An electronic money license is the authorization held by an electronic money institution, permitting a company that is not a bank to issue electronic money: stored monetary value, such as a wallet balance or prepaid card, that customers can use to make payments and redeem at face value. Wallet providers, prepaid card programmes, multi-currency account services and many app-based "neobanks" operate under one.
In the European Union and the United Kingdom the license is granted by the national regulator under electronic money legislation. An applicant needs initial capital of 350,000 euros, a business plan, sound governance and suitable owners and managers, and once authorized must hold own funds linked to the amount of e-money outstanding. Customer balances must be protected through safeguarding, and may not be lent out or paid interest by the issuer. A lighter registration exists for a small electronic money institution.
The license also covers the payment services open to an authorised payment institution, which cannot itself issue e-money. Under the European crypto-asset rules, issuers of single-currency stablecoins, classed as e-money tokens, must be banks or electronic money institutions. Outside Europe, comparable permissions go by other names, such as stored value facility or prepaid payment instrument licenses.