FCA E-money Institution UK
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The second Electronic Money Directive (2EMD) was implemented in the UK on 30 April 2011 through the Electronic Money Regulations 2011 (the EMRs).
The Financial Conduct Authority (FCA) is the regulator for the regime, having taken over from the Financial Services Authority on 1 April 2013.
E-money is a monetary value represented by a claim on the issuer that is:
- stored electronically, including magnetically;
- issued on receipt of funds for the purpose of making payment;
- accepted as a means of payment by persons other than the issuer;
- is not excluded by regulation 3 of the EMRs
Examples of e-money include prepaid cards that can be used to pay for goods at a range of retailers, or virtual purses that can be used to pay for goods or services online.
If you want to issue electronic money (e-money), you must register with or become authorised by FCA as an electronic money institution (EMI):
- authorised EMI; or
- small EMIs.
Authorised EMIs are subject to the full regulatory regime, including the capital, safeguarding and conduct of business requirements. Authorised EMIs may provide payment services that are not related to the issuing of e-money (unrelated payment services). Authorised EMIs must, however, notify the FCA of the types of payment services they wish to provide. You should also apply to become an authorised EMI if you want to issue e-money in other European Economic Area (EEA) member states.
If you expect your business to not exceed an average of €5m of outstanding e-money, you may apply to register as a small EMI. The registration process is cheaper and more straightforward than authorisation, but there are no passporting rights. Some small EMIs are subject to capital requirements and all are subject to the safeguarding and conduct of business requirements. Small EMIs can provide unrelated payment services (services that do not arise directly as a consequence of your e-money activity) but only if the average monthly total of payment transactions does not exceed €3m, on a rolling 12-month basis. Small EMIs must notify the FCA of the types of payment services they wish to provide.
EMIs may distribute and redeem e-money and provide payment services through agents, subject to prior registration of the agent by the FCA.
EMIs may engage distributors to distribute and redeem e-money. A distributor does not provide payment services, so does not have to be registered by the FCA – but applicants will have to identify their proposed use of distributors.
Persons authorised in other EEA states to issue e-money and provide payment services may exercise passport rights to issue, distribute or redeem e-money or provide payment services in the UK. The competent authority of the home state is responsible for prudential regulation and we will be responsible for conduct of business regulation and, where passporting is on an establishment basis rather than a cross-border service provision basis, anti-money laundering supervision.
Credit institutions, credit unions and municipal banks do not require authorisation or registration under the EMRs but if they propose to issue e-money they must have Part 4A permission under Financial Services and Markets Act 2000 for the activity of issuing e-money. When issuing e-money, they are subject to the provisions on issuance and redeemability of e-money in the EMRs and to the relevant conduct of business requirements of the PSRs.
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