How to obtain a payment institution and E-money license in Spain

For the last time, Spain has managed to become one of the most attractive places in the European bloc for firms willing to work in digital payments as well as financial technology. The demand for regulated financial services is soaring, and entrepreneurs willing to release electronic money or offer payment solutions require the right permission. In Spain, an entrepreneur is expected to apply for either a Payment Institution license or an Electronic Money Institution license. Both licenses give an opportunity to serve clients across the EU, but the criteria and scope differ.

This article illustrates the nuances of getting licensed in Spain to work in this sector. 

Payment Institution License in this country

A Payment Institution license targets entrepreneurs providing payment services, but not electronic money issuance. So, it has to do with transfers, loans, merchant acquiring, plus account data services.

It’s the Bank of Spain, which supervises and monitors licensed financial institutions, grants this approval. In order to receive approval, the applicant is expected to:

• Have a firm incorporated in Spain or have a branch there if it’s an EU entity.
• Roll out a solid business plan with financial projections, target markets, and also operational details.
• Prove the existence of the initial amount, the size of which depends on the services provided. For instance, basic money transfer providers might need about €20,000, while entrepreneurs providing broader services require up to €125,000.
• Demonstrate governance as well as compliance capacity, including appropriate managers, AML/CTF procedures, alongside risk management systems.
• Ensure safeguarding of customer funds via bank accounts or corresponding insurance arrangements.

Once approved, you can operate across the EU.

Electronic Money Institution license

An EMI permission actually covers the whole array of offers, as in the case above, while letting the firm release electronic funds. That’s undoubtedly crucial for prepaid cards, digital wallets, or similar financial products.

Here, you’ll have to deal with stricter criteria:

• Initial capital starts at €350,000.
• A robust internal control framework, covering IT security, data protection, as well as regulatory reporting, is required.
• Audited financial statements as well as ongoing capital adequacy monitoring are expected too.

The Bank of Spain looks through requests carefully, paying attention not only to financial strength but also to the team’s experience and compliance readiness.

Why should you choose Spain?

Spain turns out to be an attractive jurisdiction for a number of reasons: 

• It’s an EU country, and it means that licenses carry a passporting privilege to other EU countries. 
• The country also boasts a rapidly developing fintech sector, with Madrid and Barcelona becoming hubs for startups. 
• Spain offers access to both European and Latin American markets due to cultural and linguistic ties.

Application timeline 

The timeline actually depends on the complexity of the firm model and also the completeness of the request. That’s how it flows:

• Preparation phase: It takes 3–6 months to cope with documentation, compose the business plan, and also get your governance structured.
• Review phase: The country’s major bank is involved for 6–12 months, including back-and-forth clarifications.
• Permission: Once approved, the watchdog gives the green light, after which you can register for passporting.

In general, you will spend approximately 12–18 months to get licensed. 

Key сhallenges

As an applicant, you should be ready for the following:

• Strict AML/CTF criteria: Spain adheres to EU directives, so strong compliance systems are expected to be engaged.
• Local presence: Despite some functions being outsourced, a great deal of management needs to be located in Spain.
• Cost of compliance: Apart from initial capital, ongoing supervision fees, reporting costs, as well as staff expenses need to be considered.