Concept
In EU and UK payments, regulated activity can be conducted under someone else's license—as an agent of a neobank (PI, neobank) or an e-money issuer (neobank). The agent acts on behalf of the principal licensee (PSD2, Art.4(38)); the license remains with the principal, and the principal files the agent's registration with the regulator. This is the payment vertical of embedded finance.
Roles differ. neobank agents and PI agents provide payment services on behalf of the principal. E-money distributors distribute e-money (sell and redeem), do not provide payment services, and are not registered with the regulator. In investment services, the analogue is a tied agent under MiFID.
🍓 The principal is responsible for the agent before the regulator and for its AML and safeguarding. In return, a single authorization in the home country grants a passport across the entire EU/EEA—to both the principal and its agents. The neighboring model in the US is BaaS and sponsor banks.
How It Works
The agent route: the principal neobank/PI conducts due diligence on the candidate, then submits it to the national regulator as its agent. After registration, the agent operates under the principal's license—in its home country and in countries where the principal has obtained a passport. The agent does not need its own authorization or capital.
Client funds are protected through safeguarding: they are ring-fenced in a separate account at a credit institution or covered by insurance/guarantee. Commingling with the principal's own funds is prohibited. This is the same fund segregation discipline as in correspondent banking and safeguarding.
What You Need to Launch
Through the agent model—no capital, no own license: you need to meet the principal's requirements (AML policies, fit-and-proper for management, operational readiness) and register through it. Launch—within weeks. For your own license, minimum capital depends on the regime.
| Regime | Minimum Initial Capital |
|---|---|
| neobank — e-money issuer | €350K (EMD2, Art.4) |
| PI — money remittance | €20K |
| PI — payment initiation services (PIS) only | €50K |
| PI — full range of payment services | €125K |
Timelines for your own license: Lithuania—6–9 months (fastest in the EU), UK (FCA)—9–12, Ireland—12–18. Therefore, many start as agents and apply for their own authorization later, when volumes justify the capital and compliance staff.
Compliance
Basic set: AML/KYC under AMLD (CDD, monitoring, suspicious transaction reporting), sanctions screening, safeguarding reconciliation of client funds, reporting to the principal and regulator. The agent operates within the principal's compliance perimeter: the principal is obliged to monitor the agent, conduct periodic reviews, and disconnect it in case of violations. Responsibility before the regulator remains with the principal.
How It's Done in the Market
Principals are BaaS neobanks and neobanks—in the EU and UK these include, for example, ClearBank, Griffin, Solaris, Swan, Treezor, Modulr, Railsr. They give agents access to accounts, cards, and payments via API and take on the license and safeguarding. The card part of the program is usually built through BIN sponsorship.
What to look for when choosing a principal: stability and reputation (license revocation of the principal stops agents too), where it has a passport, which safeguarding bank and how reconciliation is organized, economics (revenue share, access fees, minimums), and the right to transfer the program. When volumes and desire for control outweigh—they transition to their own neobank/PI license.
Applicable Regulation
PSD2 (agent—Art.4(38)) and EMD2 (neobank and capital) plus passport across EU/EEA based on a single authorization. They are being replaced by PSD3 and PSR (final texts April 23, 2026, application approximately 21 months later): the neobank regime merges into PI (neobank becomes a PI subcategory with reauthorization), the commercial agent exemption is narrowed, e-money distributors are directly regulated as agents, and non-bank PIs gain direct access to payment systems (TARGET2). Where the entire perimeter is moving—in the material on regulatory perimeter trends.
| Pros | Cons |
|---|---|
| Launch without capital and own license | Dependence on the principal: its problems or license revocation hit the agent |
| Passport across EU/EEA through the principal's authorization | Revenue share goes to the principal; economics squeeze with growth |
| Ready infrastructure for accounts, cards, and payments | PSD3/PSR tightens: neobank reauthorization, narrowing of agent exemptions |
| Clear path to own license | Safeguarding and AML under constant monitoring and audit |
Q/A
Does an agent need its own license
No. The agent operates under the principal neobank/PI's license; the principal registers it with the regulator. E-money distributors are not registered at all, but do not provide payment services either.
How much capital is needed for your own license
neobank—€350K. PI—€20K (money remittance), €50K (PIS only), or €125K (full range of payment services). Plus safeguarding of client funds and compliance function.
What does PSD3 and PSR change
The neobank regime merges into PI (with reauthorization), the commercial agent exemption is narrowed, e-money distributors are regulated as agents, non-bank PIs gain direct access to TARGET2. Texts finalized April 23, 2026, application—approximately 21 months later.
This material is prepared as an expert overview and does not constitute individual legal advice.
FAQ
How much capital is needed for your own license
neobank—€350K. PI—€20K (money remittance), €50K (PIS only), or €125K (full range of payment services). Plus safeguarding of client funds and compliance function.
What does PSD3 and PSR change
The neobank regime merges into PI (with reauthorization), the commercial agent exemption is narrowed, e-money distributors are regulated as agents, non-bank PIs gain direct access to TARGET2. Texts finalized April 23, 2026, application—approximately 21 months later.
Key factual claims
- Timelines for your own license: Lithuania—6–9 months (fastest in the EU), UK (FCA)—9–12, Ireland—12–18.
- PSD2 (agent—Art.4(38)) and EMD2 (neobank and capital) plus passport across EU/EEA based on a single authorization.