The huge potential of electronic money
(e-money) in Europe is being stifled by flaws in the regulatory
framework, a situation the European Commission (EC) intends
remedying.
(e-money) in Europe is being stifled by flaws in the regulatory
framework, a situation the European Commission (EC) intends
remedying.
Central to the EC’s objective are wide-ranging
proposals which it believes address impediments to the e-money
market’s growth under the current rules defined by the E-money
Directive of 2000 (EMD).
proposals which it believes address impediments to the e-money
market’s growth under the current rules defined by the E-money
Directive of 2000 (EMD).
Commenting on the proposals European Internal
Market Commissioner, Charlie McCreevy, said: “These modern rules
will foster competition and innovation, while ensuring market
confidence and a high level of protection for consumers.”
Market Commissioner, Charlie McCreevy, said: “These modern rules
will foster competition and innovation, while ensuring market
confidence and a high level of protection for consumers.”
Illustrating the need for a regulatory revamp
the EC noted that €637 billion ($870 billion) in cash was in
circulation in Europe in August 2007 while e-money represented a
mere €1 billion. With its new rules in place, the EC believes that
by 2012 the value of e-money could reach €10 billion and the number
of e-money institutions (EMI) as many as 120, up from 20 at the end
of 2007.
the EC noted that €637 billion ($870 billion) in cash was in
circulation in Europe in August 2007 while e-money represented a
mere €1 billion. With its new rules in place, the EC believes that
by 2012 the value of e-money could reach €10 billion and the number
of e-money institutions (EMI) as many as 120, up from 20 at the end
of 2007.
One major obstacle to entry of new EMI’s under
the EMD is an initial capital requirement of €1 million. Under the
proposed rules this would be slashed to €125,000.
the EMD is an initial capital requirement of €1 million. Under the
proposed rules this would be slashed to €125,000.
The EC’s proposals also address the definition
of e-money.
of e-money.
Under the EMD the EC stressed that the
definition of e-money requires it to be stored on an electronic
device and is thus considered technically limited to cards-based
e-money.
definition of e-money requires it to be stored on an electronic
device and is thus considered technically limited to cards-based
e-money.
Under the new rules the EC proposes that the
definition of e-money covers electronic money which is either held
on a payment device in the holder’s possession or stored remotely
at a server and managed by the holder via a payment account with
the payment service provider.
definition of e-money covers electronic money which is either held
on a payment device in the holder’s possession or stored remotely
at a server and managed by the holder via a payment account with
the payment service provider.
The EC added that the definition should be
“technically neutral,” wide enough to avoid hampering innovation
and cover all electronic money solutions now available and those
which could be developed in future.
“technically neutral,” wide enough to avoid hampering innovation
and cover all electronic money solutions now available and those
which could be developed in future.
Emphasising e-money as a cash alternative the
EC proposes limits on amounts stored on e-money instruments. Where
no recharge is possible a limit of €500 would apply and when a
recharge is possible a limit of €3,000 would apply.
EC proposes limits on amounts stored on e-money instruments. Where
no recharge is possible a limit of €500 would apply and when a
recharge is possible a limit of €3,000 would apply.
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