What is an EMI?

digital glowing globe with different currency symbols floating around it.

The Andaria team have been networking their socks off lately! One thing we’ve noticed when talking with new connections is that there are still lots of people who aren’t clear on what an EMI is, how they differ from banks and what benefits EMIs can offer. So, our second edublog is about just that!


What is an EMI?

EMI stands for ‘E-Money Institution’ – a financial institution that provides electronic payment services and issues electronic money, or e-money. E-money is a digital representation of monetary value that can be stored on electronic devices and used for transactions online or in person.

EMIs can offer a range of services that allow users (who could be consumers or businesses) to store funds electronically, transfer money and pay bills digitally.

Recently, the use of e-money has become increasingly popular and many EMIs have emerged to meet the growing demand for digital payment solutions.


How are EMIs different from banks?

There are a few important ways that EMIs are different from banks. For instance:

Services: EMIs primarily focus on providing electronic payment services but do not offer credit facilities such as loans or mortgages.

Technology: EMIs are often more technology-focused than traditional banks and may be able to implement new technologies more quickly. This can allow EMIs to offer innovative digital payment solutions and to adapt to changing customer needs more rapidly than banks.

Regulation: EMIs are subject to a different regulatory framework than banks. EMIs typically operate as non-banking financial institutions. This means they are subject to regulatory oversight by financial authorities in the countries where they operate and they must also comply with anti-money laundering (AML) and know-your-customer (KYC) regulations, as well as data protection laws. Banks, on the other hand, are subject to an even more stringent selection of regulations, which can create a lot of challenges, particularly around their ability to cater for high-risk industries or emerging business types.


Are EMIs more agile than traditional banks?

EMIs can often be more agile than traditional banks, partly due to their smaller size and focus on digital payment solutions. EMIs are typically digital-first providers so have fewer, or no, legacy systems and processes to manage.

In addition, EMIs can often provide more cost-effective access to payment rails and those who are cloud-enabled can also add new innovations with relative ease. Some EMIs also work with partners to offer an orchestration layer that helps give customers access to a greater array of functionality and products – such as transaction monitoring and KYC tools.

All of this can enable EMIs to be nimbler and more responsive to market demand.


Is my business’ money safe with an EMI?

EMIs are still subject to regulatory oversight and are required to meet certain standards for the protection of their customers’ funds. In general, EMIs are required to hold their customers’ funds in separate accounts that are kept separate from their own operating funds. This is known as “safeguarding” and is designed to protect customers’ funds.

EMIs are also required to comply with anti-money laundering and KYC regulations. This can help to ensure that EMIs aren’t inadvertently facilitating illegal activities and can help to protect their customers’ funds from theft or other criminal activities.

Before choosing an EMI, it’s important to research the company’s regulatory status and safeguards to ensure that your business’s funds are adequately protected.


What benefits can EMIs offer to businesses?

The concept of EMIs was introduced specifically to give customer more choice and innovation. This translates to a range of benefits, including:

Speed and efficiency: EMIs can offer faster and more efficient payment processing than traditional banking methods. This can help businesses improve cash flow and reduce payment processing times, which can be particularly important for small businesses or those with tight margins.

Flexibility: EMIs can offer a range of payment solutions to meet different business needs, including online payments, mobile payments, and e-wallets. This can help businesses reach a wider customer base and offer convenient payment options to their customers.

Cost savings: EMIs can offer lower fees and charges than traditional banks for payment processing, which can help businesses save money on transaction fees and other costs associated with payment processing.

Security: EMIs can offer robust security measures to protect businesses and their customers from fraud and other security threats. This can include encryption, multi-factor authentication, and other security features.

Integration: EMIs can often integrate with other business tools and software, such as accounting software or CRM systems. This can help businesses streamline their payment processing and money management processes, reducing the risk of errors and saving time.

In a nutshell, EMIs were born for (and in) the digital age, they can offer businesses greater flexibility, cost savings, and improved payment processing efficiency, which can help improve business’ bottom line and provide better payment experiences for their customers.


Is Andaria an EMI? What can you offer my business?

We certainly are! Andaria is a fintech and a licenced EMI, regulated in both the UK and Malta to support businesses throughout Europe and facilitate payments around the world.

Andaria’s business current accounts offer a simple, cost-effective means to managing payments, along with all the key payment methods that businesses need to succeed. for more information about our accounts, visit our products page.

If you’d like to talk to one of the team about setting up an account with Andaria, get in touch.

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