Small EMI vs authorised EMI: limits, fees and the upgrade trap

Regulation 2(1) of the EMRs holds the definition that does the structural work: "electronic money institution" means an authorised electronic money institution or a small electronic money institution. Both tiers are the same species in law. That single definition is why the FSMA Part 12 change-of-control regime bites on both (applied via Schedule 3 to the EMRs) and why the 2026 safeguarding rules reach small EMIs too - "small" is a volume category, not an exemption from the serious parts of the regime.

The volume category turns on "average outstanding electronic money" (AOEM), which regulation 2 defines as the average total of e-money liabilities in issue at the end of each calendar day over the preceding six calendar months, recalculated on the first calendar day of each month. Note that the EMR amounts remain denominated in euro in the current revised UK text - a post-Brexit oddity, but the law as it stands. If the model itself is new to you, start with our founder's guide to EMI licences.

Schedule 2 to the EMRs sets initial capital. For an authorised EMI it is "at least 350,000 euro" (paragraph 2). For a small EMI the schedule requires no initial capital at all until average outstanding e-money reaches EUR 500,000; from that point the requirement is "at least equal to 2% of the average outstanding electronic money" (paragraph 3(1)).

That is worth stating bluntly, because a GBP 20,000 initial-capital figure for small EMIs circulates widely in the content ranking for this comparison. It appears nowhere in Schedule 2. Treat any page carrying it as a signal about the rest of that page's numbers.

Ongoing own funds for an authorised EMI run under Method D: an amount equal to 2% of average outstanding e-money, adjustable by the FCA 20% up or down; hybrid firms providing unrelated payment services layer a separate calculation on top. Every one of these amounts is euro-denominated in the current text - budget in euro and convert, not the other way round.

The FCA prices applications by category in FEES 3 Annex 10R. A small EMI registration is Category 3: GBP 1,120. An authorised EMI application is Category 5: GBP 5,580. Variations cost 50% of the relevant category - GBP 560 and GBP 2,790 respectively - and there is no fee where a firm is only removing services. Application fees are paid by card at the point of submission on Connect and are non-refundable whether or not the application succeeds.

Two other figures that circulate - roughly GBP 500 for the small tier and GBP 15,000 for the authorised tier - match nothing in the published schedule. On periodic fees, only the mechanics belong here: authorised EMIs sit in fee-block G.10 with average outstanding e-money as the tariff base, small EMIs in G.11, and rates reset annually - read the current tables in FEES 4 Annex 11R.

The prohibitions matter as much as the ceilings. A small EMI cannot provide account information services or payment initiation services at any volume - open-banking functionality sits behind full authorisation. And one negation applies to both tiers: a UK EMI - small or authorised - covers the United Kingdom only. Serving EU or EEA customers requires a separate authorisation from an EU regulator; there is no passporting in either direction.

Since 7 May 2026 the CASS 15 safeguarding regime has been in force, and small EMIs are in scope alongside authorised EMIs. That means internal and external safeguarding reconciliations at least once each reconciliation day, a monthly REP027 return filed within 15 business days of each calendar month end, and an annual safeguarding audit under SUP 3A - the first due within 6 months of the audit period end, then within 4 months - unless the firm holds under GBP 100,000 of relevant funds, in which case the audit (not the safeguarding itself) is exempt. Choosing the small tier does not buy out of any of this.

The same is true at the shareholder gate. Because regulation 2(1) defines both tiers as electronic money institutions, the FSMA Part 12 change-of-control regime applies to both via Schedule 3 to the EMRs: acquiring 10% or more of either kind of EMI needs prior FCA approval on a section 178 notice, and completing without that approval is a criminal offence (FSMA s. 191F). A small EMI is cheap to open; it is not casual to own or to sell.

Regulation 16 is short enough to quote in full: "Where a small electronic money institution ceases to comply with a condition in regulation 13(3), (4), (8) or (9), the institution concerned must, within 30 days of becoming aware of the change in circumstances, apply to become an authorised electronic money institution under regulation 5 if it intends to continue issuing electronic money in the United Kingdom."

Unpack that and the trap is visible. The 30 days run from awareness, which makes AOEM monitoring a compliance duty in its own right - the six-month average recalculates monthly, so a growing book crosses EUR 5,000,000 on a knowable date. And what must be filed is not a top-up form: it is a full regulation 5 authorisation application - business plan, safeguarding arrangements, wind-down plan, capital, individual forms - at the authorised-EMI fee. Regulation 16 sets the deadline for filing that file, not for starting it.

An outgrowing small EMI has two lawful routes to an uncapped book. The first is the fresh regulation 5 application that regulation 16 forces. Its statutory windows sit in regulation 9: the FCA must determine a completed application within three months, but may take up to 12 months over an incomplete one - and completeness is judged by the regulator, not the applicant. The three-month clock is real; so is the asymmetry.

The second route is acquiring a company that already holds the authorisation. That path runs on its own statutory clock: 60 working days beginning with the day the FCA acknowledges a complete section 178 notice, interruptible once for up to 20 working days (30 where the notice-giver is outside the UK), with completion before approval a criminal offence. A harder-edged and typically shorter clock - though with its own file to build, because the FCA assesses the acquirer in application-grade depth. Neither route carries a guaranteed outcome.

If acquisition fits, it should lead to an operating firm, not a dormant one: regulation 10 lets the FCA cancel an authorisation where a firm has issued no e-money within 12 months or has ceased business for more than six months, which is why "shelf EMI" offers age badly. SKY7 currently lists one operational lot, a UK FCA-authorised EMI for sale.