Definition
An EP (Établissement de Paiement, payment institution) is a licensed payment service provider, but neither a bank (EC) nor an electronic money issuer (EME).
Created by DSP1 (2007, transposed in France in 2009), the status opened the payments market to specialised non-banking players. The ACPR grants the licence in France, and an EP can passport its licence across the entire EEA.
The 8 authorised payment services
The licence covers all or part of a limitative list (Annex I of DSP2):
- Cash deposit into a payment account.
- Cash withdrawal from a payment account.
- Execution of operations (transfers, direct debits, card payments) on an account held with the PSP.
- Operations backed by short-term credit tied to the payment.
- Issuing and acquiring payment instruments (e.g. card acquirer).
- Money remittance (Western Union, Wise in part).
- PIS — payment initiation (created by DSP2).
- AIS — account information (created by DSP2).
The licence is applied for service by service: Bridge was long licensed for AIS + PIS only, Qonto for services 3 and 5.
EP vs EC vs EME
- EP — payments and tied credit only, without deposits or e-money. Min. capital €20K to €125K.
- EC — payments + deposits + credit. Min. capital €5M.
- EME — payments + e-money issuance. Min. capital €350K.
Many fintechs start as an EP, switch to EME to issue cards in-house, then apply for the EC licence for credit.
Ring-fencing of funds: the great rule
An EP cannot keep its customers' money on its balance sheet. PSU funds must be ring-fenced:
- in a segregated account at a third-party EC (the dominant method);
- or invested in safe and liquid assets;
- or covered by a guarantee at least equal to the funds held.
This is what protects the customer in case of bankruptcy: their money is recoverable, since the FGDR does not cover EP accounts.
What an EP cannot do
- Take deposits: it only holds payment accounts, not savings.
- Grant credit beyond short-term credit tied to the payment (< 12 months in practice).
- Issue electronic money (a top-up wallet): the EME licence is required.
- Join TARGET2 / TIPS directly, except since 2023 when the ECB is gradually opening access to non-banks.
In the PSD2 ecosystem
The EP is the historical status of DSP2 fintechs: most AISPs, PISPs and business neobanks started there. Lighter than an EC, it remains heavily regulated (AML-CFT, SCA, ACPR reporting, governance, own funds calculated by volume).
Concrete examples
- French EPs: Qonto (business account), Lydia (P2P, became Sumeria under EME), Bridge (AIS + PIS), Fintecture (PIS), Shine (business account), Lemonway and Mangopay (marketplaces).
- EP → EME transition: Lydia became an EP and then created Sumeria under EME to issue cards in-house and offer a remunerated wallet.
- Capital by service: €20K for pure money remittance, €50K for AIS + PIS, €125K for acquiring/issuing — the ACPR also requires a 3-year business plan and a full governance file.
- Licensing lead time: 6 to 12 months, more for multi-service. Many go through a PSP agent or a BaaS during the process to get started.
- Passporting: a French EP can passport its licence to 29 other EEA countries — which allows Qonto to serve Germany, Italy and Spain from France.
- Ongoing supervision: quarterly reporting to the ACPR (own funds, volumes, fraud, DORA incidents), possible inspections, sanctions ranging from a warning to licence withdrawal.