Europe

How a US FinTech Can Enter Europe: Partner First or Licence First?

By Paolo Petrolini · Published 3 Aug 2026 · 5 min read

Why fintech expansion is different

In most software, you can sell first and sort out the structure later. In financial services, the rules decide what you are allowed to do before you earn a single euro.

I learned this building compensIT in Italy, where we launched an earned wage access product on card rails and then a real-time income verification system used by banks and lenders. Regulation shaped the product, the partners and the order in which we did things.

This article explains the commercial choices. It is not legal advice.

Route 1: Get your own licence

The EU has licences for different activities, including payment institutions, electronic money institutions, credit institutions and, for crypto, crypto-asset service providers.

The main advantage is passporting. A company licensed in one EU member state can usually offer the same services in the others after notifying the regulators.

• For: full control over the product, the margins and the customer relationship.
• Against: it can take a year or more, and it needs local substance, capital, compliance staff and directors the regulator accepts.
• Good when: Europe is central to your business and you have the funds and time.

The UK has its own regime and its own regulator. A UK authorisation does not cover the EU, and an EU licence does not cover the UK.

Route 2: Operate under a licensed partner

You can launch as an agent or distributor of a licensed institution, or use a banking-as-a-service provider that holds the licence and gives you access through its platform.

• For: live in months, not years, with far lower upfront cost.
• Against: you depend on the partner's risk appetite, pricing and survival. Regulators have also become stricter about how these arrangements are supervised.
• Good when: you need to test demand before committing to a licence.

Route 3: Distribute through an incumbent

Instead of selling directly, you reach the market through a large established player, such as a bank, a credit bureau, a payment company or a payroll provider, that already has the customers and the trust.

This is the route we took at compensIT. A distribution partnership with Experian took the product to market scale, and Experian later acquired the company.

• For: immediate reach and credibility, and a partner who handles much of the regulatory relationship with customers.
• Against: long negotiation, dependence on one partner, and less direct contact with end customers.
• Good when: your product makes an incumbent's offer stronger and you can integrate into their systems.

How to choose

Ask four questions.

1. Does your activity need a licence at all? Some products sit outside regulated activity. Check before assuming.
2. How fast do you need proof? If you need customers within six months, start with a partner.
3. Who owns the customer? If direct relationships are your business model, plan for your own licence.
4. Which country first? For a licence, the choice of regulator matters as much as the size of the market.

A sequence that works

Start with a partner or an incumbent in one country. Use the first year to prove demand, learn local customer behaviour and build a track record. Apply for your own licence once the numbers justify it, and keep the partner in place until it is granted.

Common questions