(Note: the below is a high level review of certain potential issues and is not to be relied upon in any definitive manner nor as legal and/or regulatory advice).
The initial Emoney Directive has undergone its first revision with the new Directive (“Emoney Directive 2“) coming into force on 30 April 2011.
It is widely accepted that the first Emoney Directive did not provide a regulatory framework that cultivated technological innovation, nor grow a market of payment service providers offering credible competition to the banking sector. Emoney Directive 2 aims to overcome some of its predecessor’s challenges.
In particular, Emoney Directive 2:
- Clarifies the definition of “e-money” – server based account systems are now clearly covered
- Significantly relaxes the prudential regime for e-money institutions, and
- Widens the scope of business activities that e-money institutions are entitled to engage.
Emoney Directive 2 also aims to provide consistency with the Payment Services Directive and in doing so, looks to usefully streamline certain exemptions to mobile network operators and pre-paid card businesses.
While the new provisions do provide increased compliance guidance when carrying out an e-money business, it also presents some challenges. These stem from the uncertainty of over important terms / concepts and increased consumer protection.
- Lack of clarity over key concepts allowing exemption from regulation under the Emoney Directive and the PSD,
- Increased consumer protection over the provisions relating to issuance and redemption of e-money.