A commercial firm that issues electronic money in the United Kingdom needs FCA authorisation as an electronic money institution, or registration as a small electronic money institution, under the Electronic Money Regulations 2011 (EMRs 2011). Regulation 2 of those Regulations also treats a credit institution, a credit union, the Post Office and certain public bodies as electronic money issuers, and each of those issues without an EMI permission. Bratby Law advises on product classification, the choice between the two routes, the FCA application, capital and safeguarding arrangements, and compliance after authorisation. Rob Bratby is general counsel to UK Payments Initiative Limited, which is day-to-day work inside a payments business rather than a view from outside it.

When a firm needs FCA authorisation to issue e-money

A firm needs FCA authorisation or registration if its product is electronic money within regulation 2 of the EMRs 2011: electronically or magnetically stored monetary value, represented by a claim on the electronic money issuer, issued on receipt of funds for the purpose of making payment transactions, accepted by a person other than the issuer, and not excluded by regulation 3. Regulation 46 of the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 adds a further exclusion at regulation 3ZA, taking a stablecoin, and money or assets held to stabilise or back one, outside the meaning of monetary value. That amendment came into force on 25 February 2026 for the preparatory purposes listed in regulation 1(3) of those Regulations, which are FCA rule-making, guidance and directions and the making and determining of applications, and it comes fully into force on 25 October 2027. A firm designing a product with a cryptoasset element therefore tests it today against the definition and the regulation 3 exclusions, with the coming exclusion in view. A stored value wallet, a prepaid card programme and a multi-merchant credit balance commonly meet that definition even where the firm does not describe its product as e-money.

A firm classifies its activity as the issuance of electronic money under the EMRs 2011, a payment service under the Payment Services Regulations 2017 (PSRs 2017), both, or neither because an exclusion applies, and that classification decides the authorisation route. An authorised EMI may provide the payment services related to its e-money issuance without separate authorisation as a payment institution, so a product that does both does not need two permissions. The two regimes carry different capital requirements, different application content and different ongoing obligations. A firm settles that question before it prepares an application, through regulatory perimeter and market entry.

The authorised EMI route and the small EMI route

A firm issuing electronic money takes one of two routes under the EMRs 2011: authorisation as an electronic money institution (an authorised EMI, sometimes abbreviated AEMI), or registration as a small electronic money institution (small EMI). Its projected e-money float and payment volumes decide which. A small EMI must satisfy the conditions in regulation 13 of the EMRs 2011: its total business activities must not generate average outstanding electronic money exceeding EUR 5,000,000, the monthly average, over the 12 months preceding the application, of the total amount of its payment transactions unrelated to e-money issuance must not exceed EUR 3,000,000, and its business must not include account information services or payment initiation services. An authorised EMI has no equivalent volume limits.

Requirement	Authorised EMI	Small EMI
FCA status	Authorised (EMRs 2011, reg 6)	Registered, not authorised (EMRs 2011, reg 13)
Average outstanding e-money	No limit	Maximum EUR 5,000,000 (reg 13(3))
Unrelated payment transactions	No limit	Maximum EUR 3,000,000 monthly average (reg 13(4))
Account information and payment initiation services	Permitted, with professional indemnity insurance or a comparable guarantee (reg 6(6)(e) and (f))	Not permitted (reg 13(4A))
Initial capital	EUR 350,000 (Schedule 2, paragraph 2)	None below EUR 500,000 average outstanding e-money; 2% of average outstanding e-money at or above it (Schedule 2, paragraph 3)
Ongoing own funds	The greater of EUR 350,000 and Method D, being 2% of average outstanding e-money (reg 19(1); Schedule 2, paragraph 13)	2% of average outstanding e-money where regulation 19(2) applies (Schedule 2, paragraph 14)
Safeguarding	Required (regs 20 to 22)	Required (regs 20 to 22)

The EMRs 2011 set these thresholds in euros, which reflects their EU origin. A firm approaching the small EMI ceilings should start its authorisation application well before it reaches them, because the authorised EMI application is heavier and the FCA’s determination period runs only from receipt of the completed application.

Conditions for EMI authorisation and the determination period

An applicant must satisfy the conditions in regulation 6 of the EMRs 2011: it must be either a body corporate constituted under the law of a part of the United Kingdom with its head office, and any registered office, in the United Kingdom, or a body corporate with a branch located in the United Kingdom whose head office is outside it, and it must carry on at least part of its electronic money and payment service business in the United Kingdom. It must have robust governance arrangements and clear lines of responsibility, effective risk management and internal controls, directors and managers of good repute with appropriate knowledge and experience, fit and proper controllers of any qualifying holding, a business plan including a forecast budget for the first three years, and adequate safeguarding measures under regulation 20. An applicant required to register under the Money Laundering Regulations 2017 must have that registration in place.

The FCA must determine a completed application within three months of receiving it under regulation 9 of the EMRs 2011, and any incomplete application within twelve months. The three-month period runs only from receipt of the completed application, so an applicant answering a series of FCA information requests waits longer. An applicant whose regulatory business plan, safeguarding documentation, financial projections and governance map agree with each other answers fewer of them.

Capital requirements for EMI authorisation

An authorised EMI must hold initial capital of at least EUR 350,000 under paragraph 2 of Schedule 2 to the EMRs 2011. It must then maintain at all times own funds of at least the greater of EUR 350,000 and the amount calculated under paragraph 13 of Schedule 2, which for e-money issuance and related payment services is Method D, being 2% of average outstanding electronic money, under regulation 19(1). A firm whose float is small therefore holds EUR 350,000, not 2% of it. An authorised EMI that also provides payment services unrelated to e-money issuance must calculate a separate own funds requirement for that business under Method A, B or C as the FCA directs. A small EMI holds no initial capital where its average outstanding e-money is below EUR 500,000; at or above that figure it must hold initial capital equal to 2% of average outstanding e-money. The FCA may direct that an authorised EMI’s own funds requirement is up to 20% higher or up to 20% lower than the calculated amount, under paragraph 15 of Schedule 2 to the EMRs 2011, and may do the same for a small EMI under paragraph 16. It must make any such direction on the basis of an evaluation of the institution under paragraph 17, and it may charge for that evaluation under paragraph 18.

Safeguarding duties on e-money issuers

An electronic money institution must safeguard the funds it receives in exchange for electronic money it has issued, under regulation 20(1) of the EMRs 2011. Under regulation 20(2) it must safeguard those relevant funds in accordance with either regulation 21, which is segregation, or regulation 22, which is an insurance policy with an authorised insurer or a comparable guarantee from an authorised insurer or an authorised credit institution. Under regulation 20(2A) it may safeguard some relevant funds under regulation 21 and the rest under regulation 22. The duty falls on the institution: a credit institution, the Post Office or a credit union may also be an electronic money issuer within regulation 2 without being subject to regulation 20. Adequate safeguarding measures are also a condition of authorisation, so an applicant settles its safeguarding design before it applies.

The FCA’s safeguarding rules, in force since 7 May 2026, add operational obligations to that statutory duty. The institution must carry out an internal safeguarding reconciliation as frequently as necessary and no less than once each reconciliation day, under CASS 15.8.19R, unless it safeguards through an insurance policy or guarantee unlimited in amount, in which case CASS 15.8.11R replaces that reconciliation with a daily calculation of its safeguarding requirement. It must in either case perform an external safeguarding reconciliation no less than once each reconciliation day, under CASS 15.8.42R. It must allocate to a single director or senior manager of sufficient skill and authority responsibility for oversight of its operational compliance and for reporting to its governing body, under CASS 15.2.4R. It must submit a safeguarding return to the FCA within 15 business days of the end of each month, under SUP 16.14A.3R. It must appoint an auditor and obtain a safeguarding audit under SUP 3A, unless it is exempt because it has not been required to safeguard more than GBP 100,000 of relevant funds under the relevant funds regime at any time for a period of at least 53 weeks. CASS 15 applies to an authorised EMI and a small EMI alike, under CASS 15.1.2R(3), so an applicant designs its safeguarding operations to that standard from the start. The Safeguarding and Consumer Duty page covers the regime in depth.

EMI authorisation compared with payment institution authorisation

A firm that issues electronic money needs EMI authorisation or small EMI registration, and an EMI may also provide payment services without a separate PSRs 2017 authorisation. A firm that moves money without issuing stored value needs authorisation as a payment institution or registration as a small payment institution under the PSRs 2017, where initial capital under Schedule 3 is nil for account information services, EUR 20,000 for money remittance, EUR 50,000 for payment initiation services and EUR 125,000 for the other payment services, with the greatest applicable figure taken where a firm provides services in more than one row. A small payment institution is subject to a EUR 3,000,000 monthly average transaction ceiling under regulation 14(3) of the PSRs 2017. The figure matches the small EMI ceiling but the test does not: regulation 14(3) counts the total amount of payment transactions executed by the applicant and its United Kingdom agents, while regulation 13(4) of the EMRs 2011 counts only those transactions unrelated to the issuance of electronic money. The Payment Institution Authorisation and Licensing page covers payment institution authorisation in detail.

EMI authorisation support

A firm entering the market needs its product classified against the regulation 2 definition, its authorisation route chosen and its FCA application prepared, including the regulatory business plan, the safeguarding framework and the governance documentation. Bratby Law does that work, and for an authorised firm advises on perimeter changes, safeguarding compliance, agent and distributor arrangements and FCA supervisory correspondence. The FCA Investigations and Enforcement page covers what happens once the FCA opens an investigation.

Rob Bratby, Managing Partner, handles the work himself. His Fractional General Counsel work in the payments sector is day-to-day work on how authorisation conditions and safeguarding obligations operate inside a regulated business, and it informs the advice on safeguarding method, own funds calculation and governance design. A firm instructing Bratby Law directly does so under Direct Legal Advice; a law firm or consultancy instructing the firm alongside its own retainer does so as Specialist Co-counsel.

Frequently asked questions about EMI authorisation

What is electronic money under UK law?

Electronic money is defined in regulation 2 of the EMRs 2011 as electronically or magnetically stored monetary value, represented by a claim on the electronic money issuer, issued on receipt of funds for the purpose of making payment transactions, accepted by a person other than the issuer, and not excluded by regulation 3 of those Regulations. Prepaid cards, stored value wallets and similar float-holding products typically fall within the definition. A further exclusion at regulation 3ZA, inserted by the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 and covering stablecoins and the assets held to back them, is in force from 25 February 2026 for preparatory purposes only and comes fully into force on 25 October 2027.

What is the difference between an authorised EMI and a small EMI?

An authorised electronic money institution (authorised EMI) holds full FCA authorisation with no volume limits and initial capital of EUR 350,000. A small EMI is registered with the FCA rather than authorised, subject to a maximum average outstanding e-money of EUR 5,000,000, a EUR 3,000,000 monthly ceiling on unrelated payment transactions, and no account information or payment initiation services. Both routes carry the same safeguarding duty under regulations 20 to 22 of the EMRs 2011.

How long does FCA authorisation as an EMI take?

The FCA must determine a completed application within three months under regulation 9 of the EMRs 2011, and an incomplete application within twelve months. The practical timeline depends on application quality: FCA information requests extend the process because the three-month period runs from receipt of the completed application. An applicant whose business plan and safeguarding documentation are consistent answers fewer information requests.

What are the capital requirements for EMI authorisation?

An authorised EMI must hold initial capital of at least EUR 350,000 under paragraph 2 of Schedule 2 to the EMRs 2011. It must then maintain own funds of at least the greater of EUR 350,000 and the amount calculated under paragraph 13 of Schedule 2, which for e-money issuance and related payment services is Method D, being 2% of average outstanding e-money. The two figures are alternatives and are not cumulative, so a firm with a small float holds EUR 350,000. A small EMI holds initial capital of 2% of average outstanding e-money only where that average is EUR 500,000 or more.

Do I need an EMI licence or a payment institution licence?

If your product meets all four elements of the regulation 2 definition and falls outside regulations 3 and 3ZA, you are issuing electronic money and need EMI authorisation or small EMI registration. Storing customer value for future payments is an indicator, not the test. If you move funds without holding stored value, for example money remittance or payment initiation, you need payment institution authorisation or small payment institution registration under the PSRs 2017. The classification depends on the product’s legal structure rather than on how it is described to customers.

Can I distribute e-money through agents?

An EMI may distribute and redeem e-money through distributors and agents under regulation 33 of the EMRs 2011, but it may not issue e-money through them: issuance stays with the institution. Agents providing payment services must be registered with the FCA, and regulatory responsibility for distributor and agent conduct stays with the institution, so the arrangements need contractual controls covering safeguarding, conduct and anti-money laundering compliance.

How does the CASS 15 regime affect EMIs?

An authorised EMI and a small EMI are both safeguarding institutions for the purposes of CASS 15 (CASS 15.1.2R(3)). Each must perform an internal safeguarding reconciliation no less than once each reconciliation day (CASS 15.8.19R), unless it uses an insurance policy or guarantee unlimited in amount, in which case it must instead carry out a daily calculation of its safeguarding requirement (CASS 15.8.11R), and each must perform an external safeguarding reconciliation no less than once each reconciliation day (CASS 15.8.42R). Each must allocate oversight of safeguarding compliance to a single director or senior manager (CASS 15.2.4R), submit a safeguarding return within 15 business days of the end of each month (SUP 16.14A.3R) and, unless it has not been required to safeguard more than GBP 100,000 of relevant funds under the relevant funds regime at any time for a period of at least 53 weeks, appoint an auditor and obtain a safeguarding audit (SUP 3A.1.1R). These rules, in force since 7 May 2026, supplement the statutory safeguarding duty in regulation 20 of the EMRs 2011 (CASS 15.1.1G).

What is the e-money redemption right?

An e-money holder has a statutory right to redeem the monetary value of their e-money at par value at any time under regulation 39 of the EMRs 2011, which also requires issuers to issue e-money at par value on receipt of funds. Under regulation 40 the issuer must ensure that the contract with the e-money holder clearly and prominently states the conditions of redemption, including any fees relating to redemption, and that the holder is informed of those conditions before being bound. Redemption design affects both the customer contract and the safeguarding calculation, so a firm develops the two together.

Related payments regulation pages

These pages cover the rest of the payments regime:

Payments Regulation
Payment Institution Authorisation and Licensing
Open Banking and Variable Recurring Payments
PSR and Scheme Governance
Operational Resilience and DORA
Safeguarding and Consumer Duty
FCA Investigations and Enforcement
The PSRs 2017 Explained: Payment Authorisation, Liability and Execution Times
The PSRs 2017 Explained: Information Requirements and Framework Contracts
Digital Money and Central Bank Digital Currencies. A firm unsure whether its e-money or payment activity falls within the regulated perimeter at all should start with The PSRs 2017 Explained: the Payment Services Perimeter and the Exclusions, which sets out the exclusions that can take an activity outside the regime entirely.

Credentials

Rob Bratby is Managing Partner of Bratby Law and Fractional General Counsel to UK Payments Initiative Limited, the industry body developing the UK’s commercial account-to-account payments scheme. He also holds Fractional General Counsel appointments at The One Touch Switching Company, TelXL and Core. He is ranked Band 2 for Telecommunications in Chambers UK 2026, listed by The Legal 500 as a Leading Partner for IT and telecoms in London, and recognised in the Lexology Index as a Global Elite Thought Leader for telecoms and media and a Thought Leader for data privacy and protection.