is an authorization that is issued to payment institutions as proof of the right to provide Fintech and online banking services. The PSD2 (Payment Services Directive 2)regulates the issuance of this document for PIs. The license gives the organization legal legitimacy and access to a huge market of customers to provide its services.

Obtaining authorization is an important step in a company’s development if the company plans to provide payment services, money transfers and direct debits in the future.

In addition, obtaining a license is a crucial step if the company plans to carry out account information operations. Compliance with the PDS2 directive classifies these services as technology-neutral in order to encourage continuous innovational development.

Main differences between EMI and PI licenses

Electronic Money Institution and Payment Institution licenses – perform different functions in Fintech. The former actually deals with the issuance of electronic currency, the ability to create transactional instruments, wallets and payment cards. The Payment Institution license, meanwhile, allows for account management, transactions, but without the right to issue electronic funds.

Getting EMI authorization is a strategically important step for companies that plan to gain a foothold in digital payments and increase customer loyalty. E-money can improve the speed of transactions and reduce payment fees.

Main differences between EMI and PI licenses

EMI and MSB licenses

EMI and MSB licenses The EMI (Electronic Money Institution) license is regulated by the European Union Directive 2009/110 on electronic money. The authorization allows the issuance of its own currency, which has its own digital value and is stored electronically on servers. Recipients of the EMI license assume financial obligations to protect the interests and personal data of their customers.

The Money Service Business (MSB) license regulates currency exchange, money transfers and other banking transactions involving digital currencies in Canada. MSB license applicants are subject to obligations to comply with anti-terrorist financing and anti-money laundering measures. These conditions are regulated by the relevant law – Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). The regulatory act is designed to protect a high level of transparency of transactions, in accordance with the current requirements.

The rapid development of the digital economy in the world poses new challenges for the creation and implementation of innovative payment methods, ensuring consumer privacy rights, and combating crime in the industry. The legislative framework for EMI and MSB licenses is rapidly developing in Europe, Canada, and the issue of the need to regulate the Fintech sector is relevant in most countries of the world.

An actively growing European market for payment systems

Innovative payment acceptance methods, instant SEPA transactions, and innovative services that work in real time are driving the Fintech sector in Europe. According to industry experts, the EU license market is projected to grow at a CAGR of 15.8% from 2022 to 2027. The steady course towards digitalization will completely change the approach to the financial side of businesses in the near future.

Selecting the best jurisdiction for fintech in Europe

The European market guarantees a competitive and rapidly developing business environment for Fintech companies. Lithuania, the Netherlands and Spain have created favorable regulatory conditions for the implementation of modern payment methods. These countries attract foreign investments and stimulate the sphere of innovative technologies. Due to flexible legislation and successful implementation of e-money licensing rules, Lithuania has become a leader among European jurisdictions for the implementation of startups in this industry. In Germany, there is an opportunity to implement and test innovative projects in a limited and controlled environment.

Fintech in the UK

The UK has been a leader in financial technology for many years, creating favorable conditions for attracting large investments. The Centre for Finance, Innovation and Technology (CFIT) was established in the country to support the work of this niche economy, as well as the formation of high-paid vacancies in the high-tech industry. The country is interested in the potential and promising growth of open banking and is exploring technologies and introducing new developments to support the Fintech market.

USA innovative market

Despite the diversity of the US regulatory framework and the difficulty for centralized implementation of new Fintech mechanisms, the United States has a significant place in the global finance market. To start operating in this jurisdiction, companies will need a Money Transmitter License (MTL). The rules for obtaining it and a set of requirements for candidates are established separately in each of the states of the country. This format of work is quite complicated for newcomers in the Fintech sphere, but provides a number of advantages for those who understand the conditions of specific regions of the country.

An alternative to banking institutions in the form of a payment system

Support of SWIFT payment system for the company’s activities.
Ability to provide IBAN accounts to customers of the institution.
Opening of accounts remotely from anywhere in the world.
Issuance of Visa and MasterCard payment cards for customers.
Processing of payments through other banks of the world with currency conversion.
Full compliance with anti-money laundering regulations.
Choice of payment method with the ability to open correspondent accounts.
Access to cash deposits, withdrawals and other banking transactions.

Compliance with legislation and consumer rights protection

Obtaining a license, in compliance with the General Data Protection Regulation (GDPR) in Europe and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) in Canada, ensures the protection of customer rights and strengthens confidence in the financial institution.

Jurisdictions for financial licenses

Among the countries of the European Union, the Czech Republic and Lithuania are the leaders in issuing licenses to create their own electronic currency. In Lithuania, the total turnover of all EMIs and PIs in the first quarter of 2024 amounted to EUR 121 million, which is 12% higher than in the same period in 2023. A total of 123 EMI and PI institutions are registered in the Republic of Lithuania as of 2024 (63 in 2018).

Jurisdictions of these countries attract foreign investors and entrepreneurs with flexible taxation system, accessible and transparent procedures for obtaining EMI license, as well as favorable legislative environment for such financial institutions. For comparison, in Germany and Malta it takes 6 to 12 months to obtain such authorizations. Lithuania allows applying for a license even before the official registration of a legal entity, which significantly reduces the waiting period. Requirements for obtaining this permit are almost identical in all EU countries due to the unified legislation (EU Directive 2009/110), but each state establishes its own process for obtaining a license.

Legal assistance in registering businesses and payment systems

Preparation of documents and completion of files for submitting a request for a financial license is a key service of our company. Alt-industry specialists will prepare certificates, agreements and finalize existing files, if necessary, according to the requirements of the local legislation of the chosen state. We offer our clients White Label as a simple and effective way to quickly launch a business.

As part of the support, we provide consultations on staffing, in accordance with the chosen business model. IT-assessment of the current software for compliance with the requirements is carried out. Our experts recommend using reliable SAAS or BAAS platforms. Crasula or Canopus can also be considered. We provide assistance in connecting SEPA and SWIFT thanks to our network of reliable partners. This way you can transact in over 140 currencies worldwide while minimizing development costs. To implement our White Label strategy, we partner with DECTA and Wallester to optimize costs and accelerate business launch.

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