In plain words
Think of a provisional driving licence that only lets you drive in your home town and below a certain speed. You are driving your own car, under your own name, but the rules keep you inside a clear boundary. A small EMI is the e-money version of that.
A small electronic money institution, or SEMI, is a UK firm registered with the FCA to issue e-money in its own name. It does the same basic job as a full EMI: take customers’ money, give them a balance, let them spend and send it. The difference is scale. A SEMI must keep its average outstanding e-money at or below €5 million, serve UK customers only, and stay out of open banking services. In exchange, it needs much less capital and a lighter application. 1
It is a registration, not a full authorisation. That word matters less to customers than to you: it signals that the regulator has accepted a smaller, simpler business, and expects it to stay that way or to move up.
How it works
How a small EMI works
The same money flow as a full EMI, with a ceiling you have to watch.
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1
Register with the FCA
A UK company with a UK head office applies for registration, showing fit managers, safeguarding arrangements and anti-money-laundering controls.
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2
Issue e-money to UK customers
Customers pay in, the SEMI gives them e-money one for one, and they spend, send or withdraw it.
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3
Safeguard every pound
Customer money sits apart from the firm’s own, usually in a safeguarding account at a bank, and is reconciled every working day.
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4
Track the average against the cap
The firm measures its average outstanding e-money and, if it offers other payment services, their monthly average. Near the limit, it plans the move to a full licence.
The limits, one by one
Every SEMI rule comes back to staying small and staying in the UK. These are the conditions in the Electronic Money Regulations 2011 and the FCA’s guidance on them. 2
€5 million of e-money
Average outstanding e-money must not exceed €5 million. It is an average of what customers hold, not the total you process.
€3 million of other payments
If you also offer payment services not linked to your e-money, their monthly average over the last 12 months must stay within €3 million.
Capital that grows
No set minimum below €500,000 of average outstanding e-money. From €500,000, capital of 2% of that average.
UK only
A UK company with a UK head office. No passport into the EU or anywhere else.
No AIS or PIS
A SEMI cannot offer account information or payment initiation services, the two open banking services.
Full safeguarding
Safeguarding is a condition of registration. There is no “small” version of protecting customer money.
The €5 million cap sounds generous until you translate it into customers. A wallet where 10,000 people keep an average of £400 each is already close to it. Model your expected balances, not your expected transaction volume, before choosing this route.
Small EMI vs EMI agent vs authorised EMI
A SEMI sits in the middle of the UK ladder. You hold your own registration, so no partner can switch you off, but you accept a ceiling.
| EMI agent | Small EMI | Authorised EMI | |
|---|---|---|---|
| Whose licence | The principal EMI’s | Your own registration | Your own authorisation |
| Volume cap | Set by your principal | €5M average outstanding e-money | None |
| Initial capital | None of your own required by law | None below €500k e-money, then 2% | €350,000 |
| Can issue e-money itself | No | Yes | Yes |
| AIS and PIS | Only if the principal offers them | No | Yes, with permission |
| Who answers to the FCA | The principal | You | You |
If you start as an EMI agent, a SEMI is the natural next step when you want your own name on the register. If you already know you will pass €5 million, an authorised EMI may be the better first application. We cover the judgement call in when a small EMI makes sense, and when it does not.
Is there a small EMI outside the UK?
The SEMI is a UK category. Elsewhere the idea of a lighter, capped licence exists in some places, but it is never the same thing.
| Market | Closest equivalent | What to know |
|---|---|---|
| United Kingdom | Small EMI (SEMI) | Registered by the FCA. UK only, €5M cap. 3 |
| European Union | National lighter regimes, where a country offers one | The E-Money Directive lets member states waive some requirements for small issuers. Such a licence covers only that one country and cannot be passported. |
| UAE and Saudi Arabia | No direct equivalent | Wallet and e-money licences are set by the local regulator, such as the CBUAE or SAMA, with their own categories and capital rules. |
Example: a savings-pot app that stays small
Priya runs a UK app that helps families put money aside for school trips and gifts. Balances are small and the customers are all in the UK.
- The choice. She models 15,000 families holding an average of £150. That is well under the €5 million cap, so she applies to be a small EMI rather than a full one.
- The money. Parents top up by bank transfer. The app issues e-money and keeps the cash in a safeguarding account at a UK bank.
- The capital. While average e-money stays under €500,000, there is no set capital minimum. When it passes that point, she holds 2% of the average as capital.
- The trigger. When a school partnership is likely to double balances, she starts the authorised EMI application early, so the upgrade is ready before the cap becomes a problem.
Common misconceptions
“A small EMI is a cheap way to get a full licence.”
No. It has a hard cap, no passport and no open banking services. Moving up later means a new application to the FCA.
“The €5 million limit is about payment volume.”
It is about average outstanding e-money: what customers leave in their balances. A busy app with small balances can stay under it.
“Small means lighter compliance.”
The capital and application are lighter. Safeguarding, anti-money-laundering checks and fair treatment of customers apply in full.
FAQ
What is a small EMI?
A small electronic money institution (SEMI) is a UK firm registered with the FCA to issue e-money, under lighter rules than a full EMI. In return it must keep its average outstanding e-money at or below €5 million and serve UK customers only.
What is the difference between a small EMI and an authorised EMI?
An authorised EMI needs at least €350,000 of initial capital but has no volume cap and can offer every payment service. A small EMI needs far less capital, but is capped at €5 million of average outstanding e-money, cannot offer AIS or PIS, and cannot serve customers outside the UK under a passport.
How much capital does a small EMI need?
Below €500,000 of average outstanding e-money there is no fixed capital minimum. Once it reaches €500,000, the small EMI must hold capital equal to 2% of its average outstanding e-money.
What happens if a small EMI goes over the €5 million limit?
It no longer meets the conditions of its registration. It has to tell the FCA and either bring volumes back under the cap or apply to become an authorised EMI, so plan the upgrade well before you get close.
Does a small EMI have to safeguard customer money?
Yes. Safeguarding is a condition of SEMI registration, exactly as for a full EMI. Customer funds must be kept separate from the firm's own money and reconciled regularly.
Can a small EMI issue cards and give customers account numbers?
Yes. A small EMI can issue e-money, offer cards through a card programme partner and provide payment services linked to its e-money, as long as it stays within its limits and UK-only scope.
Sources
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1
LG
legislation.gov.uk The Electronic Money Regulations 2011
https://www.legislation.gov.uk/uksi/2011/99/contents -
2
FC
Financial Conduct Authority PERG 3A.4: Small electronic money institutions, mixed businesses, distributors, agents and exempt bodies
https://handbook.fca.org.uk/handbook/perg3a/perg3as4 -
3
FC
Financial Conduct Authority Electronic money and payment institutions
https://www.fca.org.uk/firms/electronic-money-payment-institutions
