Electronic money is a relatively recent kind of currency made possible by technological advancements. They’re displayed digitally, with the option to keep them on a computer chip card. In addition, a new participant, the issuer of electronic money, entered the market when the regulation was adopted by the European Union in 2009. However, in order to provide payment processing and electronic money issuance, a legal business entity is required.
Electronic Money Institutions (EMIs) may issue digital currencies and other “quasi-money” for financial transactions. A company must pass muster with the regulators before it can claim this designation. The time required to get an electronic money institution license might exceed six months.
Financial firms having an EMI license have the same safeguards. They can shop in-store or online.
To facilitate the use of electronic wallets, a business should just set up customer sub-accounts inside its main bank account. In return, customers may use their e-wallets to keep the digital counterpart of the company’s coins and banknotes.
This tool lets customers pay the firm. This will help them buy goods and services. Revolut’s license expired in 2018.
The initial amount of allowed capital is the most important factor in meeting the criteria for an EMI license. An EMI license costs €350,000, compared to €150,000 for a PI. The EMI licensing country’s bank must hold these funds in escrow.
This license differs per EU nation. If the company’s business plan states that its annual electronic currency issuance does not exceed €2 million, it can start operations in Latvia immediately. Permits are unnecessary here. The Czech Republic distributed 5 million Euros of digital money. Investigate the target nation’s laws before applying for a license.
EMI licenses need a thorough leadership evaluation. EU officials question and assess a company’s whole management team. At least two EU nationals must head the EU. However, several countries have EU and CIS citizens as partners. Management must demonstrate expertise by displaying credentials. They must study accounting or business instead of engineering.
In addition to the universally acknowledged and needed PSD2 guideline, each jurisdiction may develop its own requirements for businesses when it comes to the issuance of PI and EMI licenses. For example, for e-money Singapore there may be slightly different requirements than for the UK.
PI and EMI licenses usually need the same information and methodology. For financial organizations that exclusively handle electronic money, a “small EMI license” is offered.
A business must provide the following when applying for a UK Small EMI:
- business plan
- payment services it can provide to customers
- its internal governance mechanisms
- confirmation that the turnover of payments of the company does not exceed 5 million euros
- evidence that during the 12 months before applying for a small EMI, its average monthly turnover did not exceed 3 million euros (if it is a newly registered company that has not yet been in business, then the amount is estimated based on forecasts)
- a description of how the company intends to protect the funds of electronic money holders
- availability of start-up capital
- a list of directors, managers, and agents for the next verification.
Contact Fintech Harbor Consulting for more information and assistance in obtaining an EMI license.