Plan to receive your Payment or E-Money Institution licence? Read this article to learn more what parameters do regulators consider when evaluate applications.

By Ivan Aleksandrov

Before applying for a PI or EMI licence, you should earnestly assess your chances by taking a look at your company through the eyes of the regulator. If you think you might not yet be ready to apply, take care to fix the flaws in your company first, instead of waiting for the regulator to point them out to you.

In addition to formal evaluation criteria, such as comprehensive information as well as compliance with applicable legislation and local guidelines, the regulator will want to know if your team is capable of developing a business according to plan, adhering to legislative requirements (particularly when it comes to AML and security), monitoring risks and reporting to the regulator.

How regulators consider applicants can be compared to how venture capital funds evaluate potential investments – but the criteria are different. A venture investor will value your capacity for rapid growth and scaling over the span of several years; a regulator will prioritise your reliability, your financial robustness, your understanding of the payments ecosystem, the implementation of comprehensive, adequate and sound internal policies, and the combined competencies of your team.

Regulators evaluate companies across multiple parameters simultaneously. If you perform poorly in some aspect of the evaluation, make sure that your application stands out favourably in other areas.

So what parameters do regulators actually consider and what do you need to take into account if you plan to receive your Payment or E-Money Institution licence.

The team: range competencies

Some regulators allow you to apply with just 2-3 identified members of the team, however, it is always better to have enough staff to address each of the following areas of responsibility:

  • AML
  • Risk management
  • Financing
  • IT systems and cyber security
  • Internal audit

Do not forget to mention executives in charge of general governance as well:

  • CEO
  • COO
  • Chief commercial officer

The more employees you can identify at application time, the better.

The team: local representation

Even if the regulator is not very strict about a local team being present (like Ireland or Poland), a local team will always be considered better than distributed international personnel – especially for matters of risk management and AML.

Conversely, staff that you maintain beyond Europe will actually be considered as being more of a risk factor.

The team: experience

The best option is having team members with whom the regulator is already familiar, people that were approved to similar positions earlier.

Referring to staff with experience in executive positions at financial organisations, but who have not passed regulator screening before, tends to be somewhat less successful.

Be sure to avoid applications that indicate people with no experience in banking or fintech comprising more than half of the team.

The source of funds

To receive your Payment or E-Money Institution licence, the origin of the funding must be clear and transparent to a regulator. Stating crypto sales revenue as a source of financial assets is a bad idea.

An ideal source of funds would be a company with a sizeable, stable income, a regulated investment fund, or the founders’ individual savings confirmed by bank statements and tax returns.

The wealth of the source of funding also matters. Remember to have enough funds in order to finance the company for at least its first year or two. This is in addition to initial capital (EUR 125,000 for PIs and EUR 350,000 for EMIs). If you barely have enough money to make ends meet and intend to draw from a source of last resort, the regulator will certainly want to know what would happen if you ever needed more.

The regulator wants to be certain that you have enough funds to be viable, and to develop the company even if some things do not go according to plan. Please read our previous article about the total licensing costs.


Sometimes the UBO (ultimate beneficial owner) is the same person as the source of funds. In other cases, a business will attract external funding, which means that the regulator will evaluate the investor as well all major shareholders.

The reviewer will consider the UBOs’ reputations and scour their background for any compromising details. The physical location and residency of beneficial owners matters a lot. If all of your company’s owners reside outside Europe, this will be considered a major risk factor by any regulator.

The business concept

Regulators are wary of “we just want to open payment accounts” companies. To a regulator, “just opening accounts” means you want customers nobody else will serve. The payment services market in Europe is fiercely competitive, and the regulator will need to know how you intend to stay in the game.

So, if you want to receive your Payment or E-Money Institution licence, your business plan should include an appealing product, with clear justifications behind your plan to compete for users.

Your understanding of the local market is also a crucial point for every regulator.

Risk – your services and user base

Regulators will prefer companies that service low risk customers or at least maintain a risk-balanced portfolio.

Few of them will approve the application of a company that targets only high-risk customers and focus on high-risk services (e.g. crypto).

Improving the quality of your application

When all is said and done, there are no companies that will rank 10/10 across all criteria. However, a serious look at your company from every aspect can help increase your chances by improving problem areas and balancing weaknesses with strengths.

If you intend to work with high-risk customers, make sure you present the strongest local AML team to the regulator.

If you do not have a lot of funds on your current account, seek out a co-investor to provide a more robust source of funds.

If the owners of the company are situated outside Europe, play a strong hand by localising your team to the country of registration.

The most important parameter that affects how a regulator will perceive you is, of course, a detailed and considerate business plan coupled with a set of professionally drafted policies. Without them, even a promising team with powerful capital and a great idea are worthless. The reverse is also true – having this framework in place can still make a good impression if your company is less than ideally positioned in other significant aspects.

About Advapay

Advapay is a provider of Core Banking platform Macrobank and Banking-as-a-Service solutions for Electronic Money and Payment Institutions, such as digital banks, e-wallets, remittance companies, crypto startups and other fintech companies. Currently, the company serves more than 30 financial services companies across the UK and European Economic Area.   

Besides the technical infrastructure, the company provides licensing and fintech consulting services, including assistance in building payment infrastructure.  

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