What is a SaaS E-Money License (EMI)?

An EMI license allows a non-bank business to legally provide electronic money. Electronic money is a digital equivalent of a certain amount of money in a government-issued currency (e.g., USD, EUR) that can be used for payments to third parties.

Key Features of an EMI

• E-Money Issuance: Means customer money can be turned into digital currency.
• Wallet Management: Users can be provided with “store of value” accounts.
• Payment Execution: Facilitating transfers, direct debits, and credit transfers.
• Card Issuance: The authority to provide physical or virtual debit cards to customers.

Obtaining an EMI license is not quick – the process is quite rigorous and usually takes from 6 to 12 months. Also, some regulators (such as the FCA in the UK or the Central Bank of Lithuania), require proof of operational stability and financial integrity.

The Application Timeline

1. Preparation of the business plan, program of operations, and IT security protocols.
2. Submission of a formal application and the regulator’s fee payment.
3. Review process that includes several months of “Q&A” probing into your compliance and risk models.
4. Authorization, when the firm proves it has met its main requirements before going “live” (this step occurs after approval).

E-Money Institution (AMI) and Authorized Payment Institution (API) are related yet distinct categories of financial service providers. An API license is designed to support transactions but cannot store customer funds. In contrast, an EMI license allows entities to record and manage electronic money balances within user accounts.

EMIs must comply with the same security laws as banks – the Payment Services Directive 2 (PSD2) and the General Data Protection Regulation (GDPR) to protect their customers’ privacy.

Core Security Measures include the following:

• Strong Customer Authentication (SCA): The use of multiple means to verify the user, such as biometric scans or text messaging, is required before payment approval.  
• Fund Segregation: The EMI must have separate accounts for customer money and its operating accounts; as a result, customer funds will be protected if the EMI goes bankrupt.
• AML/CTF Monitoring: Systems that monitor and analyze data in real-time for the purposes of detecting money laundering and/or terrorist financing activities.
• Encryption: All data in transit or at rest is subject to end-to-end encryption.

Entities that possess an EMI license implement “Ledger” or “Core Banking” engines to store and update electronic account information. Usually, these entities use standard software rather than building from scratch.

Popular Software Categories include:

• Banking-as-a-Service (BaaS): Choose providers who combine “license-as-a-service” and technical infrastructure.
• White-Label Wallets: Consider platforms that provide pre-built, cloud-native ledgers that can be used under a company’s brand.
• Modular APIs: Incorporate tools plugging financial functions inside existing program environments.