The Advantages of Setting Up an Electronic Money Institution

An Electronic Money Institution (EMI) is a market participant licensed by the Central Bank of Cyprus, which has the right to issue electronic money. Electronic money is pre-paid monetary value issued into circulation by an electronic money institution, held on electronic devices, which can be used for payment purposes. An EMI may also perform money remittances, payment transactions, provide cash deposit and withdrawal services as well as perform direct debit or credit transfers.

The full license for electronic money is not limited in either time or area of activities. Thus, a holder of the EMI license in Cyprus shall be allowed to provide any services in the European Economic Area (EEA) without having to undergo a licensing procedure in any other member state. After the license in Cyprus is obtained the EMI may provide services in other EEA member states by means of passporting (with the use of freedom to provide services). This financial structure allows solving the main complexity of the current world economic situation for a large transnational business – banking services and international transfers.

One of the main advantages of an EMI is that it offers fully digital and remotely operated solutions. Digitalisation lies at the core of FinTech and allows clients to have round-the-clock access to their accounts and banking, no matter where they are. IBAN accounts for businesses represent an all-in-one digital platform, thanks to which customers can hold funds in multiple currencies under a single borderless bank account. In addition, through EMIs, clients can rely on a variety of methods for multi-currency payments, which are characterised by flexibility, processing speed, and advantageous and fair fees. Unfortunately, this can’t be said for traditional bank services. Furthermore, EMIs are versed in compliance and due-diligence procedures. Companies frequently encounter an insurmountable obstacle in the shape of rules and regulations banks are obliged to follow. Luckily, EMIs are inclined to face such challenges head-on since they rely on their teams’ expertise to tackle compliance issues and perform enhanced due diligence procedures effectively.

Cyprus is viewed as a very attractive destination to set up an Electronic Money Institution. By obtaining an EMI license in Cyprus, the license will be recognised in all other EEA member states. Through ‘passporting’, this allows to operate the electronic money institution across all EEA countries with a single license. Also, the license can be obtained in as a little as three months and the minimum initial capital requirement is EUR 350,000. Moreover, Cyprus is ranking high in terms of its tax regime attractiveness and is considered a favourable jurisdiction for holding and investment services companies. As a result, the net profits from EMI’s activities are subject to a corporation tax of 12.5%, one of the lowest corporate tax rates in Europe.

Electronic Money Institutions have established a permanent foothold in the fintech market, and their number is constantly growing. There are around 500 EMIs operating in Europe and this is thanks to the exclusivity of their business model, structure and license and the fact that they are more innovative and flexible than traditional banks. It has never been a better time for individuals and legal persons to set up an Electronic Money Institution and Cyprus is the ideal place to do so.