An Electronic Money License acts as authorization provided by the FCA (which acts as sole regulator) for an Electronic Money Institution to conduct its business. This generally has fewer requirements for approval from the FCA but also comes with fewer protections than a conventional banking license would. It gives an Electronic Money Institution (EMI) the ability to hold client funds for the unlimited period of time an individual has an open IBAN account.
The practical difference between an Electronic Money and Payment Institution and a regular Payment Institution is that e-money institutions in addition to the services provided by a payment institution are entitled to issue electronic money.
What is a Small EMI License?
A small e-money institution (Small EMI) has the ability to issue electronic money (e-money) and provide payment services except for Payment Initiation and Account Information services within the UK.
In order to conduct business as a Small EMI, there are a series of procedures for registration with the FCA who acts as the regulation of electronic money institutions.
There are certain limitations related to the operation of a company with a Small Electronic Money Institution license, e.g.:
Total business activity of the Small EMI prior to the time of registration must not generate average outstanding electronic money that exceeds 5,000,000 EUR and;
Monthly averages of the prior 12 month period for the total amount of relevant payment transactions must not exceed 3,000,000 EUR.
