EMI license in Netherlands

Due to the competitive nature of the Dutch economy, foreign businesses find it a welcoming, stable and rewarding place to invest. Compared to other nations, the Netherlands’ GDP per capita is higher than the EU average.

Throughout history, the Dutch economy has proven itself to be one of the most powerful economies in the world.

A number of international rankings rank the Dutch as one of the most competitive economies in Europe, the fourth most competitive nation in the 2020 IMD rankings, and the fifth most innovative nation in the 2020 Global Innovation Index, according to the World Economic Forum.

Climate of competition for businesses

Incentives from the government are often offered to companies operating in a competitive environment, especially to innovators.

A multilingual workforce with a high level of education and an open mindset provide the basis for these fiscal endeavors.

In addition to welcoming internationals living in the Netherlands, the country’s Expat Centers also contribute to the success of its economy through the creation of a dynamic and diverse workforce.

Infrastructural advancements

From a geographical perspective, the Netherlands makes sense. In just 24 hours, Amsterdam and Rotterdam can reach 95% of the world’s most lucrative markets. There are efficient airports, railways, waterways, and ports connecting the Netherlands domestically and internationally.

Innovative and future-proof

Unrivaled entrepreneurial spirit is fostered in the Netherlands. A strong Dutch economy is attracted to the world’s leading companies because it embraces innovation, sustainability, and digitalization. From agrifood and financial services to quantum technology, companies look to the Netherlands for partnerships between the public and private sectors.

A nod to the nation’s future-oriented thinking was highlighted by the EU Innovation Scoreboard 2022, which ranked the Netherlands fourth for innovators.

2022 marks the second consecutive year in which the Dutch economy has grown by 4.5 percent, following a growth of 4.9 percent in 2021. Such growth over two consecutive years had not yet been recorded this century.

There was a record high inflation rate and a record high household consumption rate. An annual review of the economy for 2022 has been released by Statistics Netherlands (CBS).

Since March 2022, Coronavirus has been eradicated from the landscape. Russian invasion of Ukraine disrupted the Dutch economy at the end of February. As a result, inflation soared rapidly. The housing market remained strong despite a rise in prices (adjusted for inflation).

There has been a marked increase in the number of EMI (E-money Institution) permits received by the Netherlands in recent years. The Netherlands offers fintech foundations looking to operate in the payment options industry with a range of opportunities due to its robust regulatory framework, favorable conditions for international teams, and efficient licensing process.

In terms of issuing licenses for payment institutions (PI) and e-money institutions (EMI), De Nederlandsche Bank (DNB) is one of the most proactive entities in the European Economic Area (EEA).

De Nederlandsche Bank (DNB), the Dutch regulator, is notable for issuing licenses faster than many European jurisdictions, where obtaining one typically takes between 12 and 15 months.

The concept of EMI

A prepaid card is a form of electronic money, also called e-money, and EMIs issue prepaid cards, electronic wallets, and other types of electronic money for individuals and businesses.

Disbursing e-money is the responsibility of a legal entity.

A claim on the issuer representing electronic money is defined as a monetary value that is electronically stored, including magnetically, and is issued upon receiving funds in order to make a payment transaction, and which is accepted by a natural or legal person other than the electronic money issuer.

An e-money system is a way to store currency in bank computers backed by fiat currency. The electronic equivalent of cash is, to put it simply, an electronic payment system.

EMI license definition

It is a license for releasing electronic money that is known as the EMI (Electronic Money Institution).

Through this method, companies can perform quasi-cash operations like topping up electronic wallets, purchasing virtual currency, and making payments to forex accounts. As well as that, the license enables your business to be an EMI institution-a company that can issue digital currencies to both individuals and legal entities.

The creation of a virtual currency wallet, third-party payment service, and other resources requiring virtual currency would be impossible without an electronic money institution.

E-money cannot, however, be issued by PIs (Payment Institutions). Electronic Money Institutions and Payment Institutions differ primarily in their ability to issue e-money.

The contrasting legal treatment of payment accounts provided by PIs and EMIs results in the adoption of different business models by these institutions. An EMI license in 2023 can be obtained from one of several jurisdictions, as discussed in this article.

A potential risk associated with the provision of financial services has prompted governments to implement laws and regulations to protect consumers.

The respective governments in the regions where companies wish to operate set specific standards that have to be met by companies offering financial services.

In some jurisdictions, the EMI license is issued by a different regulatory body. Regulatory bodies in their chosen jurisdiction require businesses to research and comply with specific requirements before they can submit their applications.

Aspects to consider

• In the Netherlands, EMI licenses are relatively easy to obtain due to the short licensing process. De Nederlandsche Bank (DNB), the Dutch regulator, issues licenses within the realistic timeframe of 9 months, although some cases are completed within 6 months, while most European regulators require 12 to 15 months. In addition to offering companies a faster route to market entry, this expedited process allows them to capitalize on emerging opportunities sooner.
• Openness to International Teams: The Netherlands provides flexibility when it comes to local presence demands for international teams. Dutch regulators do not require a significant local presence, unlike many other agencies. Just two local directors are needed for an application, allowing the majority of the team to be from another European country. The Netherlands offers fintech firms a favorable regulatory environment that facilitates global collaboration and allows them to leverage diverse talent pools.
• Documentation in English: One of the advantages of pursuing an EMI license in the Netherlands is the possibility of submitting most authorizing documents in English. The Netherlands accepts English documentation rather than local language documentation, which reduces the burden and cost associated with translations. With this flexibility, international applicants are able to appeal more efficiently.

Services

An E-money EMI / Electronic Money Institution may perform the following activities under Section 3:34 of the Financial Supervision Act:

1. Issue electronic money and provide services related to it;
2. Provide other payment methods and manage them
3. Accounts for making payments. Users can deposit and withdraw cash from such accounts, use account cards to purchase goods and services, and place and withdraw cash. Funds can also be transferred as well as direct debits set up.
4. Services provided by merchants. Merchant services can be provided by holders of a license issued by a payment institution. The company can act as a master merchant and accept payments from merchants using credit cards.
5. Remittance of funds. A payment institution can also provide money remittance or transfer services. International cross-border payments can be made through this service by the payment service provider.
6. Services for initiating payments. This model allows an initiator to initiate payments directly from the user’s bank account, subject to the user’s consent, removing Visa and Mastercard networks from the payment process. A payment service provider who holds a payment institution license is able to initiate payments directly from the user’s bank account and transfer the amount directly to a merchant retailer’s bank account.
7. Information about your account. This permission enables payment service providers to view consolidated accounts information in one place, subject to the user’s consent.

How Are EMI and PI Accounts Different?

In spite of what many customers may think, PIs and EMIs are distinct from bank accounts.

In order to assess account functionality, let us examine the kind of institution that offers these accounts.

Because PI accounts cannot hold money on behalf of their users, they are more limited than EMI accounts.

• It is expected that PI funds will be spent, transferred, or withdrawn relatively quickly after entering an account.
• As opposed to the EMI license, which allows users to open e-wallets and make purchases online, withdraw money, and pay bills, users of the EMI license can open e-wallets.

Capital requirements for establishing each institution also vary significantly because of these significant differences in functionality.

How to get an EMI license in the Netherlands

Requirements

According to the Dutch regulator, De Nederlandsche Bank (DNB), getting an EMI (E-money Institution) permit requires you to meet certain requirements.

Payment service providers must comply with these requirements in order to maintain a system of fair and honest money.

A Dutch EMI permit can be obtained by filling out the following requests:

• In order to conduct payment services activities in the Netherlands, applicants need to create a legal entity.
• A minimum fund demand must be met by the applicant. In the Netherlands, an EMI permit requires a minimum of €350,000 in authorized funds.
• It determines whether the applicant company’s key employees are a good fit and proper fit. In order to fulfill their roles effectively, these individuals must possess the required qualifications, experience, and integrity.
• In addition to their business plans, applicants must submit a marketing strategy and risk management plan. As part of the commerce plan, the proposed commerce model should be demonstrated as viable and sustainable.
• In addition to an organizational structure, the applicant must have a management team that supervises the EMI’s operations and compliance. A DNB evaluation will determine whether the proposed organizational structure is adequate and effective for ensuring proper governance and risk management.
• Applicants are required to develop robust operational plans, including risk management frameworks, inside control instruments, and compliance methods. Monitoring and managing payment options risks should be demonstrated by these methods.
• Measures to prevent the misuse of services for illicit activities should be established by the applicant based on Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) regulations. Among these activities are conducting due diligence on the customer, monitoring transactions on an ongoing basis, and reporting suspicious activities to the appropriate authorities.
• In order to keep customer data safe, ensure secure transactions, and protect against cybersecurity threats, the applicant must have robust IT systems and safety measures in place.
• DNB’s governing requirements for reporting and record keeping require applicants to establish comprehensive procedures. The goal is to routinely report financial data, transaction data, and other operational data that are relevant to the business.
• In order to maintain compliance with the DNB’s regulations, EMI holders must maintain continuous compliance once licensed. AML/CFT compliance, compliance with regulatory inspections, and cooperation with regulatory audits are all part of this.

The DNB’s official guidelines and regulations are the most current source of information regarding EMI permits, and companies need to consult them for the most accurate information.

We can also provide valuable guidance throughout the licensing process by engaging the services of our professional legal and regulatory advisors who are familiar with the Dutch regulatory landscape.

As an EMI/EMI authorized in the Netherlands, you can provide your services as a provider of electronic money services to all member countries of the European Economic Area without having to obtain additional licenses.

In the European Economic Area, there are Austria, Belgium, Bulgaria, Croatia, Cyprus (Republic of), the Czech Republic, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden.

Required information

You will be required to submit the following information with your E-money EMI / Electronic Money Institution license application:

1. Details about the company
2. The operational plan
3. A financial forecast and a business plan
4. Describe the structure of your business
5. A copy of your initial capital investment
6. Information regarding the safeguarding of client funds
7. Governance and compliance arrangements
8. Complaints and security incidents must be monitored, handled, and followed up according to the security incident procedure
9. Information about how sensitive payment data is filed, monitored, tracked, and restricted
10. Recovery and continuity measures for businesses
11. Gathering statistical data about transactions, fraud, and performance
12. Information security policy
13. Controls to manage your AML/CTF requirements, including risk assessment and mitigation measures
14. Information on shareholders
15. Arrangements for outsourcing

Timeframe

A complete application must be decided within three months of receipt by the Dutch regulator. To obtain the license, it usually takes about five to six months.

Considerations to keep in mind

Under the governing framework, Payment Institutions (PIs) are permitted to achieve broader capabilities. A Dutch PI permit holder can suggest to end users the option of storing funds in their electronic wallets for longer periods of time, unlike other authorities that strictly differentiate between PI and EMI licenses.

It further reinforces the Netherlands’ position as a forward-thinking hub for fintech by giving fintech companies the ability to provide innovative computerized banking decisions.

Dutch regulators place a great deal of emphasis on Anti-Money Laundering (AML) procedures and expect complete compliance with AML-specific requirements. DNB standards are known for their high standards in this area, although it is not unique to the Netherlands.

In order to receive an EMI grant, fintech firms should demonstrate that they have a thorough knowledge of AML rules and procedures for mitigating risks related to them. Dutch financial system integrity and respectability are enhanced by the stringent AML measures implemented by the DNB.

The Netherlands may be costly when it comes to doing business, including factors like employee salaries, office rent, and legal fees. It is however possible to mitigate costs by maintaining a compact central office and allocating expenses strategically across multiple authorities given the lower demand for a local presence.

Having a good balance between costs and profits is imperative for companies looking to establish a strong presence in the European fintech market.

​​An EMI license is crucial to the success of your business. Our team at Regulated United Europe can assist you in incorporating a company and applying for an EMI license. It’s not an easy task, so make sure you get legal assistance.

With the help of experienced lawyers, business development specialists, and financial accountants, you can establish EMI business in the Netherlands quickly, easily, and transparently.

Contact us for a personalized EMI license consultation now to set the stage for long-lasting success.