E-money (EMI) licence UK services 

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An E-money (EMI) licence in the UK enables the licence holder to offer a number of services:

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1. issuing of electronic money e.g. prepaid cards and electronic wallets.

2. services enabling cash to be placed on a payment account and all of the operations required for operating a payment account;

3. services enabling cash withdrawals from a payment account and all of the operations required for operating a payment account;

4. the execution of payment transactions, including transfers of funds on a payment account with the user’s payment service  provider or with another payment service provider, including, execution of direct debits, including one-off direct debits;    execution of payment transactions through a payment card or a similar device; execution of credit transfers, including standing  orders;

5. the execution of payment transactions where the funds are covered by a credit line for a payment service user,   including, execution of direct debits, including one-off direct debits; execution of payment transactions through a payment card  or a similar device; (iii)execution of credit transfers, including standing orders;

6. issuing payment instruments or acquiring payment transactions;

7. money remittance;

8. payment initiation services;

9. account information services.

 

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Definition of e-money in the UK

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As per Article 2(2) of Directive 2009/110/EC, “e-money” means “electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transaction, and which is accepted by a natural or legal person other than the electronic money issuer”. Prepaid cards and electronic wallets are examples of electronic money.

 

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The UK laws and regulations for E-money (EMI) licenced firms

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The following laws and regulations are applicable to E-money (EMI) / Electronic Money Institution firms in the UK:

 

- The Financial Services and Markets Act 2000

- The Payment Service Directive (Directive 2015/2366)

- The Electronic Money Regulations 2011

- Directive 2009/110/EC of the European Parliament

- The Payment Service Regulations 2017

- Payments in Euro (Credit Transfers and Direct Debits) Regulations 2012

- Regulation (EC) No 924/2009

- The SEPA Regulation (Regulation (EU) 260/2012

- The Payment Accounts Regulations 2015

- EU Payment Accounts Directive

- Data Protection Act 2018

- Guide to the UK General Data Protection Regulation (UK GDPR)

- Proceeds of Crime Act 2002 (POCA)

- Terrorism Act 2000

- Money Laundering, Terrorist Financing and Transfer of Funds 2017

- Regulation on interchange fees for card-based payment transactions (EU) 2015/751

- The Money Laundering and Terrorist Financing Regulations 2019

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Timeframe to obtain the E-money (EMI) licence in the UK

 

The Financial Conduct Authority is required by the European Banking Authority to assess and make a decision on an E-money EMI / Electronic Money Institution licence application within three months of receiving a complete Electronic Money Institution application. In reality, it takes, on average, around 6 months for an application to be assessed and a decision to be made.

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Initial capital requirement for the UK E-money licence

 

The initial capital required for an E-money licence EMI licence / Electronic Money Institution licence is €350,000

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Ongoing capital requirement for the UK E-money (EMI) licence

 

The ongoing capital required for an E-money (electronic money institution) licence is calculated at 2% of the outstanding electronic money a firm has issued.

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Reasons for choosing the UK for the EMI licence

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     -     World’s fifth-largest economy

     -     Low corporation tax

     -     Low business costs

     -     Business tax relief of up to 230% on research and development

     -     Access to a highly-skilled workforce

     -     Strong fintech growth and investment

     -     Strong reputation in financial services

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Key requirements to obtain the UK E-money licence (EMI)

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1. A minimum capital requirement of €350,000 is to establish an E-money EMI / Electronic Money Institution business.

2. The requirement is to safeguard client funds either with a segregated client bank account or with an insurance policy.

3. The management body of the E-money EMI / Electronic Money Institution licence must be of good repute and possess the relevant qualifications and experience to perform their duties.

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Documents required to apply for the UK E-money EMI licence

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As part of your E-money / EMI licence application, you will be required to provide the following information as part of your application:

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1. company identification details 

2. programme of operations 

3. business plan and financial forecasts 

4. a description of your business’s organisation structure 

5. evidence of your initial capital 

6. measures to safeguard the funds of your users 

7. compliance & governance arrangements and internal controls 

8. procedure for monitoring, handling, and following up on security incidents and security-related customer complaints 

9. processes for filing, monitoring, tracking and restricting access to sensitive payment data 

10. business continuity measures 

11. the principles and definitions applicable to the collection of statistical data on performance, transaction and fraud 

12. security policy 

13. internal control mechanisms to comply with obligations in relation to money laundering and terrorist financing (AML/CTF obligations) 

14. details of your qualifying holdings (shareholders) 

15. details of any outsourcing arrangements

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How much is the FCA fee for the E-money EMI UK Licence application?

 

The application fee for the E-money (Electronic Money Institution) licence application is £5,000. The fee is paid when you submit your licence application online. The application fee for the small E-money (small electronic money institution) is £1,000.

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