Two of the types of activities that can be completed in the fintech sector are the electronic money issuance and the provision of payment services. These correspond to the Electronic Money Institution (EMI) and the Payment Services Provider (PSP) and Estonia is one of the first European countries to acknowledge their importance.
If you want to open a company in Estonia in this sector, you will need to obtain an EMI license. Our company formation agents can help in this regard.
Legislation on EMI companies in Estonia
Financial technology or fintech has become quickly one of the most developed new industries in Europe and the European Union. It has raised so much that national and EU authorities have created legal frameworks that support the creation of various types of businesses in this sector.
Electronic Money Institutions are regulated through two important laws. The first one, created at national level is the Estonian Payment Institutions and E-money Institutions Act (PIEIA), while the second one is EU Directive 2015/2366 also known as the Payment Service Directive 2 (PSD2).
There is only one difference between EMIs and PSPs and that is in favor of the former which implies the issuance of electronic money.
Electronic money or e-money is defined as electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions, and which is accepted by a natural or legal person other than the electronic money issuer in accordance with Article 2(2) of Directive 2009/110/EC. Electronic money includes things like prepaid cards and electronic wallets.
It is important not to confuse the EMI license with the Estonian crypto license. The latter can be used for other activities. Our local consultants can offer detailed information about the differences between the two types of business permits.
Our Estonian company formation officers can offer detailed information on the regulations associated with the creation of EMIs and PSPs.
Company registration requirements when applying for an EMI license in Estonia
The steps of opening a company seeking to obtain an EMI license in Estonia are not different from those of any other business operating in a traditional industry. This means that the only requirement will rest on the procedure of obtaining the EMI license.
The business form required for these activities is the public limited liability company for which the Memorandum and Articles of Association must be drafted alongside information about the shareholders and directors. It is possible to set up this type of company through Estonian e-residency.
The most important requirement to respect when applying for EMI license in Estonia is the share capital which must amount to at least 350,000 euros. Also, only cash contributions are accepted with proof of the legitimacy of the funds.
Once the company is registered, it can apply for the EMI license with the Estonian Financial Supervision and Resolution Authority.
Our company registration agents in Estonia can assist with the incorporation with the Trade Register. You can also rely on us if you need support in applying for an Estonian crypto license. The country is one of the most advanced from this point of view, which makes it a very appealing and safe destination for those seeking a well-established destination for such operations. Contact us for guidance in obtaining such a permit.
Documents to prepare for obtaining an EMI license in Estonia
When seeking to obtain authorization for operating as an EMI, the following documents must be filed with the Estonian Financial Supervision and Resolution Authority:
- copy of the company’s Memorandum and Articles of Association,
- proof of payment of the share capital (bank statement),
- a plan providing information about the services to be provided,
- a business plan showing the company meets of the requirements imposed under the PEIA,
- a document indicating the company respects the requirements related to the protection of clients’ assets,
- internal rules and accounting policies and procedures documents, as required under PEIA,
- information on the IT means and systems used to issue electronic money.
Other documents will also be required, some of them related to the accounting regulations that must be met by public companies with respect to the audit requirements such businesses must meet.
If you want to open a fintech company in Estonia, you can rely on our advisors. Starting a business in Estonia is easy with our help.
Compliance requirements when applying for an EMI license in Estonia
When applying for an e-Money license in Estonia, the company must have the minimum of the following:
- a business strategy;
- policies for risk management and bookkeeping;
- an explanation of the systems and regulations for internal control and protection;
- information about the security measures, control mechanisms, information technology, and other technological systems and equipment that will be required for the planned services to be provided;
- a detailed guide to the operational risks;
- general specifications for maintaining and safeguarding customer assets;
- an explanation of the prudential measures;
- a business plan for continuity;
- a policy regarding conflicts of interest;
- transferring and outsourcing policies;
- a protocol for addressing customer grievances;
- a policy on sanctions;
- AML regulations.
Feel free to address our Estonian company formation agents for details on these documents. Also, our accountants in Estonia can assist with the accounting documentation for EMI applicants.
Possibility to operate abroad
An Estonian EMI license holder can offer electronic money services anywhere in the European Economic Area (EEA). No additional license from another EEA state is required (the so-called passport rules). Passporting removes regulatory obstacles to unrestricted trade amongst EEA members, facilitating similar operations.
Time frame to obtain an EMI license in Estonia
After all necessary paperwork has been filed with to the Estonian authorities, the Estonian Financial Supervision and Resolution Authority will take 2 to 6 months to approve the application. You can rely on our company registration advisors in Estonia for support in drafting the documents.
Services that can be provided under an EMI license in Estonia
The following services can be provided by a company holding an EMI license in Estonia:
- electronic money issuance, however, certain requirements must be met,
- payment and loans can also be two of the services provided under this license,
- additional services related to electronic money, such as handling payments,
- operation of various electronic payment systems.
One of the best aspects of applying for an EMI license in Estonia is that the company obtaining it will have passporting rights and provide its services in all EU countries without additional authorization requirements.
If you are attracted by the idea of starting a business in Estonia, our agents can help you.
Why set up an EMI company in Estonia
Estonia is one of the most advanced countries in the world in terms of technology. It is also the first country to enable the concept of e-residency, which makes it one of the best places to create a fintech business.
According to statistics:
- at EU level, Estonia is a fintech leader with 2.3 fintech unicorns per million capita;
- at the level of 2024, there are 193 fintech companies operating in Estonia;
- 99% of the financial transactions here are completed digitally.
If you want to set up a company and apply for an EMI license in Estonia, please contact our local specialists.