A Guide to Electronic Money Institution Licensing
What an EMI licence actually permits, how it differs from a banking licence, and what it should tell a business doing due diligence.
Prospective clients and partners carrying out due diligence on a payment provider, who want a clear, accurate understanding of what an Electronic Money Institution licence actually permits, how it differs from a banking licence, and what it means for the safety of their funds and the stability of the relationship.
What this guide covers
What an EMI licence actually permits
An Electronic Money Institution licence authorises a business to issue electronic money, provide payment accounts, execute payment transactions, and offer related services such as card issuing, within a regulatory framework set at EU level and supervised nationally. FinXP holds its licence from the Malta Financial Services Authority, permitting it to issue e-money, operate payment accounts, provide multi-currency IBANs, and issue cards under its Mastercard Principal Membership.
It’s worth being clear about this: an EMI licence is a genuine financial services authorisation, not a lighter-touch stand-in for proper regulation. It carries defined obligations around fund safeguarding, capital adequacy, governance, anti-money-laundering controls, and ongoing supervisory reporting. What it doesn’t do is accept deposits or make loans; that’s the specific activity that separates an EMI from a bank.
How an EMI licence differs from a banking licence
The distinction that matters most to a business doing due diligence isn’t which licence sounds more prestigious, but what each licence actually permits, and how client money is treated under each one.
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- Regulatory oversight: what MFSA supervision involves
- What "licensed" should mean to a client doing due diligence
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| Aspect | EMI licence (FinXP) | Banking licence |
|---|---|---|
| Permitted activities | Issuing e-money, payment services, account and card provision | Full banking activities, including lending and deposit-taking |
| Treatment of client funds | Safeguarded and segregated; never lent onward | Held as deposits; may be lent onward within reserve rules |
| Deposit protection | Not covered by a deposit guarantee scheme; protected instead by safeguarding rules | Covered by a national deposit guarantee scheme up to the protected limit |
| Capital regime | Own-funds requirements proportional to e-money issued | Basel-based capital adequacy requirements |
| Regulatory supervision | Licensed and supervised by the MFSA | Licensed and supervised by a national or EU banking regulator |
Neither model is inherently safer in the abstract; a bank can fail; an EMI can fail. What matters is how each is structured to protect client money when that happens, and an EMI’s safeguarding requirement, which keeps client funds segregated and off the institution’s own balance sheet, is the mechanism built specifically for that scenario.
Regulatory oversight: what MFSA supervision involves
FinXP is licensed and supervised by the Malta Financial Services Authority, the regulator responsible for authorising and overseeing financial services firms operating from Malta, including EMIs. That supervision doesn’t end at approval; it includes regular reporting obligations, capital and liquidity monitoring, governance and fit-and-proper requirements for senior management, and anti-money-laundering compliance overseen in line with EU directives.
Malta’s regulatory framework for EMIs operates under the same EU Electronic Money Directive that applies across the European Economic Area, so the underlying standards are harmonised even though supervision itself sits with the national regulator where the institution is licensed.
What “licensed” should mean to a client doing due diligence
The word “licensed” gets used loosely across the payments industry, and it doesn’t always mean the same thing twice. A thorough due diligence process should establish the following before treating a provider’s licence as a source of confidence:
- Direct authorisation: confirm the provider holds its own licence issued in its own name, rather than operating under another entity’s authorisation or as an agent of a licensed principal.
- Regulator verification: check the provider’s status directly on the regulator’s public register rather than relying on a claim made in marketing material.
- Scope of permissions: understand exactly which activities the licence covers, since permissions can vary between institutions holding what looks like the same licence type.
- Safeguarding arrangements: ask how client funds are segregated in practice, and whether this is demonstrable rather than asserted.
- Track record: consider how long the institution has operated under the licence, since regulatory approval on its own doesn’t tell you much about operational maturity.
Frequently asked questions
Is an EMI licence as safe as holding funds in a bank?
The protections work differently, rather than one being categorically stronger. Bank deposits are typically covered by a deposit guarantee scheme up to a set limit; EMI client funds aren’t covered by such a scheme but are required to be safeguarded and kept always segregated from the institution’s own funds, rather than being available to fund the institution’s own operations.
What happens to client funds if an EMI became insolvent?
Safeguarded funds are held separately from the institution’s own balance sheet specifically so that, in an insolvency scenario, client funds aren’t treated as assets available to general creditors. That’s the core purpose the safeguarding requirement under EMI regulation is built to serve.
Does FinXP take deposits or lend money?
No. As an EMI, FinXP issues e-money and provides payment services; it doesn’t take deposits or extend lending, which are activities reserved for banking licences. Client funds are safeguarded rather than placed on FinXP’s own balance sheet.
How can a business verify FinXP’s licence status directly?
By checking the Malta Financial Services Authority’s public register of licensed institutions, which lists authorised EMIs and the permissions each holds; entirely independent of any claims made in a provider’s own materials.
Next step
FinXP holds its EMI licence directly from the Malta Financial Services Authority, with client funds safeguarded and segregated as a matter of regulatory requirement. Speak to the team if you would like to discuss our regulatory structure as part of your due diligence.
FinXP is a Malta-licensed Electronic Money Institution with Mastercard Principal Membership and direct CENTROlink SEPA participation; a licensed payments core built for sectors regulated-market institutions won't serve: digital assets, marketplaces, cross-border payroll, and high-volume digital commerce, alongside fintechs, PSPs, and other regulated entities building on FinXP's infrastructure.