2 July 2019
Electronic money (e-money) is a relatively new payment instrument, emerged with the progress in technology. Electronic money's popularity has been driven by a number of factors including growing complications in opening current accounts and getting payment cards from traditional retail banks, changes in the population's social structure, and evolution of the Internet into a digital workplace. Electronic money comes in various forms and hence covers various needs of different customer groups, ranging from nomads, migrants and freelancers to corporations willing to make mass payouts. Several e-money institutions are covered in details below:
The European Union has recently experienced a surge in the number of e-money institutions as well as as in e-money transaction volumes.
In the European Union, the legal basis for e-money issuance is establsihed in Directive 2009/110/EC of the European Parliament and Council while the legal basis for payment services in Directive (EU) 2015/2366 (PSD2).
E-money can be considered as a digital form of cash as it shares with cash a lot of similar properties.Electronic money means a monetary value represented by a claim on the issuer, which is:
It should be noted, that electronic money differ from cryptocurrencies: while e-money is an electronically stored monetary value of fiat currencies controlled by central banking systems, cryptocurrencies represent non-fiat currencies such as Bitcoin or Litecoin, which use decentralized control and neither issued nor regulated by central banking systems.
In the case of hardware-based products, the monetary value resides in a personal physical device, such as a chip card, with hardware-based security features. Monetary values are typically transferred by means of device readers that do not need real-time network connectivity to a remote server.
Prepaid and gift cards issued as magnetic cards can serve as an example of hardware-based e-money.
Software-based products employ specialised software that functions on common personal devices such as personal computers or tablets. To enable the transfer of monetary values, the personal device typically needs to establish an online connection with a remote server that controls the monetary values usage.
Chargeable Internet-based accounts can be an example of software-based e-money.
Schemes mixing both hardware and software-based features also exist.
For example, an prepaid debit card can be issued for the corresponding Internet-based account.
An electronic money institution (EMI) is an undertaking that has been authorised to issue e-money. Electronic money issuer can be one of the following entities:
Credit institutions do not need an explicit licence to issue electronic money, whereas other institutions might need one.
Services provided by electronic money institutions can be classified into electronic money services, payment services and other services.
Electronic money services include the following activities:
Electronic money issuance is tightly connected with making payments using the e-money, consequently, to facilitate usage of electronic money, electronic money institutions provide a range of payment services to perform payment transactions with e-money:
Apart from e-money and payment services, electronic money institutions can provide other services, for example:
Electronic money institutions shall not take deposits or other repayable funds from the public.
Due to the variety of forms of electronic money and existing customer needs, electronic money issuers provide e-money products, covering different customer groups and focused on specific customer requirements.
This section provides a list of selected e-money issuers, offering online current accounts with an option of ordering a debit card linked with such an account. Electronic money issuers focused on providing online current accounts usually position themselves as an alternative to traditional retail banks having the following advantages:
However, current accounts offered by e-money issuers have several disadvantages:
Founded in 2014, Monese specializes in providing online UK current accounts. Monese accounts can be opened via a simple, fast and 100% mobile process without proof of address or credit history.https://monese.com/
online UK current accounts without proof of address
Financial Conduct Authority (United Kingdom)
ePayments was established in 2011 to facilitate payments for affiliate marketing industry. Since then ePayments has also expanded its payment services to other industries including freelance marketplaces, affiliate programs, social networks.https://www.epayments.com/
online payments for affiliate marketing industry
Financial Conduct Authority (United Kingdom)
Founded in 2012, Azimo has stated its mission to use technology to democratise financial services, making them affordable and available to all. Azimo creates a better way to share money around the world, improving millions of people’s lives by providing money remittance service to more than 195 countries in 150+ currencies.https://azimo.com/
international money transfers
Financial Services Commission (United Kingdom)