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From Cash to Code: The Growing Popularity of Electronic Money Institutions

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Across Europe and the UK, consumers are paying less with notes and coins and more with cards, instant transfers, and wallets issued by non‑bank providers. Electronic Money Institutions (EMIs) sit at the center of this shift, issuing stored‑value accounts, wallets, and cards; embedding payouts in apps and marketplaces; and wiring the rails for account‑to‑account and instant payments. As lawmakers tighten rules against fraud and push instant transfers, EMIs are scaling from niche to mainstream—while also facing higher bars on governance, safeguarding, and compliance. ([ecb.europa.eu](https://www.ecb.europa.eu/press/pr/date/2024/html/ecb.pr241219~172b929461.en.html?utm_source=openai))

What counts as an EMI—and why they matter

EMIs are regulated non‑banks authorized to issue electronic money and provide related payment services: storing value, issuing cards, wallet‑to‑wallet transfers, and initiating payments. They serve merchants, platforms, creators, and consumers that want speed, programmable payouts, and global reach without opening a traditional bank account. In practice, EMIs compete and partner with banks: they ride card networks, connect to SEPA/Faster Payments, and increasingly support instant, account‑to‑account rails mandated by new regulation. ([eur-lex.europa.eu](https://eur-lex.europa.eu/eli/reg/2024/886/oj?utm_source=openai))

The data behind the “cash‑to‑code” shift

In the euro area, cash is still used most frequently at the point of sale but continues to decline: 52% of POS transactions by number in 2024 (down from 59% in 2022). Cards dominate by value (45%), and online payments reached 21% by number and 36% by value—up sharply since 2022. ([ecb.europa.eu](https://www.ecb.europa.eu/press/pr/date/2024/html/ecb.pr241219~172b929461.en.html?utm_source=openai))

In the UK, cash’s share fell to 12% of all payments in 2023, with debit cards leading; reporting in 2025 indicates cash dropped below 10% in 2024 as mobile wallets surged. This helps explain the strong product‑market fit for EMI wallets and stored‑value accounts. ([reuters.com](https://www.reuters.com/markets/europe/uk-cash-usage-falls-record-low-share-transactions-2023-2024-07-23/?utm_source=openai))

Regulatory tailwinds—and higher standards

EU: Instant payments, stronger anti‑fraud, and a modernized framework

The EU’s Instant Payments Regulation entered into force in 2024 and begins applying from January 9, 2025 for many PSPs. It compels euro‑credit transfers to be instant, adds IBAN‑name checking, and curbs fees—reshaping economics for EMIs built on account‑to‑account rails. The Commission published detailed clarifications in 2024 and updated them in July 2025 to help firms comply. ([eur-lex.europa.eu](https://eur-lex.europa.eu/eli/reg/2024/886/oj?utm_source=openai))

Meanwhile, EU co‑legislators advanced the broader payments overhaul (PSR/PSD3) through 2025, culminating in a provisional agreement in November 2025 to step up fraud prevention, increase transparency (e.g., ATM and card fee visibility), and strengthen consumer protection. For EMIs, this means tougher liability for fraud control failures but clearer rules to scale cross‑border services. ([consilium.europa.eu](https://www.consilium.europa.eu/en/press/press-releases/2025/06/18/council-agrees-its-position-on-a-more-modern-payment-service-framework-in-the-eu/?utm_source=openai))

Separately, the Council’s stance on a potential digital euro (with online and offline functionality) keeps the EU’s central bank money project on the radar for EMIs, which could become front‑end distributors if the ECB proceeds to pilots later this decade. ([reuters.com](https://www.reuters.com/business/finance/eu-council-backs-digital-euro-with-both-online-offline-functionality-2025-12-19/?utm_source=openai))

UK: Supervisory consolidation and tighter safeguarding

In March 2025 the UK signaled a regulatory restructure, announcing plans to fold the Payment Systems Regulator into the Financial Conduct Authority. For EMIs, a single lead watchdog could streamline engagement—while the FCA’s active enforcement posture and financial promotions crackdowns continue to raise the bar. ([reuters.com](https://www.reuters.com/world/uk/uk-payments-regulator-be-abolished-absorbed-by-financial-watchdog-2025-03-11/?utm_source=openai))

The FCA has also tightened safeguarding expectations for payments and e‑money firms, reflecting lessons from recent failures: daily reconciliations, resolution packs, and clearer records so customer funds can be returned quickly if a firm fails. Industry analysis drawing on the FCA’s 2024 Financial Lives survey highlights rapid growth in consumer use of e‑money/payment accounts since 2017—another signal that EMIs are mainstreaming. ([iclg.com](https://iclg.com/news/22929-fca-confirms-new-safeguarding-regime-for-payments-and-e-money-firms?utm_source=openai))

Authorization and supervision: convergence—slowly

A December 2025 EBA follow‑up peer review found progress but persistent divergence across Member States in authorizing EMIs and payment institutions—especially on governance, internal controls, and “local substance.” Applicants still face long timelines (median ~9.5 months) and uneven expectations, which can influence where EMIs choose to base EU operations. ([eba.europa.eu](https://www.eba.europa.eu/publications-and-media/press-releases/eba-publishes-follow-peer-review-authorisation-payment-institutions-and-electronic-money?utm_source=openai))

Winning EMI business models in 2025–2027

Cross‑border payouts and marketplace embedded finance

Marketplaces, creator platforms, and B2B networks need compliant, fast, multi‑currency payouts. EMIs that combine wallet issuance, virtual IBANs, and local pay‑out rails (SEPA Instant, Faster Payments, PIX/UPI partners) are best placed to win. Many complement core licensing with payout‑orchestration partners to reach more corridors while maintaining consistent reconciliation and compliance. For example, infrastructure providers such as wirepayouts.com are referenced by operators exploring unified cross‑border payout stacks.

Account‑to‑account and instant: economics shift

As instant transfers become table stakes in the EU, EMIs that automate IBAN‑name checks, fraud‑risk scoring, and sanctions screening at wire‑speed can offer merchants lower costs than cards for many use cases. The flip side: liability and refund rules will bite firms that under‑invest in controls. ([eur-lex.europa.eu](https://eur-lex.europa.eu/eli/reg/2024/886/oj?utm_source=openai))

Wallets with programmable compliance

Wallet‑centric EMIs can differentiate with programmable limits, spend controls, and real‑time AML triggers. The payoff is lower fraud loss and faster dispute handling—critical as regulators emphasize accountability and as consumers expect near‑instant refunds for scams. ([consilium.europa.eu](https://www.consilium.europa.eu/en/press/press-releases/2025/11/27/payment-services-council-and-parliament-agree-to-step-up-the-fight-against-fraud-and-increase-transparency/?utm_source=openai))

Risks to manage

Fraud and scams: regulators now expect cross‑firm data‑sharing, proactive detection, and “confirmation of payee”‑style checks. Failure invites liability under new EU rules and UK enforcement momentum. ([consilium.europa.eu](https://www.consilium.europa.eu/en/press/press-releases/2025/11/27/payment-services-council-and-parliament-agree-to-step-up-the-fight-against-fraud-and-increase-transparency/?utm_source=openai))

Safeguarding and operational resilience: better reconciliations and wind‑down planning are no longer nice‑to‑haves; they are license‑critical. The FCA’s recent expectations aim to avoid prolonged fund freezes during failures. ([iclg.com](https://iclg.com/news/22929-fca-confirms-new-safeguarding-regime-for-payments-and-e-money-firms?utm_source=openai))

Regulatory arbitrage: uneven EU authorization practices can create pressure to “jurisdiction shop.” The EBA is pressing for convergence, but EMIs should assume higher common denominators on governance and substance. ([eba.europa.eu](https://www.eba.europa.eu/publications-and-media/press-releases/eba-publishes-follow-peer-review-authorisation-payment-institutions-and-electronic-money?utm_source=openai))

What to watch in 2026

  • EU trilogue texts for PSR/PSD3 moving to formal adoption—and the detailed technical standards that will set day‑to‑day compliance for EMIs. ([consilium.europa.eu](https://www.consilium.europa.eu/en/press/press-releases/2025/11/27/payment-services-council-and-parliament-agree-to-step-up-the-fight-against-fraud-and-increase-transparency/?utm_source=openai))

  • EU Instant Payments milestones hitting more cohorts of PSPs and merchants; adoption curves for IBAN/name matching and fraud reimbursement norms. ([finance.ec.europa.eu](https://finance.ec.europa.eu/publications/clarification-requirements-instant-payments-regulation_en?utm_source=openai))

  • UK supervisory consolidation and any post‑merger FCA rulebook changes specific to e‑money and safeguarding. ([reuters.com](https://www.reuters.com/world/uk/uk-payments-regulator-be-abolished-absorbed-by-financial-watchdog-2025-03-11/?utm_source=openai))

  • Digital euro negotiations and design decisions that could open distribution roles for licensed non‑banks. ([reuters.com](https://www.reuters.com/business/finance/eu-council-backs-digital-euro-with-both-online-offline-functionality-2025-12-19/?utm_source=openai))

Mini‑interview: an EMI operator on scaling responsibly

Q: What changed most for EMIs in 2025?
A: Instant payments moved from “feature” to “must‑have,” and fraud controls became a board‑level KPI. We invested heavily in IBAN/name checks and step‑up authentication to protect customers and reduce refunds.

Q: Where are you investing in 2026?
A: Real‑time reconciliation and payout orchestration to reach more corridors with consistent SLAs. Partnerships are key—we integrate specialist providers where it speeds time‑to‑market while keeping compliance and data ownership in‑house.

Q: Advice to first‑time EMI applicants?
A: Over‑document governance, outsourcing oversight, and safeguarding from day one. Treat the authorization pack like an operating manual, not a slide deck.

FAQ

How do EMIs differ from banks?

EMIs can issue e‑money and provide payments but generally cannot take deposits or lend from customer funds. They must safeguard client money and meet capital, governance, and conduct standards set by their regulator. ([eba.europa.eu](https://www.eba.europa.eu/publications-and-media/press-releases/eba-publishes-follow-peer-review-authorisation-payment-institutions-and-electronic-money?utm_source=openai))

Will instant payments kill cards?

No—cards remain dominant for many retail use cases, but instant transfers are gaining, especially for P2P, bill pay, and high‑value merchant payments where cost and chargeback rules differ. ([ecb.europa.eu](https://www.ecb.europa.eu/press/pr/date/2024/html/ecb.pr241219~172b929461.en.html?utm_source=openai))

Are consumers ready to ditch cash entirely?

Not entirely. Cash usage is falling, but many still value it for budgeting, resilience, and privacy. Policymakers are also acting to preserve access to cash even as digital rails expand. ([ecb.europa.eu](https://www.ecb.europa.eu/press/pr/date/2024/html/ecb.pr241219~172b929461.en.html?utm_source=openai))

Related searches

  • What is an electronic money institution license?

  • PSD3 vs PSR: what changes for fintechs?

  • Instant Payments Regulation compliance checklist

  • EMI safeguarding best practices

  • Digital euro timeline and impact on wallets

  • Cross‑border payout orchestration for marketplaces

References

electronic money institution