Electronic Money Institutions in Malta

Advantages of Obtaining an EMI Licence in Malta

Malta’s regulatory framework, governed by the Financial Institutions Act (Chapter 376 of the Laws of Malta), provides a supportive environment for financial institutions. Key benefits include:

• Attractive Tax Regime: Competitive taxation and business incentives.
• EU Passporting Rights: Expand operations across EU Member States.
• Technological Infrastructure: Advanced digital infrastructure and fintech-friendly policies.
• Skilled Workforce: A well-educated, English-speaking financial and compliance talent pool.
• Regulatory Stability: A clear licensing process under the Malta Financial Services Authority (MFSA).

These advantages collectively position Malta as a leading jurisdiction for obtaining an EMI Licence.

 

What is an EMI Licence?

An Electronic Money Institution (EMI) issues and manages electronic money, enabling digital financial transactions. To qualify as an EMI in Malta, two key elements must be present:

1. Prepaid electronic money
2. Capability to transfer electronic money freely to third parties

E-money is a digital alternative to cash, typically stored on prepaid cards, digital wallets, and mobile payment apps. This digital transformation enhances payment efficiency and security.
 

The Digital Advantage of an EMI Licence in Malta 

Unlike physical cash, electronic money exists exclusively in digital form, stored on prepaid cards, digital wallets, or mobile payment apps. This provides several advantages for financial transactions, including:

• Convenience: Instant payments without the need for cash.
• Security: Encrypted transactions reduce fraud risks.
• Efficiency: Faster, borderless transactions for businesses and consumers.

With global adoption increasing, Electronic Money Institutions (EMIs) in Malta benefit from regulatory clarity, access to EU markets, and a strong fintech ecosystem, making digital transactions more accessible and reliable.
 

Regulatory Requirements for an EMI Licence in Malta

Any company seeking an EMI Licence in Malta must comply with the licensing requirements set by the MFSA under the Financial Institutions Act. The application process includes:

• Submission of the Licence Application: Companies must submit a detailed application form to the MFSA, ensuring all regulatory criteria are met.
• Compliance with the Electronic Money Directive: Businesses can either apply for a new licence in Malta or hold an equivalent authorisation from another EU country.
• Regulatory Review: The MFSA assesses applications to confirm adherence to the Financial Institution Rules.

 

Permitted Activities for EMIs in Malta

In addition to issuing electronic money, EMIs are authorised, subject to prior approval from the MFSA, to engage in the following activities: 

1. Providing payment services as detailed in the second schedule of the Act;
2. Granting credit related to certain payment services as detailed in the Act given that it is not granted from the funds received in exchange of electronic money and held in accordance with safeguarding requires prescribed. Credit can only be granted when:
   • credit is ancillary and granted exclusively in connection with the execution of a transaction;
   • nothithstanding national rules on providung credit by credit cards, the credit granted in connection with a payment and executed with the act shall be repaid within a short period which shall in no case exceed twelve months;
   • such credit is not granted from the funds received or held for the purpose of executing a payment transaction;
   • and the own funds of the payment institution are at all times and, to the satisfaction of the competent authority, appropriate in view of the overall amount of credit granted. 
3. Offering operational services and closely related ancillary services concerning the issuance of electronic money or the provision of payment services referred to in point 1 above.
4. Operating payment systems as defined in the second schedule of the Act; and 
5. Conducting business activities other than the issuance of electronic money, in accordance with the applicable law regulating such activities 

EU Passporting for EMIs in Malta

A license to operate as an EMI shall be valid in all Member States and shall allow the EMI to issue, redeem or distribute electronic money in another Member State either through the establishment of a branch by exercising the right to establishment or by exercising its right under the freedom to provide services. A licensed EMI may also provide payment services and, or distribute and, or redeem electronic money in another Member State through an agent and, or a distributor, as applicable. In order to exercise such powers, a licensed EMI is required to give notice to the MFSA of such an intention, which notice shall contain the necessary information as prescribed in the Act. 

Main Requirements for obtaining an EMI Licence in Malta 

To apply for an Electronic Money Institution Licence in Malta, businesses must meet the following criteria:
 

• Minimum initial share capital of EUR 350,000. Licensed EMIs shall ensure that their own funds do not fall below this amount of initial share capital, or the amount of own funds as calculated in accordance with the Rules, whichever is higher. 

 

• At least two individuals to effectively manage the EMI’s operations from Malta. Such individuals must have a good reputation and sufficient experience to occupy such roles. For the MFSA to form such an opinion, such individuals along other key personnel within the institution and any qualifying shareholders, will be subject to certain due diligence procedures as prescribed by the MFSA;

 

• Sound and prudent management and robust governance arrangements. Such arrangements must include a clear organisational structure with well defined, transparent and consistent lines of responsibility, effective procedures to identify, manage, monitor and report the risks to which it is or might be exposed, and adequate internal control mechanisms, including sound administrative and accounting procedures. The MFSA will also expect that a part of such management be effectively carried out in Malta; 

 

• Head office and its registered office in Malta and shall carry out at least part of its licensable activities in Malta; 

 

How Much Does an EMI Licence Cost in Malta?

MFSA imposes the following costs on financial institutions:

• a one-time application and processing fee of EUR 3,500 payable upon submission of a licence application, and
• an annual supervision fee. Based on the institution’s balance sheet, with a minimum of €2,500 per year

Written by Dr. Daisy Grima, Junior Lawyer and Ms. Suzana-Marie Tabone, Junior Lawyer (BDO Malta Legal Team)

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