# Execution of payment transactions covered by a credit line

Source page: https://protegra.io/licensing/activities/payment-execution-credit-line/

Executing payment transactions backed by a short-term credit line requires a payment institution (PI) licence, an electronic money institution (EMI) licence or a banking licence under PSD2 Annex I (4) and Article 18(4). For non-bank institutions, credit must remain ancillary to payment services, cannot be funded from client deposits, and is subject to EEA passporting rules.

## Definition

Executing payment transactions where the funds are covered by a credit line granted to the user, within the limits PSD2 allows.

- PSD2, Annex I (4) and Art. 18(4): [official text](https://eur-lex.europa.eu/eli/dir/2015/2366/oj)

## Which licence you need

Licence families that typically permit this activity:

- [Payment institution (PI)](https://protegra.io/licensing/licences/payment-institution/)
- [Electronic money institution (EMI)](https://protegra.io/licensing/licences/emi/)
- [Bank / credit institution](https://protegra.io/licensing/licences/bank/)

- [EMI · LithuaniaElectronic money institution licence for non-limited activityLB · capital EUR 350,000](https://protegra.io/licensing/licences/emi/lithuania/)

## Where it can be licensed

| | EU/EEA passport | Domestic |
| --- | --- | --- |
| [Lithuania: Electronic money institution licence for non-limited activity](https://protegra.io/licensing/licences/emi/lithuania/) | ✓ | |

## Frequently asked questions

### What restrictions govern credit lines granted by payment institutions?

Under PSD2 Article 18(4), credit granted by a payment institution must be purely ancillary to payment transactions, cannot be funded from safeguarded client money, and must be repaid within short periods defined by national supervisory guidelines.

### Can an EMI issue credit cards using client funds?

No, electronic money institutions cannot use customer deposits or stored-value balances to finance credit lines. Credit must be financed exclusively from the institution's own capital or external bank facilities, complying with strict liquidity and exposure limits.

## Sources

1. [PSD2 Annex I (4) and Art. 18(4)](https://eur-lex.europa.eu/eli/dir/2015/2366/oj): retrieved 2026-09-24

Last verified 2026-09-24 · Author: Danil Marmysh · Reviewed by Anastasia Sidorenkova · © Protegra. Data: CC BY 4.0, cite "Protegra Licensing Atlas". Not legal advice.