(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).
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.