‘Dual squeeze’: FCA approvals for e-money licences plummet
The number of successful applicants for e-money licences has plummeted in the last few years raising further questions over a slow down in market growth.
Fresh figures – revealed in a Freedom of Information request by financial regulation consultancy Pathlight Associates – showed just 35 applicants were able to bag an electric money institution (EMI) licence in 2025.
The figure is down 80 per cent from the 171 approved by the Financial Conduct Authority (FCA) in 2020.
The permit grants non-bank companies the permission to issue digital cash, manage electronic wallets, and provide payment services under regulatory supervision. It is often seen as the essential stepping stone ahead of the full-fat UK banking licence as firms grow their foothold in the market.
Revolut secured its EMI licence in 2016, before going on to get the final green light for its fully-fledged UK licence earlier this year after some friction between regulators and the $75bn fintech giant.
Muj Malik, associate partner at Pathlight, said: “While e-money and payment firms were expected by some to create a steady flow of ‘banks in waiting’, this has not happened at scale, with the Revolut pathway proving the exception rather than the rule.”
The overall amount of licence applications hit 155 in 2025, a far cry from 371 in 2020.
Klarna, Plum and Tenora clinch permit
Figures last month showed there was zero applications for full UK banking licences in 2025.
The drop in the number of approvals come despite Treasury efforts for regulators to adopt a more pro-growth approach.
Rachel Reeves has sought to get watchdogs to ease the burden on startups seeking to scale with a fleet of reforms aimed at bolstering fast-growing sectors like fintech.
The Chancellor unveiled plans for a new ‘Scale Up’ unit which has been touted as a way to “supercharge” the growth of innovative firms. It is framed as a joint venture between the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
But Malik said a “dual squeeze” on the sector driven by “commercial pressure from a more saturated market, and regulatory pressure from more demanding oversight” has led to the EMI licence no longer being “widely perceived as an easier entry point into the UK financial services sector.”
Companies that have managed to clinch an EMI licence in the last year include buy now, pay later firm Klarna, financial assistant app Plum and foreign exchange firm Tenora.
Tenora’s boss, Harry Adams, told Morning Wire the FCA “understood the market” throughout the application process. He added the same “can’t be said for a lot of other regulators across Europe who don’t appreciate why a business like ours requires an EMI licence”.