The UK remains one of the most attractive jurisdictions for fintech, digital wallets, prepaid products, and EMIs. One of the key regulatory questions for founders of e-money products is whether they should apply for authorisation as an EMI or register as a Small Electronic Money Institution (SEMI). Before launching an e-money product, a company usually needs to determine whether its business model requires a full EMI authorisation or registration as a Small Electronic Money Institution.
On the face of it, both models appear very similar. Both allow a company to issue electronic money. Both are supervised by the Financial Conduct Authority (FCA). Both are subject to the Electronic Money Regulations 2011 and, where applicable, the Payment Services Regulations 2017. However, in practice, there is a significant difference between EMI and SEMI. This difference lies in the size of business, capital requirements, permitted services, growth strategy, compliance costs, and whether it is realistically possible for the company to operate in international markets.
EMI and SEMI in the UK
An Electronic Money Institution (EMI) is a regulated entity authorised by the FCA to issue e-money and provide payment services. E-money is electronically stored monetary value issued on receipt of funds by the issuer and is accepted as a method of payment other than cash. Depending on the scope of its authorisation, an EMI may offer products and services such as digital wallets, payment accounts, prepaid cards, merchant payment solutions and money remittance services.
The SEMI can also issue electronic money, but it operates under a simplified registration regime. The SEMI model caters to smaller businesses that do not need the full operational scale of an authorized EMI. It could act as a good starting point when a start-up is testing a business model, serving a limited client base, or operating at a lower transaction volume.
EMI vs SEMI: Key Comparison Table
| Category | EMI in the UK | SEMI in the UK |
| Regulatory status | Authorised Electronic Money Institution (EMI) | Registered Small Electronic Money Institution |
| Regulator | FCA | FCA |
| Main use case | Scalable e-money and payment business | Smaller or early-stage e-money business |
| E-money issuance | Yes | Yes, subject to thresholds |
| Average outstanding e-money limit | No statutory limit | Must not exceed €5 million |
| Payment services unrelated to e-money issuance | Permitted if included in permissions | Permitted only if payment transaction limits are met |
| Payment transaction threshold | No SEMI threshold | The monthly average value of payment transactions in a 12-month period must not exceed €3 million. |
| AIS/PIS services | May be possible with appropriate permissions | Not permitted |
| Initial capital | At least €350,000 | No minimum initial capital requirement where average outstanding e-money is below €500,000; own funds of at least 2% of average outstanding e-money once the €500,000 threshold is reached |
| Regulatory burden | Higher | Lighter, but still regulated |
| Best suited for | Larger fintechs, wallets, card issuers, cross-border payment models | Startups, limited-scope wallets, pilot projects, niche payment platforms |
| EU passporting after Brexit | Not available from the UK licence alone | Not available from the UK registration alone |
Licensing Scope and Permissions
The difference is not only a matter of scale, but also the scope of permitted activities. A fully authorised EMI can issue e-money and provide payment services within the scope of its FCA authorisation and subject to the applicable requirements of the Payment Services Regulations 2017. Where a firm plans to offer payment services that are not directly connected with e-money issuance, those activities must fall within its regulatory permissions and meet the relevant requirements. This is especially important for businesses seeking to combine e-wallets, payment accounts, card issuing, merchant acquiring, remittance services, or other payment functions within a single structure.
A SEMI operates within a more restricted framework. It can issue electronic money, provided that the relevant regulatory limits are observed. Where the institution also carries out payment services unrelated to e-money issuance, the average monthly value of those transactions during the previous twelve months must remain below €3 million. Small EMIs are also unable to offer account information or payment initiation services.
This structure can work well for smaller-scale or prepaid products, but its limitations become more noticeable as operations grow. Businesses expecting rapid expansion, substantial payment flows, international activity, or institutional customers will generally find full EMI authorisation more suitable from the beginning.
Limits and Thresholds
The SEMI route is often attractive because it involves a simpler and less expensive regulatory process than obtaining full EMI authorisation. However, this reduced regulatory burden comes with clear limitations.
One of the main SEMI restrictions is the €5 million ceiling on average outstanding e-money. Importantly, this limit relates to outstanding electronic money rather than payment transaction volumes. The figure is determined by calculating the average total financial liabilities connected with e-money in circulation at the end of each calendar day during the previous six calendar months.
Capital Requirements
An authorised EMI must maintain initial capital of no less than €350,000 and also comply with continuing own funds requirements. Under the Electronic Money Regulations 2011, its own funds must meet the applicable regulatory standards. For e-money issuance, Method D generally requires 2% of average outstanding e-money. If the EMI also offers payment services not connected with e-money issuance, further own funds obligations may arise.
Capital requirements are less strict for SEMIs. A small EMI with average outstanding e-money under €500,000 has no initial capital obligation. Once average outstanding e-money reaches, or is expected to reach, €500,000 or more, the institution must maintain own funds of at least 2% of that amount.
This makes SEMI more accessible for early-stage founders. Still, “lighter” does not mean “unregulated.” SEMIs must still maintain suitable governance, safeguarding arrangements, financial crime controls, reporting processes, and compliance procedures.
Conduct Rules and Safeguarding
Both EMIs and SEMIs must safeguard customer funds and treat users fairly. In general, e-money must be issued at par value upon receipt of funds, and customers must be able to redeem the monetary value of their e-money at par value. FCA rules set out requirements on safeguarding, redemption, disclosure and customer protection. From 7 May 2026, enhanced safeguarding requirements apply to electronic money institutions and small electronic money institutions.
This is a key point in business planning: An EMI or SEMI is not a credit institution and does not accept deposits as a banking institution. Funds received in exchange for e-money are subject to the applicable safeguarding demands. Instead, e-money is issued, and the firm has to follow safeguarding rules to ensure the protection of customer funds.
Operations in the UK and Access to the EU after Brexit
Before Brexit, most UK-authorised financial firms relied on passporting rights as a straightforward way to provide services across the EEA. That situation has now fundamentally changed.
In practice, authorization in one home state allowed a firm to operate throughout the single market. After the UK left the European Union, UK firms lost automatic access to EU passporting rights and generally need a separate regulatory basis to provide regulated services in the EEA.
Which of the Two Is a Better Option?
It depends on the business model. An SEMI in the UK may be good for a company that plans to operate on a limited scale, tests a product, or avoids the high initial capital burden of a full EMI.
FAQ
What is an EMI in the UK?
An EMI (Electronic Money Institution) is a firm authorised by the FCA to issue e-money. It can support products such as digital wallets, payment accounts, prepaid cards, and e-money-based remittance solutions.
What is a SEMI in the UK?
A SEMI (Small Electronic Money Institution) is a smaller e-money firm registered with the FCA. It can issue e-money, but it must operate within specific thresholds, including the €5 million average outstanding e-money limit.
What is the main difference between EMI and SEMI?
The principal difference is one of scale. An EMI is an authorised institution with broader permissions and higher capital demands, whereas an SEMI is a lighter registration model for smaller firms, albeit with strict limits in place for outstanding e-money and certain remittance services.
What are the capital requirements?
Upon initial authorisation, an EMI must have an initial capital of not less than €350,000. SEMI does not have a requirement for initial capital if the average outstanding e-money does not exceed €500,000. However, in cases where the average outstanding e-money exceeds such a limit, the SEMI must have an own funds equal to at least 2% of the average outstanding e-money.
Can an EMI and SEMI operate across the EU?
No, not automatically. A UK EMI or SEMI permission will not, post-Brexit, carry over any EU passporting rights. Generally, a firm which wants to work across the EU will need EU/EEA authorisation or some other form of regulatory structure compliant with those Member States.
Do EMIs and SEMIs only apply in the UK?
An EMI authorisation or SEMI registration issued by the FCA permits a firm to conduct the relevant regulated activities in the United Kingdom, subject to the scope of its authorisation or registration and compliance with the applicable regulatory requirements. Separate authorisation is generally required to provide regulated services within the EU or EEA.