Bank, or electronic money institution (EMI)?

Quick answer

A bank (in legal terms a credit institution) is authorised to accept deposits, and customer money is covered by the country's deposit guarantee system (in the EU typically up to EUR 100,000 per institution). An electronic money institution (EMI) and similar payment institution (PI), however, do not accept deposits; they protect customer money not with deposit guarantee but with the safeguarding (segregation / protection account) method. Both are regulated and licensed, and both can offer SEPA transfers; but how your money is protected in a crisis is different. That is why this is not a "which is better" but a "which protection model exists and does it suit your needs" question.

What is a bank (credit institution)?

A bank is an institution that, with regulatory authorisation, can accept deposits from the public and lend. The authority to accept deposits is the core feature that distinguishes a bank from other payment providers. Tied to this authority, banks are part of the country's deposit guarantee scheme: if the bank fails, deposits within the guarantee scope are compensated up to a certain upper limit (in the EU typically EUR 100,000 per person and institution). Because the current limit, scope and which account types are included may vary by country and period, for the exact amount you should verify with the relevant country's guarantee authority.

• Deposit acceptance: present; the money sits on the bank's balance sheet as a deposit.
• Guarantee: deposit guarantee system (within the limit).
• Interest / credit: may pay interest on deposits, may extend credit.
• Supervision: more comprehensive capital and supervisory obligations as a bank.

What are an EMI (electronic money institution) and a PI (payment institution)?

An electronic money institution (EMI) is a licensed institution that issues the money you deposit as electronic money and offers payment services. A payment institution (PI), on the other hand, offers payment services (transfers, collection, etc.) without issuing electronic money. Both are regulated in the EU within the framework of PSD2 and the electronic money directive, and are licensed by a country regulator. The critical point: these institutions do not accept deposits. Your money is not their "deposit"; it must be kept separate as customer funds.

This method of keeping separate is called safeguarding: customer money is segregated from the institution's own operating money; it is usually held in a separate customer funds account at a bank, or an equivalent protection (e.g. insurance/guarantee) is applied. If the institution fails, the funds within the safeguarding scope are in principle protected to be repaid to customers separately from the institution's other creditors. But this is not deposit guarantee: instead of a fixed state guarantee limit (such as EUR 100,000), the protection depends on how well the safeguarding arrangement is applied and on the insolvency process. Repayment can be delayed and may not be complete.

• Deposit acceptance: none; the money is segregated as customer funds (safeguarding).
• Guarantee: no deposit guarantee system; protection is provided by safeguarding.
• Interest / credit: typically does not pay deposit interest, does not lend against deposits.
• Product focus: mostly multi-currency accounts, cards, fast transfers and foreign currency.

Regulation, licence and SEPA access

Both EMI and PI are licensed in the EU under PSD2 and the relevant electronic money regulations. This licence allows them to join the SEPA schemes: many EMIs join the SEPA Credit Transfer (SCT) and instant transfer (SCT Inst) schemes directly or through a sponsor bank, and can appear in the EPC participant list (for example Wise's EU institution Wise Europe SA/NV can be listed this way). You can check whether an institution is on this list with the EPC participant lookup tool.

However, being on the list does not mean that the institution offers all SEPA services to every customer and in every product. In addition, the EU's Instant Payments Regulation (IPR, 2024/886) treats banks and EMIs differently in terms of transition periods: while the obligations to receive/send instant payments and verify the payee (VoP) come into force in 2025 for credit institutions (banks), payment institutions and EMIs are given until 9 April 2027. So saying "it is an EMI" does not mean instant SEPA is ready everywhere today; the institution's own situation must be verified.

Practical differences table

Think "different protection", not "safer"

An institution being an EMI rather than a bank does not automatically mean "risky"; many EMIs are subject to strict regulation and apply safeguarding rules. Likewise, being a bank does not mean superiority in every circumstance. The difference is in the type of protection mechanism: deposit guarantee offers a state-defined and limited compensation, while safeguarding relies on segregating the funds and on how the insolvency process works. The right choice for you depends on how much money you hold, whether you need deposit guarantee, whether you want interest/credit, and how much you value features such as speed/multi-currency.

For this reason, the most important step is this: verify which licence and which protection your own account is under. The institution's terms of use, "about/licence" page or the register of the relevant country regulator show whether the institution is a credit institution or an EMI/PI and how customer money is protected. Because guarantee limits and safeguarding conditions vary by country and institution, if critical amounts are involved, confirm the information directly from the institution and the regulator.

Checklist when deciding

• Which licence does the institution hold: a credit institution (bank), an EMI, or a PI?
• Under which country regulator does it operate, and can this be verified in the register?
• Is my money in the deposit guarantee system or within safeguarding?
• Is interest applied to my balance, and if so, under what conditions?
• Is the SEPA service I need (especially instant transfers) actually active at this institution and on my account?
• Is the amount I hold above a possible guarantee limit? If so, how do I spread the risk?

To quickly see whether an institution participates in the SEPA scheme, you can use the EPC participant lookup tool, and to examine the status of specific providers, see the Wise and Revolut guides. This page is not advice but an independent explanation; it does not recommend any provider.