What is a Small Electronic Money Institution License?
If an institution wants to offer most of the services that are offered by a payment institution and deal with issuance and redemption of electronic money then it must obtain a Small Electronic Money Institution (SEMI) License. It is important to understand that electronic money refers to the digital storage of a medium of exchange. This digital money must be stored on a computerized device.
What services can you offer with a SEMI License in the EU?
With a SEMI License, you can offer various services including those offered by Payment Institutions and those that involve electronic money. In some EU countries, however, you can apply to only deal with financial transactions that involve electronic money. Although the scope of services you can offer is huge, some services that are common throughout the EU include:
- Issue payment instruments
- Offer services that allow cash placement and operation of a payment account
- Offer services that allow cash withdrawal and operation of a payment account
- Money remittance
- Execute payment transactions including direct debits, transfer of funds, credit transfers etc where the funds are supported by a credit line
- Utilise electronic wallets and prepaid debit cards amongst other things to offer electronic money services
- Acquire payment transactions
- Execute payment transactions including direct debits, transfer of funds, credit transfers etc using the user’s or another payment service provider or through a payment card or a similar device.
The Licensing Process
Who regulates the SEMI License in the EU?
Different authorities in different EU countries are responsible for the regulation of financial institutions and their operations. In general, such institutions oversee all the financial institutions in their market, making sure that all conducted operations comply with the legal requirements, are registered with them and are transparent in all their transactions.
Key Requirements to Apply for the SEMI License in the EU
In order to apply for a SEMI License the EU, the following requirements must be met:
- Evidence proving that when trading begins, the e-money business will generate a monthly average outstanding electronic money of less than €5m
- Evidence proving that in the last 12 months before submitting the application, the monthly average of payment services transactions did not exceed €3m. In the case that the firm has not traded before, this assessment can be based on projections.
- A description of the policy regarding the funds of e-money holders that will be safeguarded by the firm
Some countries, such as Belgium, provide firms with a choice between whether they would like to carry out operations like a payment institution along with dealing in electronic money. Most countries, however, do not offer this option. In general, different EU countries require different documents, but listed below are the most commonly required documents:
- Personal Documents of the managers
- Statutory documents of the company that highlight the company’s plans of conducting the electronic money transfer operations
- A compliant business plan
- Measures to safeguard the funds of electronic money users and/or electronic money users
- Detailed description of the internal control mechanisms demonstrating compliance with obligations in relation to money laundering and terrorist financing
- Detailed description of the use of branches and agents, if any
- Identity of statutory auditors and audit firms
You can access country-specific information on your desired country’s relevant institution’s website.
While this may seem like a difficult process, it is certainly very easy. All you need to do is contact us and we will guide you through the process, answer any questions you have, and help you with SEMI licensing.
This page was last updated on February 3, 2022.