When creating a fintech product that involves moving, holding, or storing customer money, an Electronic Money Institution (EMI) license in the EU or UK is not just a regulatory requirement. It can also be a major competitive advantage.

Perhaps you are starting a digital wallet, neobank, a crypto-fiat, or a remittance app. Here are the top five advantages of obtaining an EMI license and why this initiative is worthwhile.

You are able to hold and deal with customer funds legally

An EMI license enables your firm to issue and store electronic money on behalf of users. This implies that you have the ability to legally:

·      Allow customers to deposit cash into online wallets

·      Sell prepaid cards or virtual balances

·      Keep money in secure accounts

·  Transfer money among users, merchants, and partners.

Without this license, any business that keeps customer money, even temporarily, is walking on thin ice. Professionals like Legalaes can help you navigate this regulatory landscape to ensure you operate legitimately.

It strikes credibility with partners and banks

Opening a corporate account with an unlicensed fintech business is a nightmare. PSPs, card issuing companies, and banks would have nothing to do with you unless you can demonstrate that you are regulated.

With an EMI license, you are considered a proper financial institution. That opens the doors to:

·      Commercial bank accounts

·      Integrations with payment gateways

·      Partnership issuances, e.g., with Visa/Mastercard

·  Access to the API of major financial infrastructure providers.

In other words, you become not only a startup but a licensed operator that people trust.

It opens passporting (EU only)

Once you are licensed in a member state of the EU, you can transfer your license to be able to operate throughout the European Economic Area (EEA). This is 27 countries under one license, with no requirement to establish local structures in all of them.

This is massive leverage when it comes to planning a geographical expansion. It reduces the burden on your compliance actions, accelerates market entry, and makes you a pan-European participant.

Note: Passporting is not available after Brexit in the UK, yet the UK will have a strong standalone license with international recognition.

You can now compete with banks, and not being one

You do not have to apply for a complete bank license in order to provide bank-like services. Using the EMI license, you will be able to:

·      Issue IBANs or account numbers

·      Facilitate SEPA Payments/ Transfers

·      Provide cards, top-ups, and remittances

·  Create an experience of a modern bank.

It gives your users everything they expect without assuming the regulatory burden of becoming a bank.

It simplifies fundraising

Investors seek transparency. It is a red flag to hold or transfer money without the correct license. However, when you already have an EMI license or have initiated the process, then it is evident:

·      You mean business with compliance

·      You have passed regulatory barriers

·  Your foundation is rock solid.

Such preparation can accelerate deals and improve investor confidence.

Final thoughts

An EMI license empowers actual product capabilities, increases trust, and enables quicker scaling. When you want to be serious about establishing in fintech in the EU or the UK, then by all means, obtaining a license is the most intelligent first action you can take.