EMI or PSP? Which country to get a license in?

The volume of investment in financial technology is constantly increasing. The provision of online payment services and Internet acquiring are the backbone of this niche. In order to conduct these activities, EMI or PSP licensing is a prerequisite.

What does EMI and PSP mean?

EMI – Electronic Money Institution. This license is the most complete license for carrying out electronic money operations. The holder of this license has full right both to open e-wallets and to issue e-money. Current account opening, currency conversion and money transfers are just some of the services an EMI licensed company is authorized to provide.

PSP – Payment Services Provider. This license enables you to process online payments. Basically this license is given to processing companies.

Which country should I choose for licenses?

Despite the fact that almost every progressive jurisdiction can obtain EMI/PSP licenses or their local counterparts, there are certain leading jurisdictions that have developed a favorable environment for financial technology projects. It is worth noting that the PSP license is more popular than the EMI, because of the lower requirements for the company.

By the number of issued licenses the leading jurisdictions are England and Lithuania. England is the leader in the number of issued licenses EMI (47.5% of all issued licenses EMI) and PSP (37.8% of all issued licenses PSP) of the total number of licenses in Europe.

Despite Brexit, England continues to be in demand because of its flexible regulation, good infrastructure, and willingness to develop the financial technology sector. For 2019, England issued 33 EMI licenses and 48 PSP licenses. Lithuania ranks second among the most popular jurisdictions. Lithuania issued 16.13% of all EMI licenses and 3.8% of all PSP licenses of the total number of licenses in all of Europe.

Due to Brexit, Lithuania has been named the “new European fintech capital,” and today, a great many companies are moving to Lithuania due to the possible negative consequences of Brexit and the inability to resort to passporting in EU countries with a British license. For 2019, Lithuania issued 18 EMI licenses and 6 PSP licenses. Compared to other jurisdictions, Lithuania has less stringent requirements for a license applicant.

An additional advantage to obtaining an EMI license in Lithuania, will be the ability to work in all EU countries, without obtaining licenses in each EU member state (thanks to passportization) and direct access to SEPA through Centrolink.

The choice of jurisdictions to obtain a PSP license is more extensive. Along with Lithuania, Belgium and France are worth considering. These countries have seen a dramatic increase in the number of PSP licenses issued in 2018-2019. Steady growth in the number of issued licenses is observed in Germany and Ireland. The growth indicates a favorable business environment for financial technology companies.

It is worth paying attention to the fact that Poland is the leader in the number of withdrawn licenses. In 2018-2019 alone, the Polish regulator revoked 7 PSP licenses, which is a negative signal for investors.

Conclusion

When choosing a jurisdiction to obtain an EMI/PSP license, you should consider the regulator’s requirements for local staff, board, office and audit.

Regarding the EMI/PSP licenses in the CIS countries, you should know that these licenses are mainly focused on the domestic market. Such licenses will have far fewer benefits than the European ones and will not be able to legally provide services to EU citizens.

Our lawyers have experience in obtaining EMI/PSP licenses and we would be happy to guide you through each step of the EMI/PSP licensing process and find the best jurisdiction for you to obtain an EMI/PSP license.