In plain words

If a small EMI is a provisional licence that keeps you on local roads, an authorised EMI is the full driving licence. You can take any road and carry as many passengers as you like, but you pay more for insurance and the police expect you to know every rule.

An authorised electronic money institution, or AEMI, is a firm the FCA has fully authorised to issue e-money and provide payment services. It is the full form of the UK EMI licence. There is no cap on how much e-money it can hold, it can apply for every payment service including open banking, and it answers to the FCA directly. 1

The price of that freedom is capital, people and process. An AEMI starts with at least €350,000 of capital, and its capital requirement grows as customer balances grow. It also carries the full weight of safeguarding, reporting and financial crime controls.

How it works

How an authorised EMI works

From application to running the licence every day.

  1. 1

    Apply to the FCA

    A full application covering capital, people, business plan, safeguarding, policies and technology. 2

  2. 2

    Hold €350,000 of initial capital

    The money must be in place before authorisation, as the firm’s own funds, not borrowed from customers.

  3. 3

    Issue and safeguard e-money

    Customer money is kept apart from the firm’s own, reconciled every working day and audited.

  4. 4

    Keep own funds above the line

    As balances grow, so does the capital the firm must hold. It reports its position to the FCA regularly.

Capital: the starting line and the moving line

Founders often hear “€350,000” and stop there. That is the initial capital, the amount you need to be authorised. After that, the rules ask for own funds: capital the firm keeps on its balance sheet every day, calculated from the size of the business.

Own funds, in short. An AEMI must hold whichever is higher: €350,000, or its calculated requirement. For e-money, the calculation is 2% of average outstanding e-money. If the firm also offers payment services that are not linked to its e-money, an extra amount is added for those, using one of the calculation methods set out in the regulations. 1

In practice, 2% of €17.5 million of average balances equals €350,000. Below that level of balances, the floor applies. Above it, every extra million of customer money needs another €20,000 of capital. Put this into your financial model early, because fast growth in balances is a capital event as well as a commercial one.

What an authorised EMI can and cannot do

Can

  • Issue e-money with no volume cap
  • Provide payment services, including AIS and PIS with the right permissions
  • Appoint its own agents and distributors
  • Issue cards and give customers account numbers
  • Hold its own place on the FCA register

Cannot

  • Take deposits or lend customer money
  • Pay interest on e-money balances
  • Offer deposit insurance
  • Passport its UK licence into the EU

One AEMI benefit founders underrate: you can become a principal yourself. Other firms can then operate as your EMI agents, which turns your licence into something partners can build on.

Authorised EMI vs small EMI

Small EMIAuthorised EMI
FCA statusRegisteredAuthorised
E-money cap€5M average outstandingNone
Initial capitalNone below €500k e-money, then 2%€350,000
AIS and PISNoYes, with permission
SafeguardingRequiredRequired
Best forSmall UK-only productsProducts that will scale or need every service

For the full ladder including the agent route, see the small EMI page and EMI agent vs SEMI vs AEMI.

What running an AEMI involves

The application is a project. Running the licence is a permanent operation. Once authorised, the firm must keep doing all of this, every day and every year:

  • Reconcile safeguarded funds every working day and arrange an annual safeguarding audit
  • Keep own funds above the requirement as balances grow
  • Send regular returns to the FCA, and report major incidents and changes of control
  • Run anti-money-laundering checks and transaction monitoring on every customer
  • Register and oversee any agents it appoints, because it is responsible for them

Budget for the people and systems behind this list, not only for the capital.

UK, EU and Gulf

MarketEquivalentReach
United KingdomAuthorised EMI, FCAUK. The EU passport ended for UK firms after Brexit.
European UnionElectronic money institution, licensed by the home country regulatorCan passport across the European Economic Area. Initial capital is also €350,000. 3
UAE (mainland)Stored Value Facility (SVF) licence from the CBUAEUAE mainland. Free zones have their own regulators.
Saudi ArabiaElectronic money institution licensed by SAMASaudi Arabia.

UK founders who want EU customers usually set up a separate EU entity with its own licence. That is a second licence project, not an extension of the first.

Example: a wallet outgrows its partner

Tomas runs a UK multi-currency wallet for freelancers. It launched as an EMI agent of a larger EMI.

  1. The pressure. Two years in, customer balances are growing fast, and his principal’s fees and product limits now shape his roadmap more than his customers do.
  2. The decision. His model shows balances well past the small EMI cap within a year, so he applies directly for full authorisation.
  3. The preparation. He raises the €350,000 of capital plus a buffer for growth, hires an MLRO, opens a safeguarding account and turns his partner’s policies into his own.
  4. The switch. Once authorised, he moves customers from the agent arrangement to his own licence in planned stages, with clear notice to customers.

Common misconceptions

“€350,000 is all the capital you will ever need.”

It is the floor. Own funds rise with average outstanding e-money, so growth needs more capital.

“A UK EMI licence opens Europe.”

Not since Brexit. EU customers usually need an EU licence or an EU partner.

“Once authorised, the hard part is over.”

Authorisation starts the daily work: reconciliation, audits, reporting, monitoring and keeping the FCA informed of changes.

FAQ

What is an authorised EMI?

An authorised electronic money institution (AEMI) is a firm the FCA has authorised to issue e-money and provide payment services in the UK without the volume limits that apply to a small EMI. It needs at least €350,000 of initial capital.

How much capital does an authorised EMI need?

At least €350,000 of initial capital when it is authorised. After that, it must keep own funds of at least that amount, or more if its calculated requirement is higher, which for e-money is usually 2% of average outstanding e-money.

Can a UK authorised EMI serve customers in the EU?

Not through passporting. UK firms lost EU passporting rights after Brexit, so serving EU customers usually means a separate licence in an EU country, or working with an EU-licensed partner.

How long does FCA authorisation for an EMI take?

By law the FCA must decide within three months of a complete application, or within twelve months if it is incomplete. Preparing a strong application usually takes several months before that.

Is an authorised EMI the same as a bank?

No. An authorised EMI can hold and move customer money but cannot lend it out or pay interest on it, and its customers are protected by safeguarding rather than deposit insurance.

When should a fintech move from a small EMI or EMI agent to an authorised EMI?

Usually when it will pass the small EMI cap, needs services such as open banking that a small EMI cannot offer, or when a partner's limits and fees cost more than running its own licence.

Related terms

EMISEMIEMI agentE-moneySafeguardingFCAPassportingPIMLROBanking licence

Sources

  1. 1 LG

    legislation.gov.uk The Electronic Money Regulations 2011

    https://www.legislation.gov.uk/uksi/2011/99/contents
  2. 2 FC

    Financial Conduct Authority Electronic money institution applicants

    https://www.fca.org.uk/firms/apply-emoney-payment-institution/emi
  3. 3 EL

    EUR-Lex Directive 2009/110/EC on electronic money institutions

    https://eur-lex.europa.eu/eli/dir/2009/110/oj