Sooner or later, any company faces the question of opening an account in a financial institution for managing funds. Banks are generally believed to be reliable and infallible options in this situation, but there are actually other alternatives that should be looked at before deciding, such as EMI.
Electronic Money Institution (EMI)
It’s a licensed company that issues electronic money under EU law. Here’s how it works: you swap your cash for e-money, which sits in your e-wallet, and then you use that balance to pay for stuff or send money—pretty simple.
EMIs offer a lot of the same services as banks. You get payment accounts, both for individuals and businesses, plus bank cards, IBAN accounts for SWIFT or SEPA transfers, and multi-currency accounts (think EUR, USD, GBP, and other big names). Whether you’re a company or just an individual, you can keep your money there, send or receive payments, and transfer funds.
Key difference
EMIs don’t touch loans, investment banking, or wealth management—those are off the table or heavily restricted. Another big thing: EMIs keep your money separate from their own. Banks don’t do that.
Regulations are pretty strict. EMIs can’t use your money for anything except handling your payments. For every dollar of e-money they issue, they have to keep a full dollar on hand in guaranteed funds. Banks play by different rules—they only need to hold about $1 for every $10 in customer deposits. So, if an EMI issues $1,000 in e-money, they must have $1,000 ready to go. A bank, on the other hand, could keep just $100 and still offer $1,000 in deposits.
Tech benefit of EMIs
Technology-wise, EMIs move fast. They’re quick to roll out new tech and make it easy to integrate with other services through APIs. They’re great for things like mass payments and payroll, and many even offer acquiring services, which is a real plus for businesses.
Conclusion
Banks can offer a wider range of services and a higher level of security than EMI, but at the same time, banks appear to be conservative, inflexible, formal institutions in terms of working with clients and implementing modern systems. On the other hand, EMI is radically different, providing the latest services that are closely related to the needs of the business world today and are less constrained by licensing requirements.
If you need an institution with a wide range of products and services, a bank will be the best choice in this case, but in the case of looking for an institution with lower commissions and more loyal terms, the best option will still be EMI. The most famous in the EMI market are Wise and Paysera. Now that you know the key differences between these institutions, you can decide which type of institution is right for you.
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