Payment Institution License in Europe

Payment Institution License in Europe In the continuously developing Europe’s financial industry, payment institution licenses have emerged as a key catalyst, offering businesses the gateway to the European market where innovation is eagerly welcomed and adopted. These licenses authorize their holders to process payments in ways that allow them to build trust, contribute to the integrity of the payment services industry, and constantly innovate. If you’re looking to reap the benefits of being a financial institution licensee in Europe, we’re here to help. Our team of lawyers, business developers, and financial accountants brings a wealth of expertise to the table and can be your dedicated guide, ready to equip you with the knowledge and insights needed to thrive as a European payment institution.

Payment Institution License in Europe

What Is a Payment Institution License?

A payment institution license, also known as a payment service provider license or a PI license, is a regulatory authorization granted by financial authorities in Europe that allows a company to offer payment services. Such a license legitimizes a company’s operations and opens doors to a wide range of opportunities within the European financial industry and beyond.

Pursuant to the Payment Services Directive 2 (PSD2), a payment service means 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, including transfers of funds on a payment account with the user’s payment service provider or with another payment service provider:
    • 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:
    • 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
  • The issuance of payment instruments and/or acquisition of payment transactions
  • Money remittance
  • Payment initiation services
  • Account information services

The PSD2 also states that the definition of payment services should be technologically neutral and should allow for the development of new types of payment services while ensuring equivalent operating conditions for both existing and new payment service providers. This means that the European regulatory framework is designed to encourage continuous innovation, and you can become the next great and legitimate disruptor of the market.

The Difference Between a Payment Institution License and an Electronic Money Institution License

A PI license is primarily regulated by the PSD2, permitting the above-mentioned broad range of payment services, and essentially focusing on instant payment processing. An electronic money institution license, also referred to as an e-money or EMI license, is primarily regulated by the Electronic Money Directive 2 (EMD2) and is designed to permit the issuance of electronic money, which is a digital representation of value stored electronically, and the electronic storage of customer funds. Additionally, EMIs can offer the same range of payment services as PIs.

In essence, while PI licenses demand a relatively reasonable initial capital investment to cover operational expenses and ensure financial stability, EMI licenses require a significantly higher financial commitment in order to reinforce the obligation of ensuring the ongoing security and protection of electronic funds and the financial interests of customers.

Payment Services Market Trends in Europe

According to Mordor Intelligence, the European payments market is projected to experience a compound annual growth rate (CAGR) of 15,83% during the forecast period spanning from 2022 to 2027 which suggests a growing demand for payment services in Europe. This means that as a potential PI license holder, you’re looking to enter a market with strong growth prospects, which could lead to increased business opportunities and revenue potential.

The most notable payment services market trends in Europe:

  • Payment institutions are increasingly embracing digital technologies to streamline their operations, enhance customer experiences, and improve efficiency which includes digital onboarding, remote know-your-customer (KYC) processes, and modernizing payment infrastructure
  • In accordance with relevant EU regulations, payment institutions are working on opening up access to their payment infrastructure to third-party providers while ensuring data security and customer authentication
  • Real-time payment solutions, such as SEPA Instant Credit Transfer (SCT Inst), have gained popularity, and payment institutions are adapting to provide these instant payment services to meet customer demands for faster and more convenient transactions
  • Payment institutions are also exploring and offering alternative payment methods, such as Buy Now, Pay Later (BNPL) solutions, to cater to evolving customer preferences
  • Payment institutions are increasingly focusing on sustainability by offering eco-friendly financial products and contributing to the development of a greener financial industry
  • Many European payment institutions are collaborating with various fintech startups to utilize their innovative technologies, expand their service offerings, and reach new customer segments
  • Leveraging data analytics and AI for better customer insights, risk assessment, and fraud detection is also a growing trend among European payment institutions

The Key Benefits of Obtaining a Payment Institution License in Europe

For PIs, compliance is of paramount importance, and holding a PI license is a significant advantage in itself. Obtaining a PI license in Europe boasts several specific advantages that make it an appealing option compared to other regions. These advantages contribute to Europe’s reputation as a global center for financial services and innovation which is based on its market size, regulatory stability, and the assurance of consumer protection.

Operating as a payment institution in Europe means having access to one of the world’s most expansive and economically robust markets, where the EEA’s diversity ensures that payment institutions can connect with a vast customer base and a diverse range of businesses. This makes a European PI license a strategic choice for businesses seeking growth and opportunities in the payment services industry.

Thanks to the possporting system, one European PI license is enough to access the entire EEA market. It’s a remarkable feature that greatly simplifies the operations of PI license holders across multiple European countries as you don’t need to obtain a new license in every jurisdiction of operations. By availing of this benefit, you can significantly reduce licensing expenses, minimize the time needed to master every national regulatory framework, allow yourself to focus on innovation and scalability, and accelerate your entry to new markets.

European PI licenses are well-recognized and respected by regulatory authorities in other regions which is why Europe serves as an ideal place for global expansion. Many European payment institutions have successfully expanded their services to international markets, leveraging their EU presence and reputation for quality services and adherence to exceptional regulatory standards. Also, Europe’s geographical location offers excellent connectivity to markets in Asia, the Americas, Africa, and the Middle East which eases logistics, communication, and global operations.

Access to the Single Euro Payments Area (SEPA) is another significant advantage of having a payment institution license in Europe. It represents a unified framework for euro-denominated payments across 36 European countries and offers many benefits that enhance the efficiency and reach of their payment services. SEPA effectively eliminates the distinction between domestic and cross-border euro payments within its extensive region which allows payment institutions to provide their customers with a smooth cross-border payment experience.

How Are Payment Institutions Regulated in Europe?

Payment institutions in Europe are regulated through a robust legal framework designed to ensure the integrity, security, and competitiveness of the payment services industry. The primary regulation is the aforementioned PSD2 which is transposed into national legislation of each EU member country and enforced by national authorities that license and supervise financial service providers.

Nevertheless, every national framework is uniquely complex and differs from each other to some extent which is why we strongly advise you to consult our team to understand the specificities of a particular jurisdiction and avoid unforeseen risks. We can assure you that our firm is committed to providing accurate and up-to-date information to businesses seeking to operate or already operating in the payment services industry.

With over six years of experience and a team of diverse experts, we understand the intricacies of European regulatory compliance and the evolving nature of the European financial services industry. We’re here to support your efforts in achieving and maintaining business success. While a personalized consultation is the most effective step forward, in this article section you can gain a useful insight into the main provisions of the relevant EU regulations.

The main provisions of the PSD2:

  • Outlines the licensing requirements for PIs, which includes the need to obtain a license from the competent national authority in the respective EU or EEA member country
  • Specifies the minimum capital requirements that license applicants must meet, ensuring financial stability and consumer protection
  • Covers various aspects of PI operations, including the conduct of business, safeguarding of funds, and requirements for financial crime detection and prevention
  • Includes rules aimed at safeguarding consumer rights, such as the liability of PIs and dispute resolution mechanisms
  • Outlines requirements for payment security, including strong customer authentication (SCA) and fraud prevention measures

It’s also very important to comply with the 6th Anti-Money Laundering Directive (AMLD6), the main provisions of which are as follows:

  • It mandates PIs to obtain and hold accurate and up-to-date information about the beneficial ownership of their customers
  • It obligates PIs to perform a thorough risk assessment to identify, understand, and mitigate their money laundering and terrorist financing risks
  • It requires PIs to apply enhanced due diligence (EDD) measures in situations involving a higher risk of money laundering or terrorist financing
  • It also allows for simplified due diligence in cases of lower money laundering risk
  • PIs must establish procedures for identifying and handling business relationships with politically exposed persons (PEPs)
  • PIs are required to cooperate with competent authorities, financial intelligence units (FIUs), and other businesses within the financial industry

The General Data Protection Regulation (GDPR) also applies to the EU’s payment institutions, and includes the 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
  • GDPR requires PIs to implement appropriate security measures to protect personal data, and in case of a data breach, they must report it to the relevant supervisory authority and, in some cases, to affected data subjects

Top Jurisdictions for a Payment Institution License in Europe

Choosing the right jurisdiction for your PI license is a crucial decision, one that can significantly impact the success and growth of your payment services business. Europe is an ideal location for being a PI licensee as numerous jurisdictions across the continent offer unique advantages for PIs seeking to legitimize their operations and access the European market. Whether you’re a new fintech startup or an established payment institution, there’s a solution for you that will help you realize your business goals and serve your customers more effectively in a highly competitive and regulated environment. Read on to find out about the best EU countries that offer PI licenses with indefinite durations.

Payment Institution License in Lithuania

lithuania Lithuania has emerged as a preferred jurisdiction for a high number of PIs seeking to obtain a license in Europe. In fact, the country is leading the European market entry for a variety of fintech startups which shows that it provides an accessible platform for growth and expansion. The Lithuanian regulatory framework, overseen by the Bank of Lithuania, is known for its adaptability and openness to novel fintech business models which attract many international entrepreneurs looking to build groundbreaking businesses and create impactful partnerships. The authority’s expertise in fintech regulations has facilitated a smoother and more supportive licensing process for PIs.

The Lithuanian jurisdiction is fairly easily accessible to non-European entrepreneurs as it offers a startup visa which entails a straightforward application process and favorable eligibility criteria. Residence requirements for company directors and board members are quite flexible as they aren’t obligated to reside in Lithuania or elsewhere in Europe. The application process for a PI license is also streamlined and efficient – you can get either a regular or a restricted license within three months.

A regular license is designed for more capable payment service providers who can meet initial capital requirements and are planning to offer their services to the entire EEA market. If you’re a startup looking for a license with no capital requirements and are only ready to test your payment services within one country, Lithuania’s restricted PI license is perfect for you. In any case, you’ll be able to access the regulatory sandbox overseen by the Bank of Lithuania where every fintech business can safely experiment with their products and services within a controlled environment.

Fees associated with a Lithuanian PI license application:

  • Initial capital – 20,000-125,000 EUR (as just mentioned, there are no capital requirements if you intend to operate only in the Lithuanian market)
  • Application fee – 898 EUR

Payment Institution License in the Netherlands

netherlands The Netherlands has a reputation as an international business hub with a strong emphasis on foreign trade and investment. The Dutch government offers incentives, tax benefits, and a business-friendly environment to attract foreign companies looking to establish a presence in Europe. Dutch regulatory authorities De Nederlandsche Bank (DNB) and the Netherlands Authority for the Financial Markets (AFM) maintain a proactive and cooperative approach towards payment institutions and other fintech businesses. You can apply either for a regular license from the DNB or an exemption in which case you’d be supervised by the AFM.

When applying 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 there are low requirements for a local presence. Basically, you could maintain a compact central office and distribute most of the expenses in less expensive countries, allowing you to optimize your operational costs. Of course, minimal local presence shouldn’t stop you from accessing various Dutch fintech events, conferences, initiatives, accelerators, and incubators which can serve as valuable platforms for networking, knowledge sharing, and business development.

Fees associated with a Dutch PI license application:

  • Initial capital – around 125,000 EUR (essentially, it’s determined on a case-by-case basis and depends on the complexity of the business)
  • Application fee – 6,800 EUR

Payment Institution License in Spain

spain Spain alone boasts a significant and diverse market with a population of over 46 million people which presents substantial opportunities for PI license holders. Besides, it’s an ideal jurisdiction if you’re looking 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, such as AML/CFT procedures and agreements with your potential customers should be submitted in Spanish. If needed, we can help you arrange cost-effective and efficient certified translation services. Licensing applications are processed exceptionally quickly  – within 20-90 days depending on the complexity of the business. During the application process, you can expect to receive clear and instant guidance as both authorities maintain open lines of communication in order to ensure that payment institutions understand and comply with the regulatory requirements.

Spain’s regulatory framework is accessible to startups and established businesses alike. If you’re a small business with a turnover not exceeding 3 mill. EUR, you can apply for a Small Payment Institution License with simplified registration and reporting requirements. If 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 entails more extensive regulatory requirements, including capital and operational conditions.

Fees associated with a Spanish PI license application:

  • Initial capital – 20,000-125,000 EUR, however, it may go higher depending on the complexity of your intended activities
  • Application fee – no application fee

Payment Institution License in France

france France is one of the largest economies in the EU, with a population of over 67 million people who are increasingly adopting innovative payment services. It has a growing fintech ecosystem as the French government actively supports fintech innovation through initiatives, incubators, and regulatory sandboxes. For instance, as a PI licensee in France, you would be able to join the Bpifrance Hub which is a hub for startups and innovation, offering support and resources to fintech companies. If you need to, you can also avail of the French Tech Visa which is a program that simplifies the process for non-EU tech entrepreneurs, employees, and investors to obtain French residence. On the other hand, directors and key management personnel of a French PI aren’t required to be residents of France.

In France, payment institutions are licensed and supervised by the French Prudential Supervision and Resolution Authority (ACPR) which has created a secure and transparent environment for payment institutions to operate, innovate, and thrive. The authority offers two types of PI licenses – a Payment Institution License and a Small Payment Institution License. The former is a regular license with stricter application and ongoing compliance requirements. The latter is designed for startups with less than 3 mill. EUR of transaction volumes and a limited range of services who are looking for a lower barrier 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 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 ones:

  • Most likely you’ll have to establish a company in the jurisdiction where you’re planning to license your payment institution which, of course, will have to satisfy capital, physical presence, and other requirements
  • The company’s management and owners must meet fit and proper criteria, demonstrating relevant experience and qualifications, integrity, and financial soundness
  • Having robust and effective AML/CFT processes and policies in place is of paramount importance
  • PI license applicants must also demonstrate adherence to consumer protection regulations and how they will provide transparency to consumers regarding terms and conditions, fees, and dispute resolution mechanisms
  • Having robust risk management processes in place at the time of submitting the licensing application is crucial as it demonstrates your preparation to identify, assess, and mitigate risks associated with payment services
  • It’s also necessary to demonstrate the implementation of secure and reliable operational systems, including data protection, IT security, and incident reporting mechanisms

Your PI license application form will usually have to be submitted along with the following documents:

  • A certificate of company registration
  • Articles of Association
  • A business plan detailing such information as the proposed activities, markets, and financial projections for the payment institution
  • An organizational chart showing the management and governance structure, including the roles and responsibilities of key personnel
  • CVs of your PI’s directors and other key personnel, along 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 specific type of payment institution license being applied for
  • Well-documented AML/CFT policies and procedures
  • Financial statements and audits to demonstrate financial stability, including balance sheets, income statements, and cash flow statements

How to Apply for a Payment Institution License

Applying for a PI license in any European country is a structured and thorough process, and you should carefully study the approach of the regulator responsible for PI licensing in your chosen jurisdiction. We can’t emphasize enough the importance of duly gathering and drafting required documents and implementing processes that prove your company’s capability to start compliant operations right after the receipt of a PI license. If you can ensure that, the next steps will be paying the application fee and submitting the application package to the national regulator of your chosen jurisdiction.

During the application review process, you might be asked to provide further documentation or information, or even attend a face-to-face meeting with the regulator’s representatives. The vetting process might also involve an on-site inspection of your company’s facilities aimed at ensuring that the necessary controls and infrastructure are in place. A PI license will be granted when the regulator is convinced that your company is in full compliance with relevant regulations and is capable of adhering to ongoing legal requirements, such as customer protection and monitoring of illegal financial activities.

If you wish to obtain a PI license in Europe, our team here at Regulated United Europe will be delighted to support you in incorporating a company and applying for a license in a European jurisdiction that resonates with your business goals. Our dedicated specialists can also guide you through the acquisition of a ready-made company with an existing payment institution license. With experienced lawyers, business development professionals, and financial accountants at your side, you will find the process of launching a payment institution easy, seamless, and transparent. Contact us now to schedule a personalized PI license consultation and set the stage for long-lasting success.

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


“Do you have an interest in launching your Payment Institution? Leveraging my substantial experience, I’d be delighted to support you through this process. Feel free to email me, and I’ll guide you in the appropriate direction.”

Milana Scherbakova


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A Payment Institution License, or PI license, is a regulatory authorization granted by European financial authorities, allowing a company to provide payment services. These services include various financial transactions, contributing to the integrity and innovation of the payment services industry.

A PI license, regulated by the Payment Services Directive 2 (PSD2), authorizes a broad range of payment services, primarily focusing on instant payment processing. In contrast, an Electronic Money Institution License, regulated by the Electronic Money Directive 2 (EMD2), is more focused on issuing electronic money and electronic storage of customer funds.

A PI license authorizes a company to provide services like cash deposits and withdrawals, execution of payment transactions, direct debits, credit transfers, issuance of payment instruments, money remittance, payment initiation services, and account information services.

PSD2 is a European directive regulating payment services. It provides the legal framework for Payment Institution Licenses, setting standards for licensing, capital requirements, operational conduct, and consumer protection.

PSD2 promotes innovation by being technologically neutral. That allows the development of new payment services. Its focus on equivalent operating conditions for existing and new providers encourages continuous advancements, positioning Europe as a hub for financial services innovation.

A European PI license provides access to a vast and economically robust market, simplifies operations across the European Economic Area (EEA) through the passporting system, and is well-recognized globally. It also grants access to the Single Euro Payments Area (SEPA), contributing to a seamless cross-border payment experience.

The passporting system allows a company holding a PI license in one European country to operate across the entire EEA market without obtaining separate licenses in each jurisdiction. This simplifies licensing expenses, reduces regulatory complexity, and facilitates innovation and scalability.

PSD2 outlines licensing requirements, minimum capital requirements, and various operational aspects for Payment Institutions in Europe. It ensures financial stability, consumer protection, and fosters fair competition within the payment services industry.

GDPR imposes data protection principles on EU payment institutions, requiring a lawful basis for processing personal data. It grants data subjects rights, mandates implementation of security measures, and necessitates reporting data breaches to relevant supervisory authorities and affected data subjects.

Lithuania, the Netherlands, Spain, and France are among the top jurisdictions for obtaining a PI license. Each country offers unique advantages such as regulatory adaptability, business-friendly environments, and access to growing markets, making them attractive for payment service providers.

Lithuania is preferred for its adaptable regulatory framework overseen by the Bank of Lithuania. It offers a startup visa, flexible residence requirements, and streamlined application processes, making it accessible for international entrepreneurs seeking growth and expansion.

The Netherlands provides a business-friendly environment with low requirements for local presence. Regulatory authorities, De Nederlandsche Bank (DNB) and the Netherlands Authority for the Financial Markets (AFM) maintain a proactive approach, and the country facilitates international teams and English documentation.

Spain's regulatory framework, overseen by the General Secretariat of the Treasury and International Financing and supervised by the Bank of Spain, is accessible to startups and established businesses.

It offers quick licensing processes and accommodates smaller businesses with a Small Payment Institution License.

The ACPR, overseeing Payment Institutions in France, creates a secure environment for operations and innovation. It offers two types of licenses: a Payment Institution License and a Small Payment Institution License, catering to both startups and established businesses with varying regulatory requirements.

The application package usually includes:

  • A certificate of company registration;
  • Articles of association;
  • A detailed business plan;
  • Organizational charts;
  • CVs of directors;
  •  Identification documents;
  • Proof of no criminal record;
  • AML/CFT policies;
  • Financial statements;
  • Other documents demonstrating compliance with regulatory requirements.

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At the moment, the main services of our company are legal and compliance solutions for FinTech projects. Our offices are located in Vilnius, Prague, and Warsaw. The legal team can assist with legal analysis, project structuring, and legal regulation.

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