What Is the Difference Between a Czech EMI and a PI License?
Choosing between an EMI and a PI license in the Czech Republic is a critical decision for any fintech company. The wrong choice can cost months of delay or unnecessary capital allocation. This article explains the key differences, practical implications under the 2026 legal framework, and how to avoid costly mistakes during the licensing process.
Article contents
Quick summary
- EMI licenses allow you to issue and store electronic money (e-wallets, prepaid cards), require €350,000 initial capital, and are ideal for platform-based businesses where users hold balances.
- PI licenses cover payment processing and remittance services but do not allow the issuance of e-money . They require €20,000–€125,000 initial capital depending on the scope of services.
- The Czech National Bank (CNB) regulates both licenses under Act No. 370/2017 Coll., on Payment System.
- Both full licenses grant passporting rights across the entire European Economic Area (EEA) once approved.
Understanding the core difference between EMI and PI
The single most important distinction between these two licenses is simple but has profound practical implications: an EMI can issue and store electronic money indefinitely, whereas a PI cannot.
This fundamental difference determines not only what services you can offer your customers but also your business model, capital requirements, and growth potential over the next five years.
When you hold a PI license, you function as an intermediary in the payments ecosystem. Your company executes payment transactions by moving funds from a customer's pre-existing bank account or card to a recipient.
The critical limitation is that you can hold funds only temporarily and exclusively for the purpose of executing a specific transaction.
Once the payment order is received, the funds must move toward the beneficiary within strict statutory timeframes. This means you cannot offer your customers the ability to maintain a "wallet" balance with your company for unspecified future use.
An EMI license grants you fundamentally different capabilities. You can issue electronic money and hold customer funds in stored-value accounts or digital wallets for an indefinite period.
This capability opens entirely different business models, such as prepaid cards, multi-currency wallets, and embedded financial services.
The complexity of this distinction is greater than it initially appears. When regulators from the Czech National Bank assess your business model, they examine not just your current service offerings but your operational reality.
ARROWS Law Firm has repeatedly encountered situations where clients wished they had obtained the EMI license from the outset, as upgrading requires a completely new application.
Capital requirements
The difference in initial capital requirements reflects the regulatory assessment of risk that each license type entails. These amounts must be fully paid up and clean before the license is granted.
Payment institution (PI) capital requirements
For a Payment Institution license, the Czech National Bank establishes a tiered capital structure based on the specific scope of payment services you intend to offer:
1. Money remittance services only:€20,000 minimum initial capital. This is the lowest threshold, designed for companies focused exclusively on cross-border money transfers.
2. Payment Initiation Services (PIS):€50,000 minimum initial capital. PIS enables customers to initiate payments directly from their existing bank accounts.
3. Full-range payment services:€125,000 minimum initial capital. This covers the broadest range of PI services, including operating payment accounts and acquiring payment transactions.
The CNB may require higher capital if your business plan projects high volumes or high-risk activities. This capital acts as a prudential safeguard.
Electronic money institution (EMI) capital requirements
An Electronic Money Institution license requires €350,000 in minimum initial capital. Additionally, EMIs are subject to ongoing capital adequacy requirements.
You must maintain regulatory capital equal to the higher of the initial capital or a calculated amount based on transaction volume. Specifically for e-money issuance, you must hold capital equal to at least 2% of the average outstanding electronic money .
Small-scale licenses
Both EMI and PI categories offer "small-scale" variants.
- Small-Scale Payment Service Provider: No statutory minimum capital. Limited to a monthly average of payment transactions not exceeding €3 million over the preceding 12 months.
- Small Electronic Money Issuer: No statutory minimum capital. Limited to average outstanding electronic money not exceeding €5 million .
These licenses are valid exclusively within the Czech Republic and do not grant passporting rights. They are suitable only for local start-ups or strictly Czech-focused MVPs.
Related questions
1. Can we start with a small-scale license and upgrade later without reapplying?
No. "Upgrading" is legally a request for a new authorization. While you can operate under the small license while preparing the full application, the CNB treats the full license request as a completely new administrative proceeding.
2. Do we need to hold the initial capital in Czech koruna (CZK) or can it be in euros?
Capital can be held in euros or koruna, but it must be deposited in a bank account in the Czech Republic or another EU member state. The CNB strongly prefers a Czech bank for ease of verification.
3. If we maintain more capital than the minimum, does this strengthen our regulatory position?
Yes. The CNB views excess capital as a buffer against operational risk. A capitalization plan that sits exactly on the statutory minimum is often viewed with skepticism regarding the company's long-term viability.
Service capabilities
The difference between EMI and PI licenses determines the legal scope of your services.
Payment institution services
A Payment Institution can provide services defined in the Payment Services Act, including:
- Money remittance: Transferring funds without creating a payment account.
- Execution of payment transactions: Credit transfers, direct debits, card transactions.
- Acquiring: Accepting payments on behalf of merchants.
- Issuing payment instruments: Issuing cards linked to an account aimed at transaction execution.
- Payment initiation services (PISP) and Account information services (AISP).
Notably, a Payment Institution cannot issue electronic money. It cannot accept funds from a user solely to store them for future undefined use.
Electronic money institution services
An EMI can provide all services offered by a PI plus the critical ability to issue electronic money . This includes:
- E-money issuance: Exchanging funds for e-money at par value.
- Digital wallets: Maintaining stored value accounts where users hold balances.
- Prepaid instruments: Issuing prepaid cards or vouchers that are multipurpose.
Practical business model implications
Companies focused purely on efficient money movement often operate under PI licenses . Their model moves money from point A to point B without storing it.
Conversely, neobanks and wallet providers operate under EMI licenses because their model depends on users holding multi-currency balances indefinitely. If your roadmap includes "user balance" or "top-up wallet," you almost certainly need an EMI license.
Regulatory scrutiny and compliance burden
Payment institution regulatory framework
The CNB's assessment of a PI focuses on:
- Risk Management: Operational and security risks.
- AML/CFT: Robust anti-money laundering procedures.
- Safeguarding: If the PI handles client funds, it must safeguard them via segregated accounts or insurance.
Electronic money institution regulatory framework
EMI regulation is substantially more demanding. Because EMIs hold client funds for longer periods, they function similarly to deposit-taking institutions.
- Intensive Safeguarding: The CNB strictly scrutinizes how e-money float is protected.
- Redemption Rights: You must guarantee redemption of e-money at any time and at par value.
- Governance: The CNB often requires a more robust dual-board structure and experienced officers physically present in the Czech Republic.
The PI application typically takes 6–9 months, while an EMI application often takes 9–12+ months due to deeper scrutiny of the business model and capital adequacy.
Passporting advantage
One of the most compelling strategic benefits of obtaining a full EMI or PI license in the Czech Republic is the single European passport .
How passporting works
Once licensed by the CNB, you can notify the regulator of your intention to provide services in other EEA member states. This is a notification procedure, not a new licensing process.
- Freedom to Provide Services (Cross-border): You operate from CZ and serve clients in France, Germany, etc., remotely.
- Freedom of Establishment: You open a branch or use an agent in another member state.
Czech republic as a strategic hub
In 2026, the Czech Republic remains a preferred jurisdiction due to a strict but predictable regulator. The costs are generally lower than in Western Europe, and the location is ideal for targeting both CEE and Western markets.
Application timeline
Phase 1: Document preparation
You must establish a Czech legal entity (s.r.o. or a.s.). Key documents include a business plan with a 3-year financial projection and a program of operations detailing IT flows.
You must also submit internal policies covering AML/CFT, risk management, and safeguarding, along with "Fit & Proper" questionnaires for all directors and qualifying shareholders.
Phase 2: Application submission and CNB review
The application fee for a full PI or EMI license is CZK 100,000 , payable to the CNB upon submission.
The statutory deadline for the CNB to decide is 3 months, but the clock stops whenever the regulator asks for additional information. This mechanism extends the real timeline to 6–12 months.
Phase 3: Final decision
For EMIs, a pre-launch on-site verification or detailed IT audit walkthrough is common. Once approved, you are entered into the CNB Register and can commence operations.
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Risks and Sanctions |
How ARROWS (office@arws.cz) helps |
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Inadequate business plan: CNB requires specific capital calculations and realistic scenarios. Weak plans lead to immediate suspension of the timeline. |
Expert drafting: We align your business logic with regulatory requirements (Act 370/2017) to prevent basic rejections. |
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"Fit and proper" failures: Directors lacking financial experience or with unclear history will be rejected. |
Pre-vetting: We assess your management team's CVs and backgrounds before submission to ensure they meet CNB standards. |
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Safeguarding gaps: Failure to properly segregate client funds is a top reason for license denial or revocation. |
Bank introductions: We assist in structuring safeguarding arrangements with partner banks that understand fintech. |
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AML/CFT deficiencies: The FAÚ and CNB are extremely strict on AML. |
Compliance design: We draft AML policies tailored to the Czech Act No. 253/2008 Coll. and current standards. |
Safeguarding requirements
Safeguarding is non-negotiable. PIs must safeguard funds received for the execution of payment transactions immediately upon receipt.
Electronic money institution safeguarding
EMIs must safeguard funds received in exchange for e-money. This is typically done through a segregated account at a bank in an EU Member State or via an insurance policy covering the full value of potential claims.
Related questions
1. Can we use a bank outside the EU?
Generally, no. The Act requires the funds to be in a bank authorized in a Member State or invested in secure, low-risk liquid assets.
2. What happens if there are discrepancies?
Any shortfall in the safeguarding account is a major regulatory breach. Daily reconciliation is required.
Anti-money laundering (AML) obligations
As an "obliged entity" under the AML Act, you must perform KYC verification, monitor transactions for suspicious activity, and report such activity to the Financial Analytical Office (FAÚ).
In 2026, supervision is more harmonized and stricter than ever. Penalties for non-compliance can reach millions of euros or result in criminal liability for the statutory body.
Recent regulatory developments
PSD3 and payment services regulation (PSR)
The EU regulatory landscape is in a transition phase. The PSR and PSD3 packages are paving the way for a unified regime.
The new rules aim to merge Payment Institutions and Electronic Money Institutions into a single category of "Payment Service Providers," eliminating the separate EMI license in the long term.
MiCA (markets in crypto-assets)
MiCA is fully applicable in 2026. If your fintech involves crypto, an EMI/PI license is not enough . You likely also need authorization as a Crypto-Asset Service Provider (CASP).
However, EMIs have a simplified path to issuing E-Money Tokens (stablecoins pegged to a single currency).
Executive summary for management
- Go for PI if you are a processor, a remitter, or an open banking provider. Capital is lower, and you don't need to hold client balances long-term.
- Go for EMI if you want to offer wallets, prepaid cards, or act as a "neobank" lite. Capital is higher, but the product flexibility is superior.
- Expect a 9-12 month project. Do not rely on statutory 3-month deadlines; real-world processing involves Q&A loops.
- Budget correctly. Apart from capital, budget for the application fee, legal fees, and operational setup.
Frequently asked questions
1. Can we start with a PI license and upgrade to an EMI license later?
Technically yes, but it is not an "upgrade"—it is a new license application. You will undergo the full vetting process again. If your strategy involves e-money within 2-3 years, starting with an EMI is usually more cost-effective.
2. What is the difference between an "authorized" license and a "small-scale" license?
Authorized licenses have higher capital requirements but allow EU-wide passporting. Small-scale licenses have no/low capital requirements but are strictly limited to the Czech Republic and capped volumes.
3. Do we need a physical office in the Czech Republic?
Yes. The CNB enforces "substance" rules. You must have a real head office in the Czech Republic where management decisions are made.
4. Can non-EU citizens be founders or directors?
Yes, but the scrutiny is higher. The CNB will require criminal records from their home countries and potentially more detailed proof of funds.
5. How much is the state fee?
For a full EMI or PI license application, the administrative fee is CZK 100,000 . For a small-scale provider registration, the fee is CZK 10,000 .
Disclaimer: The information contained in this article is for general informational purposes only and serves as a basic guide to the issue as of 2026. Although we strive for maximum accuracy, laws and their interpretation evolve over time. We are ARROWS Law Firm, a member of the Czech Bar Association (our supervisory authority), and for the maximum security of our clients, we are insured for professional liability with a limit of CZK 400,000,000. To verify the current wording of the regulations and their application to your specific situation, it is necessary to contact ARROWS Law Firm directly (office@arws.cz). We are not liable for any damages arising from the independent use of the information in this article without prior individual legal consultation.
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