What is an electronic money institution?
EMI or Electronic Money Institutions (EMIs) form the digital alternative to a bank where the client funds are stored in an ‘electronic wallet’. EMIs regulated by the EU can issue, distribute, and refund electronic money, and are authorised to perform transactions.
Establishing and licensing an EMI is a complex and multifaceted process with extensive industry and regulatory knowledge required. The license is similar to the PSP license with the main difference that EMI institutions can also handle Electronic Money.
What’s the difference between a payment institution and an electronic money institution?
Payment institutions and electronic money institutions are both financial entities, but they do slightly different things, and they’re regulated differently.
Payment institutions, or PIs:
- Primarily deal with money transfers and foreign exchange transactions.
- Usually act as intermediaries between payers and payees, whether they’re consumers or businesses.
- Are regulated as small PIs or authorised PIs under the Payment Services Regulations 2017.
In contrast, electronic money institutions:
- Issue e-money, also known as electronic money or digital currency, which is the digital equivalent of the funds their clients deposit with them.
- Deal with a range of transactions, plus payment cards, direct debits and credit transfers.
- Allow account holders to store funds electronically and, in most cases, make payments electronically via digital wallets or mobile apps.
- Are regulated as small EMIs or authorised EMIs under the Payment Services Regulations 2017 and Electronic Money Regulations 2011.
What are the advantages of an EMI?
If you need to open an account, there are several compelling reasons to consider an EMI rather than, or in addition to, a traditional bank. These include:
- Enhanced safety. EMIs are licensed by the FCA and keep client funds in separate safeguarding accounts, so you can rest assured that your money is safe.
- Cutting-edge innovation. Because EMIs generally don’t have to shoulder the financial burden of brick-and-mortar branches, they can invest in product innovation instead.
- Better flexibility. EMIs often have a larger and broader risk appetite, so they can often accept previously debanked consumers and businesses.
- Easy access. Many EMIs are also fintechs, so account holders can move funds, swap currencies and make payments via an online interface or smartphone app.
How can CX Financia help?
An integrated, strategic solution to EMI licensing and operational requirements can place you in a position of strength and provide a clear vision for the future.
Our full suite of services includes:
- Managing the authorisation and registration of EMIs/PIs aligned to your business needs and licensing requirements.
- Providing a full range of core and ancillary services to support legal, accounting, bookkeeping, and auditing operations.
- Consultation on structuring and managing your EMI to fuel growth and manage risks.
- Unlocking business opportunities in Cyprus with executive training for personnel.
Our solutions suit start-ups, midsize and established organizations around the globe.
To learn more about how we can fuel growth for your EMI through a transparent and compliant framework.