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An expert in corporate and international corporate law. He has many years of experience in establishing and reorganizing companies, supporting M&A transactions, as well as providing legal support for opening and running a business in the EU, Asia, and North America.
Legal Comparison of EMI/AEMI Electronic Money Licenses and PI Payment Institution Licenses
In today’s world, virtual currencies are becoming more and more common, representing a significant economic interest for investors, entrepreneurs, and regulatory authorities.
During the issuance and circulation of virtual currencies, legal issues arise, including the need for activity licensing.
Let’s look at some of the main types of licenses that govern such activities – the EMI and AEMI electronic money license and the PI payment institution license.
Legal regulation
EMI/AEMI licenses and Payment Institution (PI) licenses are regulated by the relevant regulatory authorities in the country where the payment entities operate.
Regulatory authorities usually have the power to grant, revoke, and control the use of these licenses to ensure the security, stability, and efficiency of payment systems.
In many European Union countries, EMI/AEMI licenses are regulated by national financial institutions or financial supervisory authorities.
For example, in Great Britain, such a body is the Financial Conduct Authority (FCA), in Germany – Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), in France – Autorité de Contrôle Prudentiel et de Résolution (ACPR) and others.
Payment institution (PI) licenses are also regulated by national financial regulators or central banks.
For example, in the UK it can also be the Financial Conduct Authority (FCA), in the USA – the Office of the Comptroller of the Currency (OCC) or the Federal Reserve, in Canada – the Financial Transactions and Reports Analysis Center of Canada (FINTRAC) and other bodies.
In addition, some jurisdictions may have specialized agencies or commissions responsible for overseeing electronic payments and payment institutions.
All these bodies aim to ensure compliance with established rules and standards in the field of financial services while ensuring security and trust in payment systems and their participants.
EMI (Electronic Money Institution) license
An EMI license grants its holder the right to issue and manage electronic currency, usually in digital form. The main function of EMIs of licensed institutions is to exchange this electronic currency for legal currency, as an investment service or a payment instrument.
Regulatory requirements for obtaining an EMI license may include compliance with safety standards, ensuring financial stability, and the ability to provide reimbursement to customers in the event of bankruptcy.
AEMI (Adaptive Electronic Money Institution) license
The AEMI license is the latest development in the field of electronic payments and virtual currencies. This license allows holders to issue and circulate electronic currency in responsive and interactive environments such as video games, virtual reality, and other applications where the currency can be used to purchase goods, services, or internal assets.
Although EMI and AEMI licenses both relate to the issuance of electronic currency, they differ in the context of their functional purpose and scope of application.
Understanding these differences is important for entrepreneurs and regulatory authorities considering the possibility of obtaining licenses to issue virtual currency.
License of a payment institution (Payment Institution)
A payment institution (PI) license is granted to companies that provide a variety of payment services, including payment processing, payment card issuance, fund transfers, etc.
PIs can be banks, electronic money institutions, or other financial institutions. The main function of PI is to ensure the continuous and efficient operation of the payment infrastructure and to process payments from customers.
Although the EMI/AEMI e-money licenses and the PI payment institution license both relate to the field of electronic payments, they differ in scope and functionality.
Understanding and defining these differences will help companies and regulators to choose the appropriate licenses based on their needs and business models, which will contribute to the efficient and legal functioning of payment services.
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Is a payment licence required if the company operates through a third-party payment provider?
Not necessarily. It all depends on the functions your company actually performs. If it only uses the infrastructure of a licensed provider and does not independently provide regulated services, a separate licence may not be required.
Can a company obtain a payment licence in one EU country and operate in other countries?
In the EU, the ability to provide payment services cross-border depends on the specific regulatory regime and completion of the relevant procedures. The mere fact of holding a licence does not automatically grant the right to operate in any country without additional formalities.
Can a payment licence be obtained without a finished FinTech product?
Product development may be at different stages, but the regulator must clearly understand what the company plans to do, how its operational and technological model will function, and how customers and their funds will be protected. Therefore, it is better to define the licensing strategy before the full product launch.
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