Wise, Revolut, N26 in their early stages, and many crypto onramp services all operate under an EMI (Electronic Money Institution) license. This is not a banking license, nor an ordinary legal entity, but a separate category. Why does it exist and what does it mean for the user?

What an EMI Allows

An EMI is a financial license regulated by the E-Money Directive (EMD2 in the EU, 9R Money Directive in the UK). It allows:

  • Issuing electronic money — storing client funds digitally, issuing cards, and processing payments.
  • Opening accounts for clients, crediting/debiting funds.
  • Issuing payment cards (through partnerships with card schemes).
  • Accepting SEPA and SWIFT transfers.

It does not allow:

  • Lending out client funds.
  • Earning interest on client deposits (so EMIs typically do not pay interest to holders).
  • Participating in deposit insurance schemes.

How Client Funds Are Protected

This is a critical difference from a bank. An EMI must hold client funds segregated in special accounts at a bank. These funds are legally separate from the EMI's own funds — if the EMI goes bankrupt, client funds are not part of its bankruptcy estate.

That sounds good, but the devil is in the details:

  • Segregation accounts are held at an ordinary bank. If that bank fails, the funds fall under the bank's deposit insurance (€100k in the EU). Amounts above that may be lost.
  • Funds in an EMI are not insured for €100k like a bank deposit. Protection is only through segregation, and it does not work in all scenarios.
  • During an EMI's bankruptcy, client funds may be frozen for months while the administrator sorts things out. Access is eventually restored, but not instantly.

In Practice

An EMI is a convenient tool for everyday operations: transfers, cards, multi-currency accounts. Wise and Revolut have operated this way for over 10 years without major incidents. But it is not a place to store significant sums.

Rule of thumb: what you need on hand — keep in an EMI. What you need as a reserve — keep in a bank with deposit insurance.

In 2024-2025, several EMIs went bankrupt (Railsbank rebranded to Railsr and underwent restructuring; VolPay closed in Australia). In each case, client funds were returned, but the process took 3 to 12 months.

How to Verify the License

Each EU country publishes a register of licensed EMIs. In the UK, it's on the FCA website; in Lithuania (a popular EMI jurisdiction), on the Bank of Lithuania website; in Ireland, on the CBI website. Finding a specific provider and confirming the license is active takes 1-2 minutes.

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This material is for informational purposes only and is not financial advice. Data and service terms may change, so check primary sources before making a payment or investment decision. Mentions of third-party brands and services do not imply official partnership, support, or endorsement by VirtCardPay.
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