EMI License (Electronic Money Institution)

What Are Electronic Money and EMI?

Electronic money (e-money) within the meaning of Art. 2(1) of the PSPSA is a monetary value stored electronically, including magnetically, representing a claim on the issuer, which is issued upon receipt of funds for the purpose of making payment transactions and is accepted by a natural or legal person other than the issuer.

Unlike a bank deposit, electronic money does not constitute a deposit and is not subject to interest accrual. Funds received in exchange for issued electronic money do not constitute a deposit within the meaning of the Credit Institutions Act (CIA).

An EMI is a legal entity that has obtained a license from the BNB for the issuance of electronic money. It may also carry out all payment services listed in Annex 1 to the PSPSA without the need for a separate payment institution license.

Key Characteristics of an EMI

• Issuance and redemption of electronic money at par value
• Management of digital wallets and prepaid cards
• Provision of all 7 categories of payment services under the PSPSA
• P2P (peer-to-peer) transfers and instant payments
• Currency exchange linked to payment transactions
• API integration with third parties for payment initiation and account information access
• Activity throughout the entire EEA via the single passport (passporting)

Services an EMI May Provide

Pursuant to Art. 38 of the PSPSA, an electronic money institution may carry out the following activities:

Issuance of Electronic Money

The core activity of an EMI includes the issuance of electronic money, its distribution, and redemption. The EMI is obliged to redeem electronic money at par value at any time upon request by the holder.

Payment Services (all 7 categories)

• Service 1: Services enabling cash deposits and withdrawals from a payment account, and all operations necessary for the servicing of a payment account
• Service 2: Execution of payment transactions, including transfer of funds to a payment account — direct debits, credit transfers, and payment card transactions
• Service 3: Issuance of payment instruments and/or acceptance of payment transactions
• Service 4: Money remittance
• Service 5: Payment initiation services (PISP)
• Service 6: Account information services (AISP)
• Service 7: Issuance of electronic money (EMI-specific)

Ancillary Activities

• Granting of credit related to payment services (subject to the conditions of Art. 25 PSPSA)
• Operational and closely related ancillary services — currency exchange, data storage and processing, payment systems management
• Management of other business activities, outside the electronic money issuance activity

Capital Requirements

The capital requirements for an EMI are set out in Art. 37 of the PSPSA and are significantly higher than those for a payment institution, given the additional risks associated with the issuance of electronic money.

Initial Capital

• Minimum initial capital: BGN 700,000 (seven hundred thousand leva)
• The capital must be fully paid in cash (non-cash contributions are not permitted)
• The origin of funds must be documented before the BNB
• Funds are deposited in an escrow account with a Bulgarian bank prior to filing the application

Own Funds (Ongoing Requirement)

In addition to the initial capital, the EMI must at all times maintain own funds of no less than 2% of the average outstanding electronic money, calculated over the preceding 6 months. If the EMI also provides payment services unrelated to the issuance of electronic money, own funds are increased by the payment institution requirement (Method A, B or C under Annex 2 to the PSPSA).

Safeguarding of Funds

Funds received in exchange for issued electronic money are subject to mandatory ring-fencing by the end of the business day following the day of receipt. Permissible methods:

• Segregation method: Funds are held in a separate account with a credit institution or invested in secure, low-volatility assets
• Insurance method: An insurance policy or bank guarantee covering the full amount of the liabilities

Legal Form and Company Structure

Under the PSPSA, an EMI may only be established in the following legal forms:

• LLC / SLLC — Limited Liability Company / Single-Member Limited Liability Company
• JSC — Joint-Stock Company

The company must have its registered office and management address in the Republic of Bulgaria and must be effectively managed from within the country. A physical office with the necessary infrastructure for conducting business is required.

Management Requirements

Members of the management body must meet the requirements for qualifications, professional experience, and good repute under Art. 5(1)(2) of BNB Ordinance No. 16. Each member completes a qualification questionnaire, which includes:

• Higher education in the field of economics, law, finance, or information technology
• At least 3 years of professional experience in the field of financial services
• Clean criminal record — no convictions for intentional crimes of a general nature
• No declaration of insolvency in the last 2 years
• Must not appear on counter-terrorism lists

Application Documents

The application for an EMI license is filed with the Governor of the BNB in accordance with the requirements of BNB Ordinance No. 16. The document package includes:

• Articles of Association / Partnership Agreement — certified copy reflecting the scope of activity under the PSPSA
• Ultimate beneficial owner (UBO) documents — declarations and identification documents for the ultimate beneficiaries, ownership structure
• Management CVs and questionnaires — detailed CVs and completed qualification questionnaires under Art. 5(1)(2) of Ordinance No. 16
• 3-year business plan — financial projections, projected transaction volumes, market strategy, organisational structure
• AML/KYC policies — internal rules for the prevention of money laundering under the Anti-Money Laundering Act, customer due diligence procedures, monitoring system
• IT infrastructure — description of the technical architecture, security measures, business continuity plan, PSD2/SCA compliance
• Professional indemnity insurance — document for professional liability insurance or bank guarantee
• Audit firm — agreement with a registered auditor for annual financial audit
• Source of capital documents — bank certificates, tax returns, contracts, and other documents proving the lawful origin of funds
• Criminal record certificates — for all members of the management body and qualifying shareholders

All documents are filed in Bulgarian. Documents in a foreign language must be accompanied by a certified Bulgarian translation. Documents issued abroad are legalised with an apostille.

Licensing Procedure

The process of obtaining an EMI license from the BNB goes through the following main stages:

Stage 1: Incorporation

Registration of a legal entity (LLC/SLLC or JSC) in the Commercial Register with an appropriate scope of activity, including the issuance of electronic money and provision of payment services. Deposit of the minimum capital of BGN 700,000 into an escrow account.

Stage 2: Ownership Screening

The BNB screens qualifying holdings in the capital — persons holding directly or indirectly 10% or more of the capital or voting rights. Full transparency of the ownership chain to the ultimate beneficial owners (UBO) is required.

Stage 3: Appointment and Approval of Management

Appointment of managers/board members meeting the qualification and experience requirements. Each candidate completes a detailed questionnaire and provides documents proving their qualifications.

Stage 4: Operational Readiness

Building IT infrastructure, hiring personnel, developing internal policies (AML, IT security, risk management, business continuity plan), securing a physical office in Bulgaria.

Stage 5: Filing the Application

Compiling and filing the complete document package in Bulgarian with the Governor of the BNB. In the event of deficiencies, the BNB sends a request for additional information, and the decision period is suspended until the response is received.

Stage 6: BNB Review and Decision

The BNB reviews the application and may conduct interviews with key management personnel. The Governor of the BNB issues a decision to grant or refuse the license.

Timelines and Fees

Decision Period

Under the PSPSA, the BNB issues a decision within a 3-month period from the filing of complete documentation. In practice, given the complexity of the procedure, additional questions, and interviews, the actual timeline is 3 to 6 months. Where documentation is incomplete, the period is suspended until the deficiencies are rectified.

Fees

• Application review fee: BGN 10,000 (ten thousand leva), non-refundable
• Annual supervisory fee: Consists of a fixed component (10% of the total fee) and a variable component (90% of the total fee), determined based on the volume of activity

Structure of the Annual Supervisory Fee

The fixed component is the same for all licensed EMIs. The variable component is calculated proportionally to the volume of transactions, the amount of issued electronic money, and the number of clients served. The BNB determines the specific amount annually.

Passporting — Freedom to Provide Services in the EEA

One of the main advantages of an EMI license issued in Bulgaria is the right to a single European passport (passporting). Under Directive 2009/110/EC (EMD2) and PSD2, the licensed EMI may provide services throughout the European Economic Area (30 countries) without the need for a separate license in each country.

Forms of Passporting

• Freedom of Services (FOS): Direct provision of services in another Member State without physical presence — through notification to the BNB only
• Branch: Opening a branch in another Member State — notification to the BNB, which informs the competent authority of the host country
• Agents: Use of agents in another Member State for the distribution and redemption of electronic money

The notification procedure is significantly simplified compared to full licensing — the BNB notifies the competent authority of the host country within 1 month, and the company may commence operations upon receipt of confirmation.

Third-Country Applicants (outside the EU/EEA)

Foreign persons and companies from third countries may apply for an EMI license in Bulgaria, subject to the following additional requirements:

• Apostilled documents: All documents issued in a third country must be authenticated with an apostille under the Hague Convention and accompanied by a certified translation into Bulgarian
• Enhanced screening: The BNB conducts an in-depth review of the origin of funds, business reputation, and related parties of the applicant
• Foreign Direct Investment (FDI) screening: Upon acquisition of a qualifying holding (10% or more) by a third-country person, approval may be required under the Investment Promotion Act and related FDI screening legislation
• Effective management in Bulgaria: Regardless of the origin of capital, the company must be effectively managed from within Bulgaria

Frequently asked questions