PI or EMI: which authorisation does your business actually need?

This guide is for a firm that has a product design and now has to decide which authorisation, if any, that product needs, before it picks a country or starts drafting.

It is not the right guide for a firm that only brings together information about accounts held elsewhere. A provider of account information services only is registered rather than authorised, is not subject to the initial capital requirement, and must instead hold professional indemnity insurance or a comparable guarantee.6

It is not the right guide for a firm that already holds one of these permissions and wants to know where it may operate. That is a cross-border question, and the branch, passport or own authorisation guide answers it.

PSD2 excludes a list of activities from its scope entirely, and the E-Money Directive excludes certain monetary value from the definition of electronic money. An activity that moves money is not automatically a payment service, and value that looks like a balance is not automatically electronic money.810

Separately, a Member State may exempt small payment institutions and small electronic money issuers from full authorisation, on conditions and subject to registration. The trade is that an exempted undertaking does not gain the right to operate in other Member States.910

Both questions are cheaper to answer first than to discover during an application.

An EMI can issue electronic money and hold stored value; a PI cannot. If your product stores customer value in a wallet or issues prepaid balances, you are likely in EMI territory.712

A PI executes payment services listed in Annex I to PSD2, such as remittance, acquiring and payment initiation, without issuing electronic money.712

Whether customer value is stored, redeemable or issued. Whether a business needs a payment institution or an electronic money institution authorisation turns on whether it performs a payment service listed in Annex I to PSD2, issues electronic money, or both.712

Which of those payment services the product actually performs, because the list decides both the perimeter and the capital tier: EUR 20 000 for money remittance only, EUR 50 000 for payment initiation services, and EUR 125 000 for the payment services in points 1 to 5 of Annex I.2712

Whether funds are received from users at all. Funds received from payment service users, and funds received in exchange for electronic money, are subject to safeguarding requirements that are supervised on an ongoing basis.312

Whether the firm intends to operate in other Member States, because an undertaking exempted from full authorisation does not obtain that right.910

Where the applicant is established, because a payment institution authorisation is granted only to a legal person established in a Member State.4

The choice decides your initial capital. For a payment institution it is EUR 20 000 where you only provide money remittance, EUR 50 000 for payment initiation services, and EUR 125 000 for the payment services in points 1 to 5 of Annex I. For an electronic money institution it is at least EUR 350 000.211

A provider of account information services only sits outside that scale entirely: it is registered rather than authorised, holds no initial capital, and carries professional indemnity insurance or a comparable guarantee instead.6

Getting the perimeter wrong late in the process is expensive and can require re-scoping the entire application.

On what may be done: an electronic money institution can issue electronic money and hold stored value, and a payment institution executes the payment services in Annex I to PSD2 without issuing electronic money.712

On initial capital: EUR 20 000, EUR 50 000 or EUR 125 000 for a payment institution depending on the services, and at least EUR 350 000 for an electronic money institution.211

On funds held: both are subject to safeguarding requirements, and those requirements are supervised on an ongoing basis rather than evidenced once.312

On reach: an authorised payment institution or electronic money institution that wishes to operate in another Member State applies through its home competent authority, which handles the notification to the host authority. An exempted undertaking has no such right.5910

On what the authority reads first: a payment institution application must include a security policy document containing a risk assessment and a description of the security control and mitigation measures.1

Map every money flow in your product. If value is stored, redeemable or issued, model EMI. If value only moves between parties, model PI.

Confirm the perimeter before selecting a jurisdiction. The authorisation is granted only to a legal person established in a Member State, so the entity question and the perimeter question are decided together.4

PSD3 and the Payment Services Regulation began as European Commission proposals of 28 June 2023. Parliament and Council reached a provisional agreement on 27 November 2025, the Parliament economic and monetary affairs committee approved the negotiated text on 5 May 2026, and the European Parliament record updated on 20 June 2026 classifies the file as close to adoption. As at 22 August 2026 formal adoption by Parliament and Council was still pending, so neither instrument was applicable law.13

That is the one citation on this page that has been opened and read in its live official source rather than drafted from it, and the reason it is worth stating is narrow: a file close to adoption is a reason to design a product so it can absorb change, not a reason to hold a decision open.

The most expensive failure is settling the perimeter last. A firm that models its capital, hires its team and picks a country before it has decided whether it stores customer value can find the whole plan resting on the wrong framework.

The second is reading a roadmap as if it were the product. Something that only moves money today but is designed to hold balances later is two answers, and the second one is what decides the hiring and the funding.

The third is treating the exemption above as a cheaper version of the same thing. It is a different thing, and what it costs is the ability to serve clients beyond one Member State.

The fourth is answering the question in a slide rather than in the file. The test is whether every money flow in the product can be described in the words the framework uses, and a flow nobody can describe that way is usually a flow nobody has decided about.

Not which country to apply in. Write one page listing every flow of customer money in your product, and mark which of them your firm holds, moves or issues. That page decides the authorisation, the capital, the safeguarding work and the country, in that order.