This article looks at obtaining an Authorised Electronic Money Institution (e-money) or Authorised Payment Institution license in Europe. If you are planning upon offering payment services such as issuing debit cards, money transfer service, merchant services or electronic wallets and prepaid cards, you will need to apply with the European regulator, such as the Financial Conduct Authority in the UK.
The second Payment Service Directive (PSD2)
PSD2, or the Payment Service Directive 2, is an EU Directive (Directive 2015/2366) which sets requirements for businesses that provide payment services. It applies to banks, building societies, payment institutions, e-money institutions and their customers.
Its main objectives are to protect the consumer and make payments both safe and secure. At the same time, it aims to contribute to a more competitive payments landscape.
What is electronic money (e-money)
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.
Let’s look at the payment services you are able to provide with the e-money EMI licence.
1. Payment accounts. Examples of a payment account include debit cards and payment cards. The user is able to place and withdraw cash on such accounts as well as use the account card to make a payment transaction, using the card to buy goods and services. Users are also able to set up direct debits standing orders as well as transferring funds.