UK e-money licence approvals up following 2022 “disaster”

New figures show the level of Electronic Money Institution (EMI) licence approvals is up year-on-year but are still well down on earlier years.
UK e-money licence approvals up following 2022 “disaster”

Startups in the UK were today given a boost after new figures show a year-on-year uptick in UK Electronic Money Institution (EMI) licence approvals following the 2022 “disaster”.

More than one in six startups applying for an e-money transaction licence were approved between January and the end of September this year, new figures from the FCA through Freedom of Information show.

Up but down

The figures show that 11 EMI licences out of 63 applications were approved by the regulator in the period. 50 applications were withdrawn and two were rejected, the figures show.

Holding an EMI licence means fintechs can issue payment services like e-money, prepaid cards and mobile payments.

The figures reveal an increase year-on-year but are still significantly down on previous years.

The Evening Standard has previously reported that the approval rate last year was just eight percent, compared to 90 percent in 2018 and 47 percent in 2021.

An “acid test” of business models

PayPal, which was recently approved as an EMI institution and consumer credit firm as well as registered as a crypto asset business, Greek neobank Viva Wallet and Luxembourg-headquartered payment infrastructure startup Mangopay were amongst those to get FCA EMI licences this year.

Dmitrijus Apockinas, partner, PSP Lab LLP, a fintech consulting firm, said that approvals rates were still “very low” but said it showed the regulator was showing a rigorous approach.

He believes the year-on-year increase was a positive sign for the industry.

Apockinas said:

“I thought the approval rate should be around 14 to 15 per cent but it is almost 20 per cent, it’s not that bad.”

“I think this is mainly down to the improved quality of the applicants themselves.

“Last year was a disaster in terms of approval rate.”

Romain Mazeries, Mangopay, CEO
Romain Mazeries, Mangopay, CEO

Commenting on Mangopay's EMI licence approval, Romain Mazeries, Mangopay, CEO, said the process was “rigorous” and was an “acid test” of business models.

He said:

“The process of gaining a UK e-money licence is rigorous and requires extensive planning.

“Completing the application form challenges a firm’s readiness in becoming a regulated actor, placing significant scrutiny on its business plan and financial forecasts.

“Overall, we considered the application process to be an effective acid test of our business models, compliance framework and personnel.”

On advice for those looking to undergo the process, he added:

“Planning and preparation are vital to achieving becoming an authorised e-money issuer. This includes the substance and quality of submitted documentation but also the degree of recruitment and investment to undertake.”

Lead image: Photo by Andrea De Santis

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