Financial institutions around the world operate under different regulatory licenses depending on their activities, regions, and risk obligations. In fintech, four licensing categories are the most important: EMI, PI, MSB, and local national payment licenses. Understanding the differences is essential for building compliant financial products, operating cross-border payments, issuing cards, or managing digital wallets.
1. EMI — Electronic Money Institution (EU/UK)
EMI licenses are issued in Europe and the United Kingdom, allowing companies to issue electronic money and provide broad financial services without being a full bank.
What EMIs can do
- Issue IBAN accounts
- Issue cards (debit and prepaid)
- Hold customer funds in safeguarding accounts
- Enable international payments
- Support merchant payments
- Offer digital wallets
- Provide FX and remittance services
What EMIs cannot do
- Lend customer funds
- Provide interest-bearing savings
- Invest customer deposits
Countries where EMI is common: Germany, Lithuania, Ireland, Sweden, UK, France.
Best for fintechs needing multi-currency accounts, payments, and cards under strict EU and UK regulation.
2. PI — Payment Institution (EU/UK)
A PI license allows companies to provide payment services but not issue electronic money.
What PIs can do
- Process payments
- Support remittances
- Handle merchant acquiring
- Offer FX services
- Operate payment accounts (depending on authorization level)
What PIs cannot do
- Issue e-money
- Hold customer balances long term
- Issue cards independently
Typical PI use cases include payment platforms, remittance companies, and B2B billing platforms.
3. MSB — Money Services Business (USA and Canada)
In the United States and Canada, fintech companies typically operate as MSBs.
What MSBs can do
- Handle money transmission
- Operate remittances
- Sell or issue stored value
- Process FX transactions
- Work with banking partners to offer broader services
Key requirements include FinCEN registration, 50-state licensing in the USA unless piggybacking via a bank partner, AML and BSA compliance, and strong reporting processes.
MSB is essential for platforms offering cross-border transfers, check cashing, money transmission, or virtual currency services.
4. National Payment Licenses (Rest of the World)
Each country outside the EU, UK, and US has its own licensing categories.
Examples include:
- Saudi Arabia: SAMA Payment License, stored value or digital wallet license
- Brazil: Sociedade de Credito, Payment Institution (similar to PI), PIX ecosystem compliance
- Oman: Central Bank of Oman Payment Service Provider License
- UAE: ADGM and DIFC Money Services License, Central Bank payment licenses
- Singapore: MPI (Major Payment Institution), SPI (Standard Payment Institution)
- South Africa: SARB Payment Provider Certification
These licenses allow local operation of payments, wallets, merchant services, and mobile money integrations.
5. What License Is Needed Depends on the Product
- Digital wallet: EMI or national wallet license
- Payment processing: PI or PSP license
- Cross-border payouts: MSB (US), PI (EU), national PSP license
- Merchant acquiring: PI with acquiring authorization
- Mobile money integration: national telecom-approved license
6. Real-Life Example (Saudi Arabia Fintech Operator)
A payments company in Saudi Arabia wants to launch digital wallets and instant local transfers.
Process:
- The company applies for a SAMA Payment License.
- They submit corporate documents, shareholder info, AML policies, and technical architecture.
- A compliance team aligned with Saudi AML rules is formed.
- Systems integrate with SARIE (Saudi RTGS) and local PSPs.
After approval, users can add money via bank, send and receive instant transfers, make merchant payments, and withdraw funds.
Why this license was needed: Saudi Arabia does not use EMI or PI, it uses national payment licenses under SAMA. Without this license, the fintech cannot legally operate.