EMI or PSP? In which country to get a license?
The volume of investments in financial technologies is constantly increasing. Providing payment services online and internet acquiring are the backbone of this niche. To conduct this activity, a prerequisite is the compulsory licensing of the EMI or PSP.
What do EMI and PSP mean?
EMI – Electronic Money Institution. This license is the most complete license for conducting transactions with electronic money. The holder of this license has every right to both open electronic wallets and issue electronic money. Opening a current account, conversion and money transfers are just some of the services that a company with an EMI license has the right to provide.
PSP stands for Payment Services Provider. This license allows you to process online payments. Basically, such a license is obtained by processing companies.
Which country should I choose to obtain licenses?
Despite the fact that almost every progressive jurisdiction can obtain EMI / PSP licenses or their local equivalents, there are certain leading jurisdictions in which a favorable environment has developed for financial technology projects.
It should be noted that PSP license is more popular than EMI license due to lower requirements for the company.
By the number of licenses issued, the leading jurisdictions are England and Lithuania.
England is the leader in the number of issued EMI licenses (47.5% of all issued EMI licenses) and PSP (37.8% of all issued PSP licenses) of the total number of licenses in all Europe. Despite Brexit, England continues to be in demand due to its flexible regulation, good infrastructure, and desire to develop the financial technology sector. England issued 33 EMI licenses and 48 PSP licenses in 2019.
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 Europe. In connection with Brexit, Lithuania was given the name “the new European capital of fintech”, and today, many companies are moving to Lithuania due to the possible negative consequences of Brexit and the inability to resort to passportization in EU countries with a British license. In 2019, Lithuania issued 18 EMI licenses and 6 PSP licenses. Compared to other jurisdictions, Lithuania has less stringent requirements for an applicant to obtain a license.
Legarithm offers its clients only those solutions that have an ideal price-quality ratio, therefore we recommend our clients to obtain an EMI license in Lithuania. An additional advantage of 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 jurisdiction for obtaining a PSP license is more extensive. Along with Lithuania, it is worth paying attention to Belgium and France. In these countries, the number of PSP licenses issued increased dramatically in 2018-2019. There has been a steady increase in the number of licenses issued in Germany and Ireland. The growth reflects a favorable business environment for fintech companies.
It is worth paying attention to the fact that Poland is the leader in the number of revoked licenses. In 2018-2019 alone, the Polish regulator revoked 7 PSP licenses, which is a negative signal for investors.
When choosing a jurisdiction for obtaining an EMI / PSP license, you should consider the requirements of the regulator for the presence of local employees, board, office and audit.
With regard to EMI / PSP licenses in the CIS countries, you need to know that these licenses are mainly focused on the domestic market. Such licenses will have far fewer advantages than European ones and companies which acquired this license will not be able to legally provide services to EU citizens.
Our lawyers have experience in obtaining EMI / PSP licenses and we will be happy to accompany you at every stage of obtaining an EMI / PSP license and find the best jurisdiction for you to obtain an EMI / PSP license. Contact Legarithm via chat.