Starting a payment company in 2026 means navigating a landscape where regulatory requirements have materially increased, banking relationships are harder to establish than five years ago, and the line between an EMI, a PSP, an MSB, and an acquiring institution is frequently misunderstood. Most licensing failures trace back to a single root cause: a founder chose the wrong license for their business model — or chose the right license in the wrong jurisdiction for their target market.
This guide fixes that. It covers everything in order: business model first, license type second, jurisdiction third. If you are asking what license do I need to start a payment company or what is the difference between an EMI and a PSP license, the sections below answer those questions in sequence.
Part 1 — What Type of Payment Business Are You Building?
Before selecting a license or jurisdiction, define exactly what your business does. Payment regulation is service-specific — the authorization you need depends on which specific activities you intend to provide, not on a generic category like “fintech” or “payment company.”
E-money issuer / neobank: Issues electronic money (stored value), provides IBANs, operates digital wallets. Requires an EMI license. Example business: a digital wallet for cross-border workers.
Payment institution / PSP: Processes payments on behalf of merchants (acquiring), initiates transfers, provides payment gateway services. Does not issue e-money. Requires a PI or PSP license. Example business: an e-commerce payment gateway.
Merchant acquirer: Processes card transactions for merchants, interfaces with card schemes (Visa, Mastercard). Typically requires an EMI or PI license plus card scheme membership. Example business: a merchant payments platform for a specific vertical.
Cross-border remittance / money transfer: Transmits money internationally on behalf of clients. Requires MSB (Money Services Business) registration in most jurisdictions. Example business: a remittance platform for a diaspora corridor.
Crypto payment processor: Accepts or converts cryptocurrency for merchants or individuals. Requires VASP registration in most jurisdictions plus often a payment license. Example business: a crypto payment gateway for e-commerce.
Embedded payments / BaaS: Provides payment infrastructure to other businesses (APIs, white-label). May require licensing as an EMI plus technical service agreements. Example: a BaaS provider for neobanks and fintechs.
Define which of these you are building. Many founders try to combine multiple activities under one license — sometimes possible, often not. Jurisdiction selection depends entirely on which activities you need authorized.
Part 2 — License Types Explained
EMI (Electronic Money Institution) License. Issued in the EU under EMD2 (Electronic Money Directive 2) and equivalents outside the EU. Allows: issuing e-money (stored value held for customers), digital wallets and prepaid cards, plus the payment services an EMI is authorised for, such as payment accounts, money transfer and acquiring. Does NOT allow: taking deposits (that is a banking license), lending from your own balance sheet against deposits. The most comprehensive non-bank payment license available in the EU.
PI (Payment Institution) License. Issued under PSD2 in the EU. Covers payment services — payment accounts, transfers, acquiring, money remittance — without e-money issuance. A PI can provide payment accounts, including IBANs, but holds customer funds only in connection with payment transactions; it cannot keep them as stored value. Appropriate for pure payment processing, acquiring, and transfer businesses that do not need e-money functionality.
MSB (Money Services Business). In Canada, MSBs register with FINTRAC; payment service providers performing retail payment activities must also register with the Bank of Canada under the Retail Payment Activities Act. In the US, FinCEN MSB registration is only the federal layer — money transmission also requires state money transmitter licences, which carry bonding and net-worth requirements.
PSP License (Payment Service Provider). Used in Singapore (MAS), Mauritius (FSC PIS, BoM PSP), Labuan (Labuan FSA Payment System Operator), and various other offshore jurisdictions. Scope varies by jurisdiction — some PSP licenses cover e-money issuance, others cover only payment processing.
Acquiring License. Specific authorization to process card transactions as a principal acquirer. Typically requires EMI or PI license plus card scheme membership (Visa/Mastercard principal membership or sponsored membership). Most new payment companies start as sponsored acquirers.
Part 3 — Jurisdiction Selection
EU — The Global Standard for Payment Companies
Lithuania (Bank of Lithuania) — EMI License. Historically the EU's largest EMI hub, with a newcomer programme and structured application support from the Bank of Lithuania. €350,000 minimum capital. Statutory review period: up to 3 months from a complete application; realistic end-to-end timeline of 3–6 months for a well-prepared file. EU passporting across 30 EEA countries. Best for: firms needing both EMI and MiCA authorisation, e-wallets, neobanks, and any business needing EU IBAN issuance and 30-country market access. See our EU EMI License service page.
Latvia (Latvijas Banka) — EMI and Payment Institution licences. Latvia has become the most active Baltic licensing jurisdiction: by July 2026 Latvijas Banka had issued four EMI licences that year, against three in the whole of 2025, and in 2026 three companies received a MiCA licence and a payment institution licence on the same day. €350,000 minimum capital for an EMI. EU passporting across the EEA. Latvijas Banka offers free pre-licensing consultations, and since January 2026 a specialised bank licence with €1 million initial capital is available for fintechs that outgrow an EMI. Best for: EU e-wallets and payment businesses, and combined crypto and payment models. See our Latvia EMI and payment institution page.
Cyprus (CBC) — EMI License.€350,000 minimum capital. Similar timeline to Lithuania. Zitadelle AG's Cyprus base provides on-the-ground CBC access and is particularly relevant for payments companies already holding or considering a CySEC investment license.
UK (FCA) — EMI Authorization. Post-Brexit, UK EMI authorization no longer provides EU passporting. Minimum capital: £350,000. 12–18 months. Appropriate for businesses targeting the UK market specifically or UK clients.
Asia-Pacific
Singapore (MAS) — Major Payment Institution (MPI). SGD $250,000 minimum capital. ~12 months. The gold standard for ASEAN and Asian payments credibility. MPI covers the widest scope of payment services under the Payment Services Act — domestic and international money transfer, merchant acquiring, e-money issuance, and Digital Payment Token (DPT/crypto) services. Best for: fintech companies targeting ASEAN, institutional payment infrastructure providers, and businesses requiring MAS regulatory credibility for correspondent banking. See our Singapore MPI License page.
Labuan, Malaysia (LFSA) — Payment System Operator (PSO). RM1,000,000 minimum capital for payment system activity, or RM1,500,000 where the operator also provides e-money or digital-asset services. 3–6 months. 3% tax. 0% withholding tax on dividends. Strong Malaysian banking access (Maybank, CIMB). Best for: Asia-Pacific operators targeting cross-border payments within ASEAN, e-wallet operators, and payment businesses seeking cost-efficient offshore structure with genuine regulatory standing. See our Labuan Payment System Operator License page.
Indian Ocean / Africa Gateway
Mauritius (FSC) — PIS License. MUR 2,000,000 (~USD $45,000) minimum capital. 6–9 months. ~3% effective tax. Best for: cross-border payment companies targeting Africa, South Asia, and the Indian Ocean corridor. The PIS license specifically authorizes activities conducted exclusively outside Mauritius — it is offshore-focused by design. From 1 July 2026, FSC processing fee: USD 1,400; annual FSC fee: USD 2,600 (plus a USD 600 Global Business Licence processing fee and a USD 2,600 Global Business Licence annual fee). Zitadelle AG's PIS clients include SticPay. See our Mauritius PIS License page.
North America
Canada (FINTRAC) — MSB Registration. No minimum capital and no registration fee. Covers money transfer, foreign exchange and virtual currency dealing. Payment service providers performing retail payment activities must also register with the Bank of Canada under the Retail Payment Activities Act. An MSB registration is not an EMI and does not allow e-money issuance. Best for: remittance operators and crypto payment processors entering North America at low initial cost.
Jurisdiction Decision Framework
| Business model | Best jurisdiction |
|---|---|
| EU e-wallet / neobank | Latvia or Lithuania (EMI) |
| EU crypto + payments | Latvia or Lithuania (MiCA + EMI/PI) |
| Global institutional payments | Singapore MAS MPI |
| ASEAN cross-border | Singapore or Labuan |
| Africa/Indian Ocean e-commerce | Mauritius PIS |
| North America remittance/crypto | Canada MSB |
| Cost-efficient ASEAN e-wallet | Labuan PSO |
| Fastest route to market | Buying an existing licensed EMI or PI (see Part 9) |
Not sure whether you need an EMI or a PI?
Tell us what your product does with customer money and where your customers are. We'll tell you which licence and jurisdiction fit.
Part 4 — Technology Stack for Payment Companies
A payment company's technology stack is more complex than a brokerage stack because it touches multiple regulated systems simultaneously.
Core Banking System (CBS) / Payment Processing Engine. The backbone of your e-money or payment operation. Options: Temenos, Mambu, Thought Machine (institutional), or banking-as-a-service providers for faster market entry. License your CBS or build on top of a BaaS platform. Cost: $5,000–$50,000+/month depending on scope and volume.
Card Scheme Integration. To issue cards (Visa/Mastercard debit or prepaid), you need: principal membership (direct — a substantial investment in capital, compliance and technology) or sponsored membership (through a principal member — more accessible for new entrants). BIN sponsorship programs from established EMIs or banks are the standard path for new issuers.
IBAN/Account Infrastructure. For IBAN issuance: typically through a correspondent bank relationship or BaaS partner in the SEPA zone. Sort code access for UK Faster Payments: through a sponsor or indirect access arrangement.
Payment Gateway. Stripe, Adyen, and Checkout.com are the institutional options for card acceptance. For bespoke gateways: custom development or white-label gateway software.
AML/Transaction Monitoring. Regulatory requirement in all jurisdictions. ComplyAdvantage, Featurespace, NICE Actimize for transaction monitoring. Screening against OFAC, EU, UN, HM Treasury sanctions lists mandatory. PEP and adverse media screening at onboarding.
KYC/Onboarding.Sum&Substance, Onfido, Jumio, or Veriff for identity verification. Document verification, liveness checks, and proof of address processing. Cost: $0.50–$3.00 per verification depending on volume and tier.
SWIFT / Correspondent Banking. For international wire transfers: SWIFT membership or access via correspondent bank. SWIFT BIC required. Correspondent relationships must be established proactively — this is the hardest operational component for new payment companies.
Part 5 — Banking and Correspondent Relationships
Banking is the single biggest operational challenge for new payment companies in 2026. The combination of de-risking by global correspondent banks, heightened AML scrutiny, and regulatory pressure on facilitating payments for unproven entities means that the “open an account and start operating” assumption is false.
Reality in 2026: EU banks apply enhanced due diligence to all new EMI licensees for the first 12–24 months of operation. SWIFT correspondent access for new payment companies typically requires a sponsor bank relationship and 6–18 months of track record. Card scheme membership (even sponsored) requires the applicant to demonstrate financial stability, AML infrastructure, and compliance history.
Practical approach: Start with a banking-as-a-service or BIN-sponsorship provider for immediate access to IBAN, card, and payment infrastructure while you build your own correspondent relationships. Transition to direct correspondent banking as your transaction volume and compliance track record develop.
For non-EU offshore jurisdictions, banking access varies significantly. Mauritius offers strong domestic bank access (MCB, SBM, AfrAsia) for PIS licensees. Labuan offers Malaysian bank access. Singapore MPI holders access Singapore's world-class banking infrastructure. SVG or pure holding structures have the hardest banking path.
Part 6 — Realistic Cost Breakdown
Offshore Entry (Mauritius PIS)
| Item | Cost |
|---|---|
| Mauritius GBC + PIS license | FSC fees: USD 7,200 in year 1 (PIS and Global Business Licence), plus incorporation, management company and compliance costs |
| Min. capital (held in company) | USD $45,000 |
| Payment processing technology | USD $20,000–60,000 |
| AML/KYC tooling | USD $6,000–15,000 |
| Banking setup | USD $5,000–15,000 |
| Total Year 1 | USD 90,000–120,000 |
Asia-Pacific Regulated (Singapore MPI)
| Item | Cost |
|---|---|
| Singapore company + MPI license | USD $20,000–40,000 (Year 1) |
| Min. capital (SGD $250K) | USD $185,000 |
| Payment technology stack | USD $40,000–120,000 |
| AML/KYC + compliance | USD $20,000–50,000 |
| Banking + SWIFT setup | USD $10,000–30,000 |
| Total Year 1 | USD $280,000–440,000 |
EU EMI (Lithuania)
| Item | Cost |
|---|---|
| Lithuania company + EMI license | USD $30,000–60,000 |
| Min. capital (€350K) | USD $385,000 |
| Core banking / BaaS | USD $60,000–180,000 |
| Card scheme access | USD $20,000–80,000 |
| AML/compliance infrastructure | USD $30,000–80,000 |
| EU staffing (compliance, MLRO) | USD $80,000–200,000 |
| Total Year 1 | USD $650,000–1,000,000+ |
Part 7 — PSD3, PSR and the 2027 AML Rules
The EU is replacing PSD2 with PSD3 and a directly applicable Payment Services Regulation (PSR). The new rules will apply after a transition period once they are published in the Official Journal. Key changes affecting new applicants:
- Open Banking obligations strengthened — PIs and EMIs must provide enhanced API access to third-party providers.
- Stronger fraud liability framework — liability rules for unauthorized transactions become stricter.
- DORA applies — digital operational resilience requirements (in force January 2025) apply to all EU payment institutions.
- Strong Customer Authentication (SCA) requirements continue to evolve.
- EU AML Regulation from 10 July 2027 — a single EU rulebook for customer due diligence, beneficial ownership and internal controls, applying directly to EMIs and payment institutions.
Founders applying for EU EMI or PI licenses now should structure their compliance frameworks to accommodate PSD3 requirements from launch — retrofitting is expensive.
Part 8 — Five Common Mistakes
1. Licensing before business model validation. A €350,000 minimum capital commitment is expensive proof of concept. Validate your payment product with a BaaS partner first.
2. Confusing EMI and PI scopes. If customers will keep balances with you as stored value, you need an EMI. A PI can provide payment accounts but holds funds only to execute payment transactions.
3. Underestimating banking timeline. Correspondent banking access can take 12–18 months from license grant. Build this into your financial projections.
4. Ignoring card scheme requirements. Card issuance and acquiring require card scheme membership separate from your payment license. Principal membership costs and timeline are separate from licensing.
5. Choosing jurisdiction based on capital cost alone. A Mauritius PIS at USD $45,000 capital is right for Africa/Indian Ocean cross-border payments. It is not a substitute for a Lithuania EMI for a European e-wallet or neobank targeting EU clients — however attractive the capital figure looks.
Part 9 — Buying an Existing EMI or Payment Institution
Acquiring an existing licensed EMI or PI can shorten time to market and may include banking and safeguarding arrangements that are hard to build from scratch. The regulator still approves the new owner through a change of control application, and an operational institution with clean compliance history is a far safer buy than a dormant one. Listings are published on our group's marketplace, Financial License Market, and we advise on due diligence and approval. See our M&A advisory.
Frequently asked questions
An EMI can issue e-money — customer balances held as stored value — as well as providing payment services. A payment institution provides payment services such as payment accounts, transfers and acquiring, but holds customer funds only to execute payment transactions. Both can provide payment accounts, including IBANs.
Disclaimer: This guide is for informational purposes only and does not constitute legal or regulatory advice. Requirements, fees, and timelines are subject to change. Last updated: October 12, 2026.