PSP Licence in the EU: A Jurisdiction Comparison

Compare PSP licence options across the EU: payment vs e-money institutions, passporting, capital and substance, and how to choose a jurisdiction.

Building a payments business in Europe usually starts with a single decision that shapes everything after it: which member state to license in. A PSP licence — a payment institution or e-money institution authorisation — granted in one EU country can, through passporting, be used to serve customers across the entire bloc. That makes the choice of home jurisdiction one of the most consequential a founder will make.

The temptation is to chase the regulator with the fastest reputation or the lowest cost. In our experience that is the wrong frame. The right jurisdiction depends on your model, your appetite for substance, your banking needs, and where your team can credibly operate. A licence obtained quickly in the wrong place can cost far more later in friction and remediation.

This guide compares the main considerations and the jurisdictions founders most often weigh, without pretending there is a single best answer.

Payment institution or e-money institution

Before comparing countries, decide which licence you need, because the same two categories exist across the EU under the harmonised framework.

A payment institution (PI) authorises payment services: executing payments, acquiring transactions, money remittance, and, with the right permissions, payment initiation and account information services. It does not let you issue stored value.

An e-money institution (EMI) authorises everything a PI can do, plus the issuance of electronic money — the stored balances behind wallets, prepaid cards and many neobank products. If your product holds customer balances that customers can spend later, you almost certainly need an EMI rather than a PI.

The EMI is broader and carries a higher minimum capital requirement; the PI is narrower and lighter. Choosing the wrong category, or under-scoping permissions, is a common and avoidable error.

Passporting: the real prize

The reason jurisdiction choice matters so much is passporting. Once authorised in one member state, a PI or EMI can offer its services throughout the European Economic Area, either by establishing branches or by providing services cross-border, through a notification process rather than a fresh licence in each country.

This is what lets a single authorisation serve the whole single market. But two caveats deserve emphasis. First, your home regulator remains your lead supervisor, so its expectations and responsiveness follow you everywhere. Second, host-country rules on consumer protection, conduct and local registration can still apply, so passporting reduces but does not eliminate the multi-country dimension.

Choosing a home state is therefore choosing the regulator you will live with, not merely the door you enter through.

Capital, substance and timelines

The minimum capital for PIs and EMIs is harmonised at the EU level, so it does not vary by country in the way founders sometimes assume. What varies is how regulators apply the surrounding expectations: own-funds calculations, safeguarding of client money, governance, and the depth of the application file.

Substance is where jurisdictions diverge most in practice. Every EU regulator now expects genuine local mind and management: resident directors, key function holders in compliance and risk, and decision-making that actually happens in the licensing country. A licence run remotely from outside is no longer realistic anywhere in the bloc, and supervisors actively test this.

Timelines also differ. The statutory assessment period is broadly aligned, but the practical clock depends on regulator workload, the quality of your application, and how many rounds of questions follow. A well-prepared file in a less congested regulator can move faster than a rushed one in a popular hub.

The jurisdictions founders compare

Several member states have become natural homes for payments businesses, each with a different character.

Lithuania built an early reputation as a fast, fintech-friendly entry point with an accessible regulator and a deep pool of EMI authorisations. It remains popular, though supervision and expectations have matured, and the volume of licensees has drawn closer scrutiny.

Ireland offers an English-language, common-law environment and a regulator regarded as thorough and demanding. Timelines can be longer and the bar high, but the reputational weight of an Irish authorisation is significant, particularly for firms targeting institutional partners.

Malta has long courted fintech and offers an English-language framework, though firms should weigh reputational and de-risking considerations carefully and ensure real substance.

The Netherlands and Luxembourg appeal to firms prioritising credibility, banking access and a stable, well-resourced regulator, typically at the cost of a more demanding process. Cyprus and several others also feature in comparisons, particularly for cost-sensitive applicants willing to invest in substance.

The pattern is consistent: there is a trade-off between speed and cost on one side and reputation and banking access on the other. No jurisdiction wins on all axes, and the right pick depends on which axis matters most to your model.

Banking access often decides it

A point that surprises founders: the licence is frequently not the hardest part. Securing banking and settlement arrangements for a regulated payments firm can be harder than the authorisation itself, and it varies by jurisdiction and by the firm's risk profile.

A licence in a jurisdiction where you cannot easily obtain safeguarding accounts and settlement rails is of limited use. We therefore treat banking access as a primary selection criterion, not an afterthought, and we map it in parallel with the licence application rather than after approval.

Choosing well

The disciplined approach is to start from the model, not the map. Decide whether you need a PI or EMI and which permissions. Identify where you can credibly place real substance and a capable team. Then weigh regulator reputation, banking access, language, cost and timeline against your priorities, and choose the jurisdiction that fits the whole picture rather than the one with the best headline.

Founders who reverse this — picking a country first and forcing the model into it — tend to pay for the mismatch later.

How HPT helps

We help payments founders scope the right licence and permissions, compare EU jurisdictions against their specific model and priorities, build the substance and governance regulators expect, prepare the application, and coordinate banking and safeguarding arrangements alongside it. Where a non-EU base or a partner-licence route fits better, we set that out honestly.

If you are choosing where to license a European payments business, we would be glad to help you weigh the options.