Differences in payment licenses in the UK

The most widely applied licenses for the UK firms engaged in the FinTech sector are the two non-banking PSP authorizations: PI License and EMI license. They both give authorizations to engage in the delivery of the main monetary services that allow servicing a wide range of businesses. Thus, businesspersons may hesitate between the EMI and the PI license, being unsure which one corresponds better to the scope of the company they wish to set up. Indeed, both types are quite similar in some respect, however, there are also many different aspects between them. We will try to clarify the similarities and the dissimilarities so that you could make a more precise decision on which authorization a specific business requires.

Main dissimilarities between the EMI and the PI licenses

Both EMIs and PIs in the UK are under the remit of the same law – PSD2. The main similarity between these FinTech organizations is that both PIs and EMIs can deliver services in the respect of payments to their clients. Licensing conditions are, in general, similar to the shareholding, personnel, or accounting and external audit obligations, for instance. However, the main dissimilarity is that EMIs have the authorizations to issue e-funds additionally to their authorization to operate as PIs and deliver payment solutions.

Taking into consideration the PI and EMI license obligations imposed by the authorities, several other differences can be found as described below:

Restrictions for EMIs and PIs

• For EMI there are restrictions for the overall amount of financial liabilities related to e-funds in the issuance of 5,000,000 euros per month and in terms of overall payment operations – they should not constitute more than 3,000,000 euros per month.
• PIs have identical restrictions on the overall amount of payment activities – 3,000,000 euros per month.

Capital obligations

• Minimum obligations for EMI constitute 350,000 euros.
• Minimum obligations for PI vary from 20,000 euros (only funds remittance) to 125,000 euros.

Licensing fees

Fees for licensing as an approved organization or incorporation as an EMI or PI depend on the rules established by the regulatory agency.

For instance, if you are considering obtaining a small EMI or PI license, applying to FCA, the regulative body for approximately 50,000 financial organizations in the UK – there is a fee for application in the amount of £500 while for licensing for an authorized organization the fee payable is £5000.

The regulatory body of the UK FinTech sector

In the UK, a primary regulative organization for the domain of finances was the Financial Service Authority. However, over time, it split up into the following organizations:

• Financial Cοnduct Authority, and
• Prudential Regulation Authοrity.

They have the following roles:

• The FCA is responsible for the monetary service domain in the UK, with the primary purpose to safeguard consumers, ensure the industry remains stable and spur correct competitiοn between market players.
• The PRA is a department of the Bank of England and in charge of the regulation of banking organizations, investment firms and other major organizations.

Companies providing their activities in the FinTech domain, as a rule, fall under the remit of the FCA.

These are the core dissimilarities between EMIs and PIs. If you need any further details or a consultation, you can contact our lawyers at Eternity Law International. Also, you may check EMI and PI licenses for sale.

Please contact us to get more information.

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