Risk & Rules
What is an EMI (electronic money institution)?
An electronic money institution (EMI) is a firm authorised to issue e-money and provide payment accounts without being a bank. E-money is held and spent like cash in an account, but it is not a bank deposit — instead of deposit insurance, EMIs must safeguard customer funds under FCA rules.
EMI vs bank — the honest comparison
A bank can lend out your deposits; if it fails, the FSCS protects eligible deposits up to £85,000. An EMI cannot lend your money at all: it must safeguard customer funds — held separate from its own money, in designated accounts at credit institutions or in liquid safe assets — so the funds exist to be returned if the EMI fails.
Neither model is “safer” in the abstract; they are different protections. The EMI model’s strength is that your funds are ring-fenced by rule rather than insured after the fact — and since May 2026 the FCA’s new safeguarding regime has tightened exactly how that ring-fencing must operate.
Why modern payment accounts run on EMI licences
The EMI licence is the permission behind most fintech business accounts, multi-currency wallets and named IBANs. It lets a firm issue accounts and move money at software speed while the regulatory perimeter — safeguarding, AML, conduct — stays enforced by the FCA.
When you open a “business account” with a fintech, the useful question is: which EMI issues it, and what is its FCA firm reference number? Any provider should answer instantly — and you can check the answer on the register yourself.
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