Payment Institution License in Europe 2025

Payment institution licenses have been a huge driving force in the ever-evolving financial industry in Europe, opening the doors to a huge market where innovation is embraced and adopted. They are structured in a manner such that holders of such licenses can perform the processing of payments in a way which enables them to engender trust and contribute to the integrity of the industry of payment services in a continuous manner. It is here that we can help if you want to get the benefit of being a Licensee Financial Institution in Europe. Our lawyers, business developers, and financial accountants come together as one big team, complete with a dedicated guide ready to arm you with knowledge and insights that might help you thrive as a Payment Institution in Europe.

What Is a Payment Institution License?

A Payment Institution License is a license given by the financial authorities of Europe, which gives rights to an organization for providing payment services. Such a license justifies the activities of the company and opens wide perspectives for it in the European financial market and beyond.

PSD2 defines a payment service as any of the following business activities:

• Services enabling cash to be placed on a payment account as well as all the operations required for operating a payment account
• Services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account
• Execution of payment transactions, either the transfer of funds on a payment account with the payment service provider of the user or with another payment service provider, including:
  • Execution of direct debits, including one-off direct debits
  • Execution of payment transactions through a payment card or a similar device
  • Execution of credit transfers, including standing orders
• Execution of payment transactions where the funds are covered by a credit line for a payment service user:
  • One-off direct debits, execution of payment transactions through a payment card or a similar device, execution of credit transfers, including standing orders;
• Issuance of payment instruments and/or acquiring of payment transactions;
• Money remittance;
• Payment initiation services;
• Account information services

The PSD2 adds that the definition of payment services shall be technologically neutral and allow for the establishment of new types of payment services while providing for equivalent operating conditions for both existing and new payment service providers. That means under European regulatory you can be the next great and legitimate disruptor of the market.

How a Payment Institution License Differs from an Electronic Money Institution License

A PI License is mainly governed by the PSD2, allowing a wide range of payment services mentioned above, and focusing principally on instant payment processing. The so-called e-money license, sometimes referred to as an electronic money institution license or EMI license, was mainly controlled under the Second Electronic Money Directive, known as EMD2. It allows issuing electronic money, meaning a digital representation of value, which is stored on an electronic device, and the electronic storage of customer money. It also authorizes EMIs to offer the same wide range of payment services as PIs.

This essentially means that while PI licenses require an investment of a moderate amount of initial capital that would make the operations viable and stable, EMI licenses are far more financially intensive with a view to supporting the responsibility that comes with ensuring continuity in electronic funds and customers’ financial interests.

Trends in the Payment Services Market in Europe

With Mordor Intelligence stating that the CAGR for the European payments market will go up to 15.83% from 2022 to 2027, it basically translates to increased business and financial prospects in Europe. This would mean that as a future license holder of a PI, you are just about entering a market wherein growth prospects are rampant, thus having better business opportunities and revenue potential.

Most noticed market trends in the Payment services market in Europe:

• Payment institutions increasingly adopt digital means to streamline their operations and customer experience for greater efficiency, such as through digital onboarding, remote KYC, and upgradation of the payment infrastructure.
• With regard to relevant EU regulations, it enables access by third-party providers to the payment infrastructure of the payment institutions while ensuring data security and customer authentication.
• Real-time payment solutions, such as SEPA Instant Credit Transfer—abbreviated as SCT Inst—have drawn extensive attention; these instant payment services have widely been adopted and provided by a payment institution in order to meet customer requirements for speed and convenience.
• Some of the payment institutions are willing to contribute to sustainability by providing green financial products and contributing towards a greener financial industry. Most of the payment institutions in Europe are collaborating with different fintech startups in order to leverage their innovative technologies, extend the service offerings, and reach new customers.
• Data analytics and AI can be leveraged for better customer insights, risk assessment, and fraud detection—also a growing trend among European payment institutions.

The Key Benefits of Obtaining a Payment Institution License in Europe

For PIs, compliance is everything, but having a PI license as such ensures one significant privilege. A PI license issued in Europe entails certain specific advantages, rendering it more attractive compared to other regions. Each of these advantages contributes cumulatively to establishing Europe as a global center for financial services and innovation, through market size, stability in its regulation, and consumer protection.

Operating as a Payment Institution in Europe means the opportunities for one of the largest and economically strongest markets in the world are extensive. The rich diversity of the EEA ensures that the processes concerning a payment institution extend to an enormous customer base and a wide range of businesses. Thus, a European PI license is considered highly strategic for any enterprise willing to seek growth and opportunities in the Payment Services industry.

The passporting system ensures that only one European PI license is needed to access the whole EEA market. That is a remarkable characteristic, which in effect makes the operations of PI license holders fairly simple in multiple European countries, considering you will not have to obtain a new license in every other jurisdiction of operation. Availing this benefit will drastically reduce your licensing cost, save time to get mastery in each national regulatory framework, and let you be in the position of innovating and scaling up while accelerating entry to new markets.

Licenses from European PI are considered highly by the regulatory authorities of other regions; hence, it acts as an ideal place for Europe to expand in various parts of the globe. Many payment institutions in Europe have extended their services to reach international markets, somehow capitalizing on the presence of the EU and the reputation for quality services, besides adherence to exceptional regulatory standards. Also, the geographical location of Europe offers excellent connectivity to markets in Asia, the Americas, Africa, and the Middle East, making logistics, communication, and global operations easy.

Another very significant benefit of a payment institution license within Europe is access to the Single Euro Payments Area. In this respect, it is an area for all euro-denominated payments within 36 European countries and is characterized by various advantages that make their payment services more efficient and wider-reaching. SEPA virtually erases the difference between domestic and cross-border payments in euros within its vast geographical area, thus it enables payment institutions to seamlessly offer cross-border payment experiences to their customers.

How does the regulation of Payment Institutions look in Europe?

Payment institutions in Europe are regulated through a robust legal framework that would make sure integrity, security, and competitiveness within the industry of payment services. The major regulation is already-mentioned PSD2, which gets introduced into the national legislation of each EU member country, and enforced by national authorities who license and supervise financial service providers.

Nevertheless, every national system is sui generis complex, distinct from all the others in some respect, and for this reason, we strongly recommend you get in contact with our team in order to be properly informed about the peculiarities of any specific jurisdiction and also to avoid unexpected risks. We can make sure that our firm will do its best to provide enterprises with proper and timely information, which are willing to conduct or are already operating their activity in the payment services sector.

Having in mind the fact that we have more than six years of experience and that our team includes experts from different areas, we understand the complexity of European compliance regulations and how constant change affects the Financial Services Industry of Europe. We will be able to advise you on how you can achieve and maintain business success. Of course, there is no substitute for an individual consultation, but at least you can get an idea about the basic provisions within the framework of the relevant EU-regulations by reading this section of the article.

Main Provisions under PSD2:

• Sets out the procedure for licencing of PIs, where an application for a licence is to be made from the competent national authority of the relevant EU/EEA member state.
• Outlines minimum capital requirements an applicant for a licence has to have in order to ensure financial stability and protection of consumers.
• It defines the conduct of business during PI operations, the protection of funds, and requirements concerning detection and prevention of financial crime. Includes rules aimed at protection of consumer rights, among which are the liability of PIs and the respective mechanisms for dispute resolution.
• Sets out requirements on the security of payments, such as strong customer authentication (SCA) and fraud prevention measures.

It is also of paramount importance that the 6th Anti-Money Laundering Directive is followed. The key provisions are given in the following:

• PIs to obtain and maintain information regarding the actual ownership of their customers, which should be adequately updated. This also has to include a proper risk assessment focused on identifying, understanding, and mitigating their money laundering and terrorist financing risks.
• It obligates PIs to apply enhanced due diligence measures in circumstances that present a high risk of money laundering or terrorist financing.
• It also provides for simplified due diligence when money laundering risk is assessed as low.
• PIs are supposed to have in place processes for identifying and dealing with business relationships with politically exposed persons.
• PIs are obliged to collaborate with the competent authorities, FIUs, and other businesses within the financial sector.

The General Data Protection Regulation also applies to the payment institutions of the EU and includes following data protection principles:

• There must be a lawful basis for processing personal data which may include the necessity of processing for the performance of a contract (e.g., providing payment services) or compliance with a legal obligation.
• Data subjects are granted various rights, including the right to access their data, request its deletion, and restrict its processing.

Under GDPR, the PIs have the responsibility to put in place the necessary security measures that will protect personal data and, when data loss or hacking does take place, this would have to be reported both to the relevant supervisory authority and, depending on the case, to affected data subjects.

Top Jurisdictions for a Payment Institution License in Europe

Deciding on the proper jurisdiction for a PI license is considered a very important decision that may have a great influence on the successfulness of the payment services business and its further development. Europe is one of the best places to become a PI licensee since many countries within the continent offer special benefits for PIs willing to legitimate their activity and access the European market. Be it a new fintech startup or an already established payment institution, we have a solution for you to make your business goals and serve your customers’ needs more effectively in such a competitive and regulated environment. Further on, we would like to introduce you to the best EU countries that grant PI licenses for indefinite periods.

Payment Institution License in Lithuania

Currently, Lithuania stands as one of the top favorite jurisdictions among the high number of PIs seeking licenses within Europe. In fact, it tops Europe’s market entry for a number of other fintech startups and provides an accessible platform for growth and expansion. The Lithuanian regulatory framework is guided by the Bank of Lithuania, known to be very flexible and open toward new fintech business models. This sets a playground for many international entrepreneurs to build innovative businesses and create influential partnerships. With the authority experience in fintech regulations, the licensing process for PIs became easier and supportive.

The Lithuanian jurisdiction is relatively accessible to non-European entrepreneurs, as it provides a startup visa with a quite simple application process and favorable eligibility criteria. Residence requirements for company directors and board members are quite flexible; they are under no obligation to reside in Lithuania or elsewhere in Europe. Application processes regarding the PI license are also streamlined efficiently—one can get either a normal or restricted license within three months.

A standard license is aimed at more capable payment service providers that can afford initial capital requirements and that are planning to offer their services in the entire EEA market. Meanwhile, if you are a startup willing to license with no capital requirements and you are ready to test your payment services only within one country, then Lithuania’s restricted PI license will suit you best. Anyhow, you will get access to the regulatory sandbox, driven by Bank of Lithuania, where literally any fintech business is allowed to safely test their products and services in a live environment.

Fees with respect to Lithuanian PI license application:

• Initial capital – 20,000-125,000 EUR (as just mentioned, there is no capital requirements if you are going to provide services only within the Lithuanian market)
• Application fee – 898 EUR

Netherlands Payment Institution License

The Kingdom of the Netherlands is globally famous as an international business hub with a high level of foreign trade and investments. The government has created incentives, tax benefits, and a business-friendly environment for foreign companies to establish a foothold in Europe. The Dutch regulatory bodies De Nederlandsche Bank and the Netherlands Authority for the Financial Markets have been very open and collaborative with payment institutions, as well as any other type of fintech company. Either you file an application for a license with the DNB or apply for an exemption whereby your supervision would shift to the AFM.

During the application for a Dutch PI license, you can prepare all documents in English and even hire an international team. While many European jurisdictions require a strong local presence—in the Netherlands, the requirements for a local presence are low. In fact, you could keep a small central office and distribute the majority of the costs in cheaper countries, which provides the possibility to optimize your operational costs. Of course, moderate local presence shouldn’t prevent you from reaching out to a wide range of Dutch fintech events, conferences, initiatives, accelerators, and incubators which can become meaningful platforms for networking, experience sharing, and business development.

Fees applicable to a Dutch PI license application:

• Initial capital – approx. 125,000 EUR (essentially, it’s decided on a case-by-case basis and is based on the complexity of the business)
• Application fee – 6,800 EUR

Payment Institution License in Spain

With the population of more than 46 million people, Spain alone is already a huge and diversified market that, respectively, offers a lot of great opportunities for PI license holders. Moreover, it’s a great jurisdiction to expand your payment services into Southern European and Latin American markets. Payment institutions are licensed by the General Secretariat of the Treasury and International Financing under the Ministry of Economic Affairs and Digital Transformation and supervised by the Bank of Spain.

The licensing authority accepts most of the documents in English; however, some essential documentation, like AML/CFT procedures and agreements with your future customers, should be provided in Spanish. We can help arrange certified translations at competitive prices if you require this service. The license application processing is very swift: within 20-90 days, according to your business complexity. During the licensing process, you will be given clear and prompt advice, as both regulators have open lines of communication to ensure that payment institutions understand and comply with the regulatory requirements.

The regulatory framework in Spain is friendly both for start-ups and established businesses. If you are a small enterprise with a turnover not exceeding 3 million EUR, then you may be licensed as a Small Payment Institution with simplified registration and reporting requirements. Where your turnover exceeds this threshold, and you intend to offer a broader range of payment services, you should apply for a Full Payment Institution License, which involves more far-reaching regulatory requirements, including capital and operational conditions.

Costs for a Spanish PI license application:

• Initial capital – 20,000-125,000 EUR, though the actual figure could be higher depending upon the intricacy of your proposed activities
• Application fee – no application fee

Payment Institution License in France

France is among the big economies of the EU, housing more than 67 million people who are rapidly adopting innovative payment services. It has an emergent fintech ecosystem as the French government actively supports fintech innovation by different initiatives, incubators, and regulatory sandboxes. For example, being a PI licensee in France opens access to the Bpifrance Hub—an innovation and startup ecosystem offering resources that foster growth-stage fintechs. You will also be entitled to use the French Tech Visa should you need to, a fast-track procedure for residence in France for non-EU tech entrepreneurs, employees, and investors. Whereas, for a French PI, there is no requirement for either a director or a key management person to be a resident of France.

Under the France government, payment institutions are licensed and supervised by the French Prudential Supervision and Resolution Authority, ACPR in an environment that is safe and transparent for the operation and innovation of payment institutions with the ability to thrive. The authority issues two types of PI licenses: a Payment Institution License and a Small Payment Institution License. The former is going to be a regular license with more stringent application and ongoing compliance requirements. The latter is for startups that handle less than 3 million EUR of transaction volumes, with a limited range of services requiring lower barriers to entry and simplified compliance. The ACPR can grant you a PI license within three months of receipt of a complete application.

Fees associated with a French PI license application:

• Initial capital – 20,000-125,000 EUR
• Application fee – 3,000-5,000 EUR

General Payment Institution License Requirements in Europe

While the specific PI license eligibility requirements vary from country to country, overarching EU regulations mean that some of the requirements may be shared across the member countries—particularly the following:

• You will in most cases have to establish a company in the jurisdiction where you are planning to license your payment institution, which of course will have to meet capital, physical presence, and other requirements.
• The management and owners of the company must be fit and proper, with relevant experience and qualifications, integrity, and financial soundness.
• It is of paramount importance that suitable and efficient AML/CFT processes and policies are in place.
• Applicants for a PI license should also demonstrate due respect for consumer protection legislation and how they would be open about consumers in terms of, amongst others, terms and conditions, fees, and procedures for dispute resolution.
• The robustness of the risk management processes, important at the time of submission of the licensing application, shows your preparedness to identify, assess, and mitigate the risks associated with the payment services you provide.
• You must also be able to show that you have implemented secure and reliable operational systems on data protection, IT security, and incident reporting mechanisms.

The application for a PI license would be generally accompanied by the following documentation in support, including but not limited to:

• Certificate of registration of the company
• Articles of Association
• A business plan outlining, amongst other information, the proposed activities, markets, and financial projections concerning the payment institution
• Organizational chart showing management and governance structure, with roles and responsibilities of key personnel
• CVs of your PI’s directors and other key personnel, together with evidence of their financial qualifications and relevant experience.
• Copies of identification documents of the company directors, shareholders, and ultimate beneficial owners.
• Proof of no criminal record of each shareholder, ultimate beneficial owner, director, and other key personnel.
• Evidence of the initial capital required for the type of payment institution license applied for.
• Well-documented AML/CFT policies and procedures
• Financial statements and audits to show the financial stability: balance sheets, income statements, cash flow statements

How to Apply for a License of a Payment Institution

The process of a PI license application in any European country is a bit formalized and very scrupulous, and you should study the approach of the regulator in charge of PI licensing in your chosen jurisdiction seriously. We cannot stress enough that duly gathering and drafting the required documents and implementing processes, which prove the capability of your company to start compliant operations right after the receipt of a PI license, is of great importance. If you can ensure that, among the further actions will be paying an application fee and submitting the application package to the national regulator of your chosen jurisdiction.

During the review process, you might be called upon to provide further documentation or information, and, in some cases, even present yourself in person before the regulator representatives. The vetting process could also include an on-site inspection of your company’s facilities for the purpose of ensuring that controls and infrastructure necessary are put in place. A PI license will be issued when the regulator is satisfied that your firm fully complies with relevant regulations and is able to meet the continuing legal obligations such as customer protection, monitoring illegal financial activity.

If one desires to acquire a PI license in Europe, then our staff here at Regulated United Europe will be glad to assist in the incorporation of your company and a license application in any European jurisdiction that may suit your business needs. In cases where urgency is relevant, our competent professionals may assist you with purchasing a ready-made company with an already obtained payment institution license. You will definitely find that the process is very smooth and transparent with experienced lawyers, business development persons, and financial accountants at your side. Contact us now for a personalized PI license consultation to set up the stage for your long-lasting success.

Also, lawyers from Regulated United Europe provide legal support for crypto projects and assist with adaptation to MICA regulations.