Full banking or electronic money license: What are the differences?
At Solaris, we not only have a full banking license, but we are also a licensed e-money institution (EMI). This ensures that we can always offer our partners the right services for their customers' financial needs across Europe and the UK.
Read on to learn all about our unique setup and decide under which license you would like to launch your financial products.
What is a full banking license?
In the financial industry, a full banking license is the official permission to operate a credit institution or bank-like entity. In Germany, a full banking license is known as a CRR credit institution license.
A banking license certifies that a bank meets all legal requirements for protecting the assets and data of its customers, and signifies that a financial company complies with the strict government regulations.
To obtain a banking license, the institution must meet a tough list of requirements, including maintaining large financial reserves and ensuring a secure data system. This is part of the preventive state control of a bank.
Anyone wishing to conduct banking business in Germany needs a license from a European financial supervisory authority.
Only a company with a full banking license may call itself a bank.
What is an e-money license?
E-money license is colloquially used as a synonym for EMI. An electronic money institution license is the official permission granted to an institution by the financial supervisory authorities, allowing it to conduct financial transactions through the disbursement of electronic money.
Electronic money, also known as e-money, is subject to banking supervision law because it acts as a digital equivalent of cash. As the officially recognized equivalent of a country's official currency, it offers users binding legal security standards.
E-money is stored in EMI or bank computer systems to facilitate electronic transactions.
A permission to operate an e-money business granted in one European country can also be used for business operations in all other countries of the European Union.
What are the differences for financial products?
Depending on the license under which a product is created, different services can be offered to customers.
With the CRR license:
- Offer payment services
- Manage customers' deposits
- Offer bank checking accounts
- Offer interest-bearing accounts
- Issue credit cards, and debit cards
- Offer loans, and other lending products
- Offer other financial services products such as bancassurance and wealth management
With the EMI license:
- Accept customer funds and change them into e-money
- Customers can use e-money accounts as digital wallets for contactless payments
- Offer debit and prepaid cards
- Offer account-to-account transfers, standing orders, and direct debits, but not lending as a standalone product
- Offer some digital financial services products, such as foreign currency exchange
- Provide fast payments, efficient and scalable
Are all financial products secure?
The deposits of your customers under the CRR license are protected by the German Deposit Guarantee Act up to an amount of EUR 100,000.
For all e-money deposits, we can ensure that we comply with all regulations and that all funds are held in segregated accounts to protect your customers' funds.
Our EMI obligations provide you with clear individual account and customer records to provide real-time and responsive finances.
Can Solaris provide services within the EU, EEA and UK?
So-called passporting rights apply to full banking licenses granted from a European Financial Authority. With a license in one EU country you can offer your products and services in other EU countries and in the EEA. Our German license allows us to offer all banking services within the EEA.
Bank of Lithuania's EU e-money license also includes passporting rights. Therefore, we can conduct financial operations, offer e-money services and issue debit cards in the rest of the EU and the EEA. The e-money license granted by the Financial Conduct Authority allows Solaris to operate as an e-money institution with all the aforementioned services in the UK.