E-money, short for electronic money, is a digital cash equivalent that can be used for electronic transactions and is stored on an electronic device or remotely on a server. An e-money licence is a regulatory approval that allows a company to issue e-money and provide related payment services. E-money licence requirements vary by business scale, jurisdiction, and other factors.

In certain jurisdictions, businesses need an e-money licence if they want to provide products such as digital wallets, prepaid cards, and other forms of electronic funds storage and transfers. The licence ensures that the company complies with financial regulations such as those related to Anti-Money Laundering (AML), consumer protection, and the maintenance of adequate financial reserves.

E-money transactions are popular worldwide. In the European Union, for example, there were almost 4.7 billion e-money transactions in the first half of 2025. E-money licences allow companies to facilitate these payments. Below, we'll explain what businesses should know about e-money licences and the requirements for getting one.

What's in this article?

• What you can do with an e-money licence
  
• What you can't do with an e-money licence
  
• Who needs an e-money licence?
  
• Small EMI vs. authorised EMI: Which do you need?
  
• Requirements to get an e-money licence
  
• How to apply for an e-money licence
  
• How Stripe Connect can help
  

What you can do with an e-money licence

An e-money licence allows companies to provide a range of financial services centred around digital payments and the management of electronic funds. These services include:

• Issue e-money: Companies can create and distribute digital currency that customers can use to make cashless transactions or transfer funds.

• Redeem e-money: Businesses can convert customers' electronic balances back to cash or transfer them to bank accounts at face value.

• Handle payment transactions: Companies can transfer money on users' behalf and manage direct debits, credit transfers, and more.

• Manage payment accounts: Businesses can open, operate, and close payment accounts for their users.

• Provide payment instruments: Companies can provide payment tools such as cards and app-based solutions that facilitate the initiation and processing of payments.

• Remit money: Businesses can provide electronic services that let customers send money internationally.

• Offer payment initiation and account information services: If their regulatory permissions allow them to, companies can initiate payments from a user's account at another institution or provide information about different accounts that the user holds.

What you can’t do with an e-money licence

An e-money licence does not allow businesses to provide the following products and services:

• Bank accounts: E-money institutions cannot provide traditional bank accounts that include services such as interest accrual and loans.

• Credit extensions: They cannot extend credit or loans to customers unless specifically permitted to do so by additional licensing.

• Investment services: Businesses cannot manage investments or give investment advice.

• Insurance services: Companies cannot offer or broker insurance products.

• High-value asset management: They cannot manage assets other than e-money such as securities, commodities, and real estate.

• Currency exchange: While some basic currency exchange services might be permitted, businesses cannot provide comprehensive foreign exchange trading services.

• Securities: Businesses cannot issue securities or bonds.

Who needs an e-money licence?

Businesses that need an e-money licence typically operate in the digital payment space and handle the issuance, management, or transfer of e-money. Here are some common types of businesses and operations that require this kind of licence:

• Digital wallet providers: Companies providing digital wallets in which users can electronically store and manage funds

• Prepaid card issuers: Businesses issuing prepaid cards that users can load with funds for transactions or withdrawals

• Online payment platforms: Platforms that facilitate online payments for goods and services and allow users to store funds and transact electronically

• Money transfer services: Services providing electronic remittance solutions that enable users to send money across borders

• Mobile payment services: Apps and services that allow payments via mobile devices

• Cryptocurrency platforms that perform conversions: Cryptocurrency exchanges that give the option to deposit, withdraw, or convert currency (this requirement depends on the regulatory environment)

• Fintech firms: Fintech startups with innovative payment solutions or financial services involving the creation or management of e-money

• Neobanks: Digital-only banking alternatives that rely on e-money licences to provide account services, payment cards, and fund storage without holding a traditional banking charter

Small EMI vs. authorised EMI: Which do you need?

Before starting the application process, determine the scale of the licence you require. In jurisdictions like the UK, Electronic Money Institutions (EMIs) are regulated by the Financial Conduct Authority (FCA) under the Electronic Money Regulations 2011. Under this framework there are two distinct regulatory categories: authorised EMIs with full permissions and small EMIs with a limited operational scope.

Applying for the correct tier prevents early-stage startups from being burdened by heavy regulatory capital requirements, while ensuring that established businesses have the regulatory clearance they need to scale internationally.

Here is how the two licences compare based on the standard European and UK regulatory baselines:

Requirements to obtain an e-money licence

Here are the typical steps you’ll need to complete to qualify for an e-money licence. Specific requirements and application processes vary by location.

Document a business plan

• Define your target market, including the specific customer segments and areas you plan to serve.

• Outline your revenue model and how you plan to monetise your services.

• Identify potential risks such as fraud, operational risks, and regulatory changes, along with your mitigation tactics.

• Provide financial projections that demonstrate your company's expected growth and profitability.

Demonstrate financial stability

• Meet the minimum capital requirements, which will depend on where you intend to operate. An EMI starts with an initial capital of at least €350,000 in the EU.

• Prepare audited financial statements that show your company's current financial position and ability to withstand financial shocks.

Enact security measures

• Enact strong cybersecurity measures, including encryption, firewalls, and intrusion detection systems.

• Ensure compliance with regulations like the Digital Operational Resilience Act (DORA), which requires documented operational resilience, third-party risk management, and incident response planning.

• Conduct regular security audits and vulnerability assessments to address potential weaknesses.

• Prepare a clear incident response plan to handle any security breaches or cyberattacks.

Apply data protection measures

• Implement data protection policies and procedures that comply with applicable regulations such as GDPR.

• Obtain explicit consent from customers to collect and process their personal data.

• Provide clear, transparent information about how customer data is used and shared.

Develop AML/CTF policies and procedures

• Develop a comprehensive Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) programme including risk assessments, customer due diligence procedures, transaction monitoring systems, and reporting mechanisms.

• Appoint a qualified compliance officer to oversee and implement the programme.

• Train employees on an ongoing basis to ensure they are aware of their obligations and can identify suspicious activities.

Conduct background checks and fit and proper assessments

• Conduct background checks on key individuals such as directors, officers, and major shareholders, and conduct assessments of their suitability to run an e-money institution. This typically involves examining their financial history, professional experience, and any past regulatory or criminal records.
  

Be aware that European regulations are evolving. The proposed PSD3 and PSR will soon consolidate e-money and payment institution licences into one framework, requiring future applicants to adapt to new unified standards.

How to apply for an e-money licence

E-money licences are different in each country. For example, if you want to operate in the e-money space in the US, you need to secure a money transmitter licence at the state level. Here's a breakdown of the process:

1. Understand your business model

Clearly define the specific e-money services you intend to offer. This will help you identify where you'll need to obtain licences and any additional regulatory requirements.

2. Research specific regulations

Each jurisdiction has its own licensing requirements and procedures. Familiarise yourself with the specific rules and regulations of where you plan to operate. Determine if your business model requires additional licences or registrations such as a lending licence and virtual currency licence.

3. Develop a comprehensive business plan

This document should outline your company's objectives, target market, revenue model, risk management tactics, and financial projections.

4. Complete the application

Complete the appropriate application form. Provide all requested information about your business, management team, and financial condition. Include the following required documentation:

• Audited financial statements: These statements demonstrate your company's financial stability and ability to handle customer funds.
  
• AML/CTF programme manual: This document outlines your policies and procedures for preventing money laundering and terrorist financing activities.
  
• Background checks: Key individuals within your company such as directors and officers will probably need to undergo background checks.
  
• Surety bond: A surety bond acts as a financial guarantee to protect customers in case your company fails to fulfil its obligations.
  
• Other documents: Depending on the local requirements, you might also need to provide additional documents, such as proof of net worth, organisational charts, and sample contracts.
  

5. Submit the application

Follow the instructions for submitting your application package, which is typically done online or by mail. Include any application and licensing fees with your application, which varies by jurisdiction. In the UK, it's £5,000 for a full EMI licence, £500 for a small EMI licence. Regulators will review your application and supporting documents. Before approving it, they might require you to attend an interview to discuss your business plan and answer any questions.

6. Receive decision and resubmit as needed

The typical authorisation period for a full EMI can range from 6 to 18 months. If your application is approved, you'll receive your licence. This allows you to legally operate your e-money business in that jurisdiction. If your application is denied, you'll probably have the opportunity to appeal the decision or resubmit your application after addressing any deficiencies.

7. Maintain ongoing compliance

Submit periodic reports to regulators. These might include financial statements, transaction data, and AML/CTF activity reports. Be prepared to undergo audits by regulators.

How Stripe Connect can help

Stripe Connect orchestrates money movement across multiple parties for software platforms and marketplaces. It offers quick onboarding, embedded components, global payouts and more.

Connect can help you:

• Launch in weeks: Use Stripe-hosted or embedded functionality to go live faster and avoid the up-front costs and development time usually required for payment facilitation.

• Manage payments at scale: Use tooling and services from Stripe so you don't have to dedicate extra resources to margin reporting, tax forms, risk, global payment methods or onboarding compliance.

• Grow globally: Help your users reach more customers worldwide with local payment methods and the ability to easily calculate sales tax, VAT and GST.

• Build new lines of revenue: Optimise payment revenue by collecting fees on each transaction. Monetise Stripe's capabilities by enabling in-person payments, instant payouts, sales tax collection, financing, expense cards and more on your platform.

Learn more about Stripe Connect or get started today.