EMI licence vs BYOL — who holds the licence behind your product?
The single decision that shapes your unit economics, your timeline and your regulator relationship: run under a provider's licence umbrella, or hold your own authorisation. Here is the trade, priced honestly — in five steps.
By Mikolaj Slezak · Published
Step 1 — Understand the two models
Umbrella: your programme runs on the provider's EMI, PI or banking licence — they carry regulatory responsibility, onboard you as a distributor/agent or programme, and charge for that carriage in the unit prices. BYOL (bring your own licence): you hold the authorisation and buy technology from vendors — full control, direct regulator relationship, and the full compliance burden. Most of the market's marketing blurs this line; every profile in the catalogue keeps licence type explicit so you always know who would actually be regulated.
Step 2 — Price the trade honestly
Umbrella: more per unit, almost nothing up front, live in months. BYOL's real price is mostly not the famous capital line — though that exists: EUR 350,000 initial capital for an EMI under EMD2, and EUR 20,000–125,000 for a payment institution under PSD2 depending on services. On top sit the compliance team, safeguarding arrangements, audits, and an authorisation process that commonly runs six months to a year with a national regulator — all paid before your first customer transacts. The crossover point is a volumes question: the umbrella premium you pay per unit versus the fixed cost base you would carry instead.
Step 3 — Match the licence class to the product
Work backwards from what the product does: holding customer balances (wallets, accounts, prepaid cards) is e-money — EMI territory; pure payment services (initiation, acquiring, remittance) can live under a PI; credit needs a banking licence; crypto services need MiCA authorisation (the MiCA guide). Definitions in plain language: EMI licence, payment institution, safeguarding, passporting — one EEA authorisation passports across all 30 states.
Step 4 — Plan the migration path
The standard European playbook is sequential: launch under an umbrella, migrate to BYOL at scale. The trap is portability — if accounts, cards and customer data cannot move, your migration becomes a relaunch with churn. So negotiate the exit before you sign the entrance: data export formats, card portability (BIN transfer or reissue), account migration support and notice periods. The catalogue's licence-type filter separates licensed providers from pure software vendors, which is exactly the BYOL shopping list.
Step 5 — Verify the landscape in the registers
Before choosing a home regulator — or trusting an umbrella — look at where authorisations actually live: the European Fintech Index holds 2,579 register-sourced entities from the EBA, ESMA and FCA registers, and our register analysis maps the clusters (Lithuania as the e-money capital, where PIs concentrate, and why 4 in 10 licences never passport). Regulator choice is strategy, not paperwork: supervision style, authorisation queues and passporting practice differ.
What to do next
If you are still proving the product: shortlist umbrella providers — BaaS, IBAN sponsors, BIN sponsors — with the licence facts verified per profile. If you are going BYOL: filter for Vendor-type providers (software without a licence attached) and plan the authorisation in parallel. Either way, request a match and tell us your licence status — it is literally a field on the form, because it changes which three providers we pick. Free, neutral, zero pay-to-rank.
FAQ
How much does an EMI licence cost?
The statutory floor under EMD2 is EUR 350,000 initial capital, plus ongoing own funds; payment institutions range from EUR 20,000 to EUR 125,000 under PSD2 depending on services. The real cost sits on top: compliance staffing, safeguarding arrangements, audit and an authorisation process that commonly runs six months to a year with a national regulator.
What is the difference between an EMI and a payment institution?
An EMI may issue electronic money - stored balances your customers hold - and provide payment services; a PI provides payment services without issuing e-money. If your product holds customer balances (wallets, accounts, prepaid cards), you are in EMI territory; pure payment initiation or acquiring can live under a PI.
Can I start under an umbrella and get my own licence later?
Yes - it is the standard European path: launch under a provider's licence to prove the product, then apply for your own EMI/PI once volumes justify the fixed costs. The trap is portability: if accounts, cards and data cannot move, the migration becomes a relaunch. Negotiate exit terms at the start, not at scale.
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