Small Payment Institution and Small EMI License in 2026

What a small PI or small EMI licence is for

A small Payment Institution (SPI) or small Electronic Money Institution (small EMI) is a lighter version of the full PI and EMI licences designed for domestic, sub-scale fintechs. The regime exists in every Member State that exercised the Article 32 PSD2 option, most visibly Lithuania, Ireland, Poland, France, the Czech Republic and (post-Brexit) the United Kingdom.

A small licence lets you provide the same Annex I payment services as a full PI, and for a small EMI the same e-money issuance as a full EMI, but with lower capital, lighter governance and faster authorisation. The trade-off is simple.

The small regime is built for a specific moment in a company's life: prove the product, stay domestic, reach enough volume and margin to justify a full licence.

The volume thresholds that define the regime

The small PI and small EMI perimeters are set by PSD2 Article 32 and Article 9 of the E-Money Directive, and transposed with some national variation.

The volume calculation is based on a rolling 12-month average, not a single peak month. You must notify the regulator as soon as you can reasonably see the threshold will be exceeded in the next 30 days, and you have 30 days to file for the full licence after the breach.

Initial capital and ongoing own funds

Member States set their own numbers under the Article 32 ceiling. The norm is a material discount to the EUR 20k / 50k / 125k initial capital of a full PI and the EUR 350k of a full EMI.

Even where initial capital is zero, an ongoing own-funds test still applies. Lithuania, Ireland and Poland use a simplified version of PSD2 Methods A, B and D. UK small PIs calculate own funds as the greater of a fixed-overheads-based floor and the product of transaction volume and a percentage tied to their service mix.

A small EMI must additionally pre-fund a safeguarding float equal to the average outstanding e-money balance. This is the same safeguarding logic as a full EMI but on a much smaller balance.

What a small PI can actually do

The service perimeter of the small PI regime follows PSD2 Annex I, but Member States can exclude or restrict some activities.

• Execution of payment transactions and merchant acquiring - allowed in every jurisdiction that operates a small PI regime.
• Money remittance - allowed and common, often the core small-PI use case (MTOs, domestic family remittance).
• Issuance of payment instruments - allowed, but some regulators require a higher-tier licence for card issuing with a wallet (which they classify as e-money).
• Payment initiation (PISP) - allowed under PSD2 in principle but scoped out by several Member States because of the higher operational-risk profile.
• Account information (AISP) - handled through a separate registration rather than a small PI in most jurisdictions.

The critical restriction is territorial. A small PI cannot passport to other Member States and cannot accept cross-border customers by remote onboarding. Domestic activity only. Some regulators tolerate inbound customers from neighbouring states under freedom-of-services rules of the PSP on the other side, but active marketing abroad triggers full-PI rules.

The fast-track authorisation process

The small regime exists precisely to shorten time-to-market. Expect a lighter file and faster decision than a full PI or EMI.

1. Business plan and volume forecast. Show that the firm plans to stay under the EUR 3M/month cap for at least the first 24 months, with a sensible trigger for upgrade.
2. Simplified governance file. Fewer fit-and-proper questionnaires. The MLRO and one compliance officer are usually enough, versus a full board package for a full PI.
3. Light AML manual. Aligned with the Fifth and Sixth AML Directives but without the full institutional-risk-assessment expected from a large firm.
4. Safeguarding plan. Non-negotiable. Customer funds must be safeguarded at a credit institution or under an insurance policy from day one, just like a full PI.
5. Submission and decision. Statutory clocks range from 3 to 6 months depending on jurisdiction. Realistic end-to-end is 4 to 9 months.
6. Registration vs authorisation. Small PIs are on a public register rather than the EBA authorised-institution list. They are regulated but not passportable.

Small EMI files are one step heavier because the regulator reviews the e-money safeguarding design, wallet architecture and redemption flow. Budget an extra 2 to 3 months compared to a small PI in the same jurisdiction.

Small vs full: when to upgrade

The right time to upgrade is not when you hit the cap but 6 to 9 months before you hit it. A full PI or EMI application takes that long in any serious jurisdiction.

Upgrading is not a fresh authorisation from scratch. Regulators use most of the small-PI file as the base and ask for the incremental documents (full governance, stressed business plan, own-funds methods, passporting notifications). Firms that prepared the small file with the upgrade in mind save 6 to 9 months.

Where small PIs and small EMIs actually live

Jurisdiction choice matters even inside the domestic regime. Four markets dominate.

France (AEMI and AEP), Czech Republic and a handful of CEE states also run small regimes but with lower uptake because firms tend to skip straight to full PI or EMI.

Safeguarding and AML: no discount here

The small regime discounts capital and reporting, never customer protection or AML. The rules are identical to full PI and EMI.

• Safeguarding. Customer funds segregated at a credit institution or under an insurance or guarantee arrangement, reconciled daily, never comingled with firm funds.
• AML programme. Full KYC, sanctions screening, PEP review, ongoing monitoring, SAR filing and recordkeeping. The MLRO is personally responsible regardless of firm size.
• Incident reporting. Major operational and security incidents must be reported to the regulator within 4 hours of detection, same as a full PI under EBA guidelines.
• DORA alignment. Small firms have a proportionality regime under DORA but must still document ICT risk, business continuity and outsourcing.

Regulators increasingly flag "small" as a risk factor rather than a relief. Expect focused supervisory visits on safeguarding reconciliation and AML transaction monitoring in the first 12 months after authorisation.

From small to full: the upgrade playbook

Upgrading is a project, not a form fill. Use the approach that most successful teams have adopted.

1. Plan the full-PI file from day one. Write governance, AML and safeguarding documents at full-PI standard even when you apply as small. Most of the uplift is in the level of detail, not the policy itself.
2. Build volumes evenly. A lumpy monthly pattern makes the 12-month average hard to manage. Regulators read erratic growth as operational risk.
3. Pre-fund capital for the full regime. Raise the EUR 125k (or EUR 350k for EMI) before filing so the only change at upgrade is paid-up capital evidence.
4. Hire for full-PI governance early. Head of risk, head of compliance, independent non-executive directors. Regulators remember interim structures and ask tough questions at upgrade.
5. Automate safeguarding and reporting. Manual reconciliation does not scale past EUR 2M/month without errors. A fintech that arrives at the upgrade with a solid ops stack gets approved noticeably faster.

The upgrade window is also a natural moment to consider EU-wide strategy: stay small and domestic, or upgrade and passport across the EEA.

Ship a small-PI or small-EMI product with Crassula

The small regime is the right door for founders who want to prove a payment product without burning two years on a full-PI file. Crassula is the operational core that gets you from idea to live product inside the 4 to 9 month licensing window, and then follows you into the full-PI or full-EMI upgrade without a replatforming project.

We work alongside your legal counsel to scope the file, plug the technology into your home regulator's expectations, and prepare the upgrade path the day your volumes approach the threshold.

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