PSP, EMI, and AEMI: What Is the Difference and Which Model Should a Fintech Business Choose?

Launching a fintech business requires not only a technological solution but also the right regulatory model. This model determines which financial services the company can offer, whether it has the right to issue electronic money, and what operational requirements apply. The terms PSP, EMI, and AEMI are frequently encountered in the fintech sector. Although they all relate to payment services, there are important differences between them that must be considered before launching the business. A PSP (Payment Service Provider) is an entity that provides payment services.

Such companies facilitate payments, money transfers, acquiring, and other payment operations. It is important to understand that "PSP" is a general concept rather than the specific name of a single, universal license. For instance, in the European Union, the relevant activities might require "Payment Institution" (PI) status.

This model is suitable for companies planning to process payments or execute transfers without issuing electronic money themselves.

An EMI (Electronic Money Institution) is an entity authorized to issue electronic money and provide permitted payment services. Unlike a standard payment institution, an EMI can create products that involve storing the electronic monetary value of users.

This model is relevant for:

• e-wallets;
• payment apps;
• prepaid payment products;
• multi-currency fintech services.

At the same time, an EMI is not a bank. Electronic money institutions are subject to specific requirements regarding the safeguarding of client funds, capital, and internal controls.

AEMI (Authorised Electronic Money Institution) refers to an authorized electronic money institution. This specific status is used in the UK, for instance, for companies that have obtained full authorization from the Financial Conduct Authority (FCA). Unlike a Small Electronic Money Institution (SEMI)—which operates under a simplified regime with certain limitations—an AEMI operates under full authorization and must comply with a broader set of regulatory requirements.

Thus, EMI and AEMI do not represent fundamentally different business models; EMI is the general term for an electronic money institution, while AEMI specifies its authorized status within a given jurisdiction.

Which model should a fintech company choose? The choice depends primarily on the functionality of the planned product. If a company intends to facilitate transfers, process payments, or provide acquiring services, the payment institution model is worth considering. If the business involves launching e-wallets, prepaid products, or issuing electronic money, it is necessary to evaluate the feasibility of obtaining an EMI license.

For a large-scale fintech project in the UK that plans to issue electronic money independently, the AEMI model may be appropriate. However, obtaining one's own license is not always a mandatory first step; in some cases, a business can launch a product by partnering with an already licensed financial institution.

Obtaining a financial license entails far more than simply registering a company and submitting documents. Regulators assess a business's financial stability, ownership structure, management qualifications, and ability to comply with legal requirements.

Particular attention should be paid to:

• minimum capital and financial requirements;
• AML/KYC procedures and customer due diligence;
• protection of user funds;
• information security and risk management;
• choice of jurisdiction and access to target markets.

It is also important to consider not only the cost of obtaining a license but also ongoing expenses related to compliance, personnel, reporting, and operational support.

PSP, EMI, and AEMI are terms that help define the regulatory model for a fintech business. PSP refers to Payment Service Providers; EMI entails the ability to issue electronic money; and AEMI designates a fully authorized Electronic Money Institution in relevant jurisdictions.

Choosing the wrong model can lead to additional costs, launch delays, and the need to alter the business structure. That is why a legal analysis should be conducted during the fintech project's planning stage. Antwort Law’s lawyers assist fintech companies in determining the optimal regulatory model, selecting a jurisdiction, assessing licensing requirements, and preparing the necessary documentation. We support businesses through the structuring, licensing preparation, and financial service launch phases, helping to establish a legally sound foundation for future growth.

Lidia Ivanova

International lawyer
Antwort Law