EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 9.10.2008 
SEC(2008)2573 
  
Draft 
COMMISSION STAFF WORKING DOCUMENT 
Accompanying document to 
 
the proposal for a Directive of the Eu ropean Parliament and of the Council 
amending Directive 2000/46/EC on the taking up, pursuit of and prudential supervision 
of the business of electr onic money institutions 
  
IMPACT ASSESSMENT
 
{COM(2008)627 final} 
{SEC(2008)2572} 
EN 2   EN TABLE OF CONTENTS 
1. Introduction................................................................................................................ .. 4 
2. Procedural issues and consulta tion of interested parties.............................................. 4 
3. Problem definition........................................................................................................ 6 3.1. General background ..................................................................................................... 7 3.2. The lack of legal certainty and the scope of the directive hampers market 
development ............................................................................................................... 11 
3.3. An inconsistent legal framework ............................................................................... 14 3.4. Summary of problems im pact on stakeholders .......................................................... 19 
3.5. Is action necessary at EU level?................................................................................. 20 4. The objectives ............................................................................................................ 20  
4.1. General and specific policy objectives....................................................................... 20 4.2. Consistency of the objectives  with other EU policies................................................ 21 
5. The policy options and the policy instruments .......................................................... 21 5.1. The policy options and their scope............................................................................. 21 5.2. The policy options grouped in packages of measures................................................ 23 6. Analysis of impacts and choice of preferred option(s) .............................................. 25 6.1. Impact of the packages............................................................................................... 25 6.2. Impact on administrative burden................................................................................ 30 7. Comparison of the packages ...................................................................................... 31 7.1. Comparison on achievement of  the specific objectives ............................................. 31 
7.2. Comparison of the impact of the packages ................................................................ 31 7.3. Comparison of the impact on the stakeholders .......................................................... 33 7.4. Comparison of the administrative burden.................................................................. 33 8. Conclusions................................................................................................................ 3 5 
9. Evaluation and monitoring......................................................................................... 35 
BIBLIOGRAPHY ................................................................................................................... . 36 
GLOSSARY....................................................................................................................... ...... 37 
ANNEX 1 The policy options and their scope......................................................................... 39 
EN 3   EN ANNEX 2 Initial screening of options..................................................................................... 43 
ANNEX 3 Screening of risk profiles ....................................................................................... 53 ANNEX 4 Screening of administrative burden........................................................................ 59 ANNEX 5 Overview of consultative work .............................................................................. 66 ANNEX 6 Number of electronic money issuers in EU ........................................................... 67 ANNEX 7 List of licensed EMI end 2007 ............................................................................... 69 ANNEX 8 Evolution of Electronic Commerce a nd Cards based electr onic money in EU...... 70 
ANNEX 9 Method D for calculatio n of own funds for electronic money institutions ............ 72 
ANNEX 10 Relationship between payment volum e and issued electronic money ................. 73 
EN 4   EN Draft 
COMMISSION STAFF WORKING DOCUMENT 
IMPACT ASSESSMENT 
 
Accompanying document to 
 
the proposal for a Directive of the Eu ropean Parliament and of the Council 
amending Directive 2000/46/EC on the taking up, pursuit of and prudential supervision 
of the business of electronic money institutions  
Disclaimer  
This impact assessment report commits only th e Commission's services involved in its 
preparation and the text is prepared as a ba sis for comment and does not prejudge the final 
form of any decision to be taken by the Commission. 
1. INTRODUCTION  
Over the past three decades, the European fi nancial sector has evolved and grown with 
incredible speed, spurred princi pally by four challeng es: globalisation, Eu ropean integration, 
financial and technol ogical innovation. 
Directive 2000/46/EC on the taki ng up, pursuit of and prudential supervision of the business 
of electronic money institutions (hereby referred as 'the EMD')1 was adopted in response to 
some of the challenges highlighted above. The EMD represented a response to the emergence 
of new pre-paid electronic payment products, and was intended to create a clear legal 
framework designed to strengthen the Internal Market and stimulate competition whilst at the 
same time ensuring an adequate level of prudentia l supervision.  
Electronic money is defined by the EMD, as 'm onetary value as represented by a claim on the 
issuer which is: (i) stored on an electronic device ; (ii) issued on receipt of funds of an amount 
not less in value than the monetary value is sued; (iii) accepted as  means of payment by 
undertakings other than the issuer'. 
The EMD seeks to open the market for the issuance of E-money through the creation of 
Electronic Money Institutions (EMIs) regulate d under a lighter prudential regime than that 
required of credit institutions.  
The legal basis for this initiative is Articles 47(2) and 95 of the EC Treaty. 
2. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  
On the basis on the EMD's review clause (Article 11), the Commission launched, in 
January 2005, an evaluation exercise. Based on i ndications that the de velopment of e-money 
                                                 
1 OJ L 275 of 27.10.2000, p. 39. 
EN 5   EN may have failed to live up to expectations, a nd that the original ambitions of the EMD may 
not have been achieved, the Co mmission decided to broaden th e initial scope of the review2.  
In July 2006 the Commission adopted a Staff working document on the review of the 
E-Money Directive (EMD)3. The report concluded that there was a need to revise the current 
directive, some provisions of which seemed to have hindered the ta ke-up of the e money 
market. The report also suggested awaiting th e final adoption of the Payment Services 
Directive (PSD) before taking further ac tion, to permit completion of the complex 
negotiations on the PSD.  
In order to prepare the present impact a ssessment, the following steps were taken: 
• The evaluation of the directive, five years after its implementati on, identified the main 
problems described in Secti on 3 and proposed recommendatio ns regarding the future 
review of the EMD. The ev aluation process included : 
– an external evaluation study4, launched in September 2005, focussing on evidence 
gathered by external consultants; 
– a public consultation of stakeholders on the evaluation of the E-money Directive 
launched in July 20055. 
• A public consultation of stake holders on the application of  the E-money Directive to 
mobile operators in 20056. 
• Regular discussions with Member States, the ECB, financial institutions, consumer 
organisations, mobile operators, merchants,  notably through the existing consultative 
committees on retail payments: PSGEG7 and PSMG8 in 2007 and 2008. 
• A specific meeting with the e-money industry, held on 25 January 2008. 
                                                 
2 The Commission services were requested to report on : the measures to protect the bearers of electronic 
money, and the possible need to introduce a guaran tee scheme; capital requirements; waivers; and the 
possible need to prohibit interest  being paid on funds received in  exchange for electronic money. 
3 SEC(2006) 1049 of 19.7.2006, Commission staff working document on the Review of the E-Money 
Directive. 
4 Evaluation of the e-money directive (2000/46/EC), Final Report,  
http://ec.europa.eu/internal_market/bank/docs/e-money/evaluation_en.pdf .  
5 E-Money 003/2005 questionnaire on the EMD, public consultation document of the Commission 
services (Internal Market and Services DG). 
6 Application of the E-money Directive to mobile operators, Consultation paper of DG Internal Market, 
http://ec.europa.eu/internal_market/bank/docs/e-money/2004-05-consultation_en.pdf . 
7 The Payment Systems Government Experts Group (PSGEG) is a consultative body composed of 
government experts from Member States of the EEA, typically drawn from national finance ministries 
and national central banks as well as a represen tative from the European Central Bank members as 
observers, with expertise in the payments area with the objective of providing advice and guidance to 
the Commission. 
8 The Payment Systems Market Group  (PSMG) is a consultative body composed of market experts, 
typically drawn from banks, corporates, retailers and associations representing interested stakeholders 
such as SMEs and consumers, telecom operators, banks, electronic money institutions, merchants with 
expertise in the payments area with the objective of providing advice and guidance to the Commission. 
EN 6   EN • An inter-service working group established in February 2008, with participation of the 
Secretariat-General and Competition DG, Information Society and Media DG, Economic 
and Financial Affairs DG, to discuss the impact assessment.  
• A specific bilateral meeting held  with the ECB on 30 April 2008. 
The Impact Assessment Board expressed in its opinion that ' this impact assessment has 
benefited from thorough preparation, contai ns robust analysis and makes good use of the 
Commission's IA guidelines. In spite of the t echnical nature of the issue at hand, the impact 
assessment is accessible to non-expert readers .' The main recommendations from the Impact 
Assessment Board which were taken into account were: 
Recommendation 1 suggested to clarify reporting requirements and why they are maintained 
under package 4: Paragraph 6.2 and Annex 4 were  modified to explain the administrative 
burden of existing reporting requirements a nd why they are maintained under Package 4. 
Paragraph 3.3.2.1 was modified to explain the existing application pr ocess for waivers. 
Recommendation 2: suggested to describe demand-side issues affecting the e-money market. 
Paragraphs 6.1.3 and 6.1.4 have been adapted to reflect assumptions behind estimated market 
uptake and Paragraph 3.1.2.1 was adapted to clarify the relative success in some Member States. 
Recommendation 3 suggested cl arifying assumptions behind ma rket uptake. Assumptions on 
market uptake have been reflected in paragraph 6.1.3. and in Annex 4.  
Recommendation 4 suggested improving the risks affecting e-money institutions. 
Paragraph 6.1.3 was amended to reflect better the risks affec ting e-money institutions. In 
addition, A glossary of terms has been added in Annex. 
3. P
ROBLEM DEFINITION  
The main problems identified by the evaluation and the consultation pr ocess can be grouped 
as follows:  
• The definition of electronic mone y and the scope of the directive  are unclear . This 
creates legal uncertainty as to whether th e EMD applies to certa in business models, 
hindering the development of new and innovative services.  
• The legal framework  is inadequate . The current prude ntial requirements are considered 
excessive with regard to the risk of the ac tivity by the majority of industry participants. 
Moreover, the different use made by Member  States of some options, regarding in 
particular waivers and passpor ting, has created an  inconsistent legal framework. This 
overall legal inconsistency will increase once the Payment Services Directive is implemented (by November 2009), since some provisions of the latte r are incompatible 
with the EMD. 
These problems have resulted in a limited market  uptake for electronic money in Europe, in 
terms of volume of e-money issued and in terms of number of market participants. 
EN 7   EN 3.1. General background 
3.1.1.  History and introduction 
A well functioning market for electronic money se rvices is important, since they offer an 
alternative to cash and contribute to the deve lopment of electronic commerce. After a slow 
start, electronic commerce has been growing stea dily in recent years, and currently amount for 
4.2 % of enterprise turnover9 in the EU. 
The first electronic money products launched in the early 1990s were electronic purses . These 
services, enabling consumers to store electronic  money on a chip of a smart card, are used to 
replace low-value cash payments at the point of sale. They are know as ' cards based e-
money' . Examples of these of schemes are Danm ønt, Mondex, Proton or Primeur Card. They 
offer advantages over cash especially when small, exact amounts have to be paid at unstaffed locations such as vending, park ing or ticketing machines. For banks, these services enable 
cost savings as they contribute to the increasing use of digital transactions in the EU, lowering 
the use of cash. They also enable cash-like trans actions to be executed at a lower cost to the 
card issuer than credit or debit card payments  since they do not requ ire online authorisation. 
New types of e-money services
 have been developed and offer a secure means to purchase 
and sell goods and services on the internet. These new types of money services are called 
'server-based' , in the sense that funds are not stored locally on chip cards or computers, but 
kept at a 'central server' (e.g. at the issuer).  The most successful and widely known server-
based e-money schemes to date fall essentially  into the category of pre-funded personalised 
online payment schemes, involving the transfer  of funds stored on a personalised online 
account (not including traditional bank deposit s). The most well known example of these 
services is PayPal. Accounts are typically accessible via internet  browser, email, and/or in 
some cases via mobile text message (SMS), an d allow transfers betwee n private persons and 
between consumers and merchants. 
For consumers, server based e- money services offer the possibility to purchase in a secure 
way on the internet without disclosing credit card details. For merchants they offer new, 
innovative and cheaper ways to sell goods via the internet. As they offer competition to other 
traditional payment instruments on the internet, such as credit cards and debit cards and represent lower fees for the merchant, they contribute to  a well functioning and innovative 
payments market in the EU.  
3.1.2.  Overview of the current e-money market 
The 2006 evaluation report showed that the e-m oney market has developed more slowly than 
expected and has not become a widespread alternative for cash, far from its full potential. Only a limited number of EMIs have been created, and the most important market participant, PayPal, has recently adopted the st atus of a credit institution.  
There are no comprehensive statistics available on the total amount of e-money in circulation 
in the EU. There are only statistics available for card-based e-money, as Member States are 
required to collect such data and report it to the ECB. In July 2007 the total amount of e-
money circulated by banks
 amounted to EUR 658 million10. With regard to server-based e-
                                                 
9 Annex 10 describes the evolution of electronic commerce in the EU. 
10 ECB Blue Book, January 2008. 
EN 8   EN money, neither the ECB nor national Central Banks currently publish data. Only some data 
are available from some Member States. As it is a small market with a limited number of 
players, data from individual i ndustry players is not available.  Based on data coming from the 
industry and some Member States , the estimated amount of e-m oney in circulation issued by 
electronic money institutions and waived entities  amounts to EUR 395 million. 
The estimated total value of outstanding-money in  circulation in the EU as of July 2007 is 
therefore:  
Table 1:  Outstanding e-money in circulation in EU in million euro 
Type of issuing institution Outstanding e-money in 
circulation in 2005 Estimated outstanding 
e-money in circulation 
in July 2007 Increase 
(percentage) 
Traditional credit institutions 450 658 46 % 
EMIs and waived institutions 220 395 79 % 
Total 670 1 053 57 % 
Source: ECB Bluebook & EMA (E-money Association), 2007 
Regardless of the gradual increase that can  be observed in the period 2005–2007, the total 
amount of electronic money in circulati on remains low in comparison with he 
EUR 637 billion cash in circulation in the EU in August 2007, which is less then 1 %. 
3.1.2.1.  Card-based e-money 
Statistics on the use of card-based e-money are available from the ECB's Blue Book on 
Payment and Securities Settlement Systems in th e EU. They show a slight increase in the 
relative importance of e-money transactions, up from 0.4 % of all cashle ss transactions in the 
EU in 1999, to 0.7 % in 2006 as shown in Gr aph 1. The uptake of ca rds based electronic 
money therefore remains low.  
Graph 1:  Relative importance of cashless payments instruments in euro area, 2006 
Re lative  importance of ca shle ss payme nt instruments,  Euro Area, 2 006
(percen tage of  total volume of ca sh less tra nsact ion s)
Cre dit transfers
30, 5%Card s
30 , 0 %
Direc t debi ts
29,2 %Ch eq ues
9,5%Card-based e-money
0,7%
 
Source: ECB Blue Book, 2006  
The development of cards base d electronic money varies by country and has been most 
successful in the Benelux countries (where almo st all debit cards are equipped with e-money 
EN 9   EN function) Germany and Austria where eight issued  cards out of ten enable e-money services 
(Graph 2).  
Graph 2:  Cards with an e-money fu nction per inhabitant, 2006 
Cards with an e-money function per inhabitant, 2006
0,000,200,400,600,801,001,20
AT BE CY CZ EE FI FR DE EL HU IE IT LV LI LU MT NL PL PT SK SI ES SE UK EU# of cards with e-money function per inhabitant
 
Source: ECB Blue Book, 2006 
Some stakeholders interviewe d during the evaluation attribut ed the relative success of e-
purses in some countries partly to the existence of a 'killer application', i.e. a very specific use 
where an e-money card offers very clear advant ages, or may even be strictly necessary to 
make a payment in specific circumstances. It was suggested that consumers only start to use 
e-money when they are practically 'forced to' in certain situations; once they have become 
used to e-money, this then sometimes encourages them to extend its usage to other areas. The mere availability of the e-money function on a debit card is usually  not enough to convince 
most customers of its usefulness. 
Examples of country-specific card-based e- money schemes of the Benelux countries:  
Proton (Belgium):  According to the ECB statistics, in 2003 this was the most widely used 
scheme in Europe. The scheme is currently ope rated by Atos Worldline, which has taken over 
BankSys which was a subsidiary of 34 Belgian banks who included the Proton application on 
their debit cards and issue the e-money. Appr oximately 10 million cards have the Proton 
function, and around 20 % of these are actively use d. Proton has three 'dominant' applications: 
Canteens and vending machines in big companie s; public telephones (initially Proton's 'killer 
application', but now decreasing), and gene ral vending machines and parking meters. 
Chipknip (Netherlands):  The current Chipknip scheme is th e result of the incorporation, in 
2000, of the Chipper-scheme (launched in 1997) in to the original Chipknip scheme (launched 
in 1996). There is currently a re loadable version, issued by banks  and integrated into around 
80 % of Dutch debit cards, as well as a dis posable version called Prepaid Chipknip. Both 
kinds of cards are used mainly (90 %) for parki ng (said to be Chipknip's 'killer application' – 
many parking meters in the Netherlands t oday only accept payment via Chipknip), vending 
machines, and catering.  
EN 10   EN 3.1.2.2.  Server-based e-money 
In recent years, a number of server-based products have emerged and met with relative 
success in catering to different 'niche' ma rkets, including person-to-person internet 
transactions, online gaming, and as payment in struments for persons without access to bank 
accounts or credit cards, such as young people or immigrant communities. 
There are currently no comprehensive statistical data on the use of server based e-money in 
the EU available from official sources. Data collected by the EMA11 for January–June 2007 
reported a monthly turnover of EUR 791 million, representing EUR 395 million of 
outstanding electronic money .  
3.1.2.3.  Number of electronic money issuers 
The number of electronic money issuers in th e EU has remained low but has been growing 
over the years. In total, 20 EMIs and 127 ent ities (in seven EU Memb er States) issuing e-
money under a waiver were reported end 2007. Waived institutions are small EMIs, which have been authorised to operate in a given Memb er State without having to comply with all of 
the authorisation requirements of full blown EM Is. As shown in Annex 6, the majority of 
EMIs are operating in UK.  
Table 2:  Number of electronic money institutions and waived institutions 
 2005 2007 
EMIs 9 20 
Waived institutions 72 127 
Source: European Commission, Evaluation report EMD 2006; Member States survey in 2008 
Most of the institutions ope rating under a waiver are opera ting in the UK and the Czech 
Republic. In the UK, 46 waivers ('small e-money i ssuer certificates') had been granted as of 
end 2007. In the Czech Republic, 54 waived ins titutions were reported in 2007, the majority 
of which were public transport providers. 
3.1.3.  The current legal framework 
Traditionally, payment services were offered by banks regulated by the EU banking directives 
such as the so called 'Capital Requirements Di rective' (hereby referred to as the 'CRD')12.  
The Capital Requirements Direc tive and the E-money directive  
Electronic money can be issued by electronic money institutions (which are considered as 
'special purpose' credit institutions), regulated  under the EMD. Credit institutions, regulated 
                                                 
11 The E-Money Association among its membership 17 companies, including most of the EMIs and a 
number of active small e-money issuers in the UK, plus one Norwegian EMI. 
12 The key Directives in the bankin g sector are the Capital Requirements Directives, which were amended 
in 2006: Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast of directive 2000/12/EC); and 
Directive 2006/49/EC of the European Parliament an d of the Council of 14 June 2006 on the capital 
adequacy of investment firms and credit in stitutions (recast of directive 93/6/EEC). 
EN 11   EN under the CRD, can issue electronic mone y within the framework of the EMD13. Operators 
wishing to issue e-money th erefore have two options: 
– to apply for a licence as an e-m oney institution under the EMD or 
– to apply for a licence as a fu ll blown credit institution. 
The EMD created a special legal framework for EMI. This legal framework restricted the 
EMIs' activities to the issuance of electroni c money and the provision  of closely related 
financial and non-financial services, such as th e administering of e-m oney and the issuing and 
administering of other means of payment. Th is implied that activiti es such as mobile 
telecommunications services or retailing co uld not be performed by EMIs. Companies 
engaged in these businesses and willing to issue electronic m oney therefore had to split up 
their activities in two separate entities. Gran ting any form of credit was also an excluded 
activity. The framework included a strict pruden tial regime for electronic institutions, which 
was designed with the CRD as main point of reference.  
The Payment Service Directive and the E-Money Directive  
The Directive on Payment Services (PSD), a dopted in November 2007, which provides the 
legal foundation for the creation of an EU-w ide single market for payments, created 
additional complexity. The PSD aims at establis hing a modern and comprehensive set of rules 
applicable to all payment serv ices in the European Union. Member States will have to 
implement it at the latest by 1 November 2009. The PSD created a new type of institution, 'Payment Institutions', enjoying a specific pruden tial regime which is different from that of 
Electronic Money Institutions and Credit Institutions. 
Some of the provisions of the EMD are not coherent with the PSD. For examples the 
respective licenses for becoming an 'Electronic M oney Institution' or a 'Payment Institution' 
are not compatible with one another, as th e range of activities authorised for payment 
institutions under Article 16 of the PSD would exceed the scope of activities permitted under 
Article 1(5) of the EMD. As a result, compan ies cannot hold both licenses, which will create 
problems for 'hybrid' service providers, offeri ng both payment services and e-money services. 
3.2. The lack of legal certainty and the sc ope of the directive hampers market 
development 
During the review process, stak eholders expressed concerns th at the current directive lacks 
legal certainty. First of all the definition of el ectronic money is considered unclear. Second it 
is unclear for stakeholders whethe r or not it is applicable to certain business models such as 
certain prepaid payment from mobile netw ork operators and electronic vouchers.  
3.2.1.  The definition of e-money is unclear 
The definition of 'e-money' requires it to be 'sto red on an electronic device'. This definition is 
therefore considered technica lly limited to one form of e-money (notably cards based 
electronic money) and does not encompass the va rious pre-paid produc ts available in the 
market (e.g., 'server-based' e-money). The current definition also raises  questions in cases 
                                                
 
13 Provisions regarding definition of electronic money and redeemability apply to credit institutions, while 
the prudential regime only applies to electronic money institutions 
EN 12   EN where the value stored would be less than the amount actually paid to th e issuer, disqualifying 
in principle such products from  being defined as e-money. For example, a service where the 
consumer would pay EUR 20 to the issuer, but which would be only c onverted into EUR 15 
of e-money, would in principle fall outside the definition of electronic money as contained in 
Article (1)(3)b of the EMD.  
3.2.2.  The scope of the EMD prevents new market entrants  
The application of the directive to mobile ope rators and issuers of electronic vouchers would 
have a huge impact on the number of market participants and on th e amount of electronic 
money in circulation as they would be enab led to design new services. According to the 
stakeholders consulted, the current lack of cl arity prevents the development of these two 
markets.  
3.2.2.1.  Mobile network operators' prepaid services  
The European mobile market currently repr esents 553 million subscribers. 60.9 % of these 
subscribers use prepaid services, and 39.9 % r eceive a monthly bill (also referred to as 
'postpaid'), as shown in Graph 3. There are approximately 100 mobile operators in the EU. 
Many mobile operators offer to their customer s the possibility to purchase third-party goods 
and services (in particular dig ital content such as ri ng tones, logos, game s, etc.) using their 
prepaid funds or via their 'postpaid' monthly bill. Currently, only approximately 1 % of the total prepaid funds are used for third-party servic es, while the rest is spent on services offered 
by the mobile operator itself. According to Capgemini the European market for mobile 
payments will be worth EUR 913 million in 2008, and is expected to rise up to over EUR 8.7 billion in 2012
14. 
Currently, almost all Member States have de  facto exempted these services from the 
application of the EMD, but  the justifications vary. 
After the transposition of the PSD, some simi lar payment services could, depending on the 
type of subscription (prepaid or postpaid), be regulated under different regimes: the EMD, for 
prepaid services and the PSD for postpaid. This is a potential confusing situation which needs 
to be addressed. For example, after the adop tion of the PSD, the purchase of a movie ticket 
via a mobile phone: if paid for by the money st ored on a prepaid card, it will be regulated 
under the EMD; if the same ticket is paid with  a monthly bill, it will fall under the scope of 
the PSD. The extent to which such funds sh ould be considered e- money, and therefore 
regulated under the EMD, was addressed by a Guidance note issued by the Commission in 
early 2005 in order to provide clarification on the conditions under which the EMD applies to 
prepaid products of mobile operators. This guidance note places the emphasis on the form of the direct payment relationship between a mobile customer and a third party vendor.
15 Despite 
                                                 
14 Capgemini, http://www.capgemini.com/industries/media/insights2/mobile_payments/ . 
15 Paragraph 14 Commission's Guidance note ( http://ec.europa.eu/intern al_market/bank/docs/e-
money/guidance_en.pdf ): 
'The Commission services therefore suggest that when  Member State authorities conduct an analysis of 
whether a mobile operator or other ‘hybrid’ institution is engaged in the issuance of e-money, they 
consider the form of direct payment relationship between a mobile customer and a third party vendor. This payment relationship may be established when either:  
a) there is a direct transfer of  e-value (as far as the Commission services understand, this may be 
technically feasible for mobile handsets); or  
EN 13   EN the guidance note, the e-money indu stry considers further clarification is needed to ensure that 
the same services carrying the same systemic and consumer risks are subject to the same 
rules.  
Graph 3:  Mobile subscribers in EU : prepaid and monthly paid 
Mobile subscribers: prepaid and  monthly paid (October 2007)
EU average: prepaid: 60.9% - monthly paid: 39.9%
71% 29%53%51%40%70%78%62%40%42%91%63%47%67%45%59%89%74%34%42%62%42%54%42%55%61%56%
49%60%30%22%38%58%9%58%
37%53%34%55%41%10%26%65%38%58%46%58%45%41%44%
47%
0%10%20%30%40%50%60%70%80%90%100%
BE BG CZ DK DE EE EL ES FR IE IT CY LV LT LU HU MT NL AT PL PT RO SI SK SE UKPrepaid Monthly paid 
Source: European Commission, 200816 
3.2.2.2.  Uncertainty as to the application of the EMD to electronic vouchers operators 
Different issuers of paper vouche rs (gift vouchers, meal vouche rs, etc.) have expressed an 
interest in switching their produc ts to an electronic format. In  principle, such electronic 
vouchers would seem to fulfil all the criteria of  the definition of e-money. However, operators 
such as the French Association of Service V oucher Issuers (APETDS) claim that the legal 
uncertainty created by the current regime has so far prevented its members from issuing 
electronic vouchers in Europe. 
In 2007, the European market for service vouc hers, such as meal and gift vouchers, was 
estimated at EUR 13 billion based on data provided by members of the APETDS17. Due to 
legal uncertainty regarding the a pplication of the EMD, the digi talisation of these paper-based 
vouchers has not yet been materialised (data fro m APETDS show that currently only 3 % is 
dematerialised) and a large potential for digitalisation remains.  
Applying the current directive to service vouc hers would pose problems as some of the 
features of service vouchers products (like mobi le payment products) are not compatible with 
certain provisions of the curren t E-Money Directive, such as th e restriction of activities and 
the redeemability requirement. 
                                                                                                                                                         
b) the mobile operator acts as a facilitator (or intermediary) in the payment mechanism in such a way 
that customer and merchant would also have a direct debtor-creditor relationship.' 
16 Commission Staff Working Document, Accompanying the progress report on the Single European 
Electronic Communications Market 2007 (13th Report), Volume 1, SEC(2008) 356, p. 12. 
17 Members include: Accor Services, Sodexho and Groupe Cheque Déjeuner. 
EN 14   EN 3.2.3.  The activities of EMIs are too narrowly defined 
The activities of electronic money institutions ar e restricted under Article 1(4) of the EMD to 
issuing electronic money and closely related serv ices. This restriction of activities, which was 
originally intended to ensure the financia l stability and soundness of electronic money 
institutions, poses problems for the application of the directive to 'hybrid institutions' such as 
telecom operators and retailers. This is partic ularly true for business where prepaid payment 
services represent a small porti on of their activiti es. Under an EMI license, they are not 
allowed to conduct any other business except fo r issuance of e-money and closely related 
services. As a result, they have  to split up their business in di fferent legal entities which can 
be costly and inefficient. This  provision differs from the non-excl usivity approach  of the PSD, 
where a payment institution can engage in non-p ayment services business (e.g. retailing or 
telecom activities). 
3.2.4.  Redeemability 
Article 3 of the EMD states that a bearer of electronic money ma y, during the period of 
validity, ask the issuer to redeem it at par value in coins and bank notes or by a transfer to an account free of charges other than  those strictly necessary to carry out that operation. The 
contract may stipulate a minimum threshold for redemption. The threshold may not exceed 
EUR 10. Redeemability was inserted in the EMD for consumer protection reasons, to ensure 
that customers can get at all time their money back. Other important factors were monetary 
policy concerns, as redeemability at par value en sures control of the money supply in the EU. 
Redeemability appears to pose a problem fo r Mobile Network Operators (MNOs) and 
electronic vouchers' issuers. Mobile operators are unable to split 'ex ante' customers' prepaid funds for mobile services and electronic mone y. The only way to apply this provision is to 
apply it to all the money stored on the prepai d card, whether or not it is used for prepaid 
payment services regulated under the EMD or for telecom services (voice calling, SMS and 
other telecom services) outside the scope of the EMD. This is one of the main reasons why, 
currently, their products remain outside the EMD. It is also  unclear how funds which are 
never redeemed should be treated.  
3.3. An inconsistent legal framework 
Although it is widely acknowledged that the EMD has provided non-banks with an 
opportunity to enter the e-money market-place, the review report showed that high capital 
requirements, as well as certain restricti ons and requirements imposed by the EMD, have 
hindered the development of the e-money ma rket. The adoption of the PSD, which is 
currently being transposed into national legi slation, will increase th e complexity and the 
inconsistency of the overall le gal framework and eventually lead to an absence of level 
playing field between payment institutions and EMIs. 
3.3.1.  The prudential regime 
Prudential requirements have as objective to ensure sound and prudent operations of 
electronic money institutions. At  the time of conception of th e EMD in 2000, the main points 
of reference were the then existing capital re quirements directives. The adoption of the PSD 
will allow payment institutions to conduct paym ent services under a lighter prudential regime 
than that of electronic mone y institutions under the EMD.  
EN 15   EN The review process provided evidence that certa in requirements are disproportionate to the 
risks posed by EMIs. This evidence is reinforced if the cumulative effects of the overall regime are considered: initial  capital, ongoing own funds and limitations on investments.  
a) Initial capital The current initial capital requirement of EUR 1 million  is deemed by a number of 
stakeholders to be too high and disproportionate w ith regard to the risk of the service. This 
high initial capital is an obstacle for smalle r firms wishing to apply for an EMI license. 
Graph 4:  Initial capital requirements EMD & PSD in euro 
Initial capital requirments in EURO
1.000.000
20.00050.000125.000
0200.000400.000600.000800.0001.000.0001.200.000
EMI PSD- Money remittance PSD- Mobile/digital
paymentsPSD- Other services
 
As shown in Graph 4, the initial capital requirement of EMIs is much higher in comparison 
with the equivalent requirements for payment institutions under the PSD (which vary from 
EUR 20 000 for money remittance, i.e. the sendi ng of money to someone at a distance, up to 
EUR 125 000 for other payment services). As a result, smaller firms have difficulties to apply for an EMI license.  
b) Ongoing own funds On top of initial capital requirements, EMIs ar e also required to hold own funds which, at all 
times, should not be lower than the maximum between initial capital requirements and a ratio 
of 2 % of the issued electronic money. 
The 2 % own funds requirement  does not in itself appear to have given rise to major 
difficulties for authorised EMIs, although its co mbination with other aspects of the EMD 
(e.g., initial capital, limitation of investments, restriction of activ ities) have led to complaints 
that the overall regime is excessive. As shown in  Graph 5, this is especially the case for small 
operators, with e-money issued between EU R 5 million and EUR 50 million which have 
similar capital requirement of EUR 1 milli on, representing a capital requirement of 
respectively 20 % or 2 % capital. For large oper ators, capital require ments can go up, linear 
with the float of issued e-money, to EUR 20 million. Companies with issuance of electronic 
money of less than EUR 5 million can operate under a waiver and therefore can be exempted from this requirement.  
Graph 5:  Total capital requirements in func tion of issued e-money in euro 
EN 16   EN  Tot al capi tal  r equi rement s i n functi on of issued e-money i n Mil l ion EURO
1121020
0510152025
5 50 100 500 1. 000
Issu e d  e-m o n e y in  M illio n  E UR OT o ta l c a p ita l re qu ir e m e nts  in  M
 
c) Limitations on investments 
EMIs are required to have investments which at least match their financial liabilities related to 
outstanding electronic money. The list of eligible investments is limited to the most liquid assets and fulfils an important function by pr otecting the float of electronic money issued. 
This limitation of investments  reduces the opportunity for EM Is to earn money on the funds 
they receive in return for issuing e-money, a nd puts them at a competitive disadvantage with 
fully licensed credit institutions. Bank and cred it card receivables are excluded from the list of 
eligible investments. As many customers fund thei r account with credit card  or credit transfer, 
this has resulted in a funding gap for e-money business models
 which credit e-money 
immediately, but which must wait a number of  days for receivables to be credited and 
accounted for under the float. Th erefore EMIs need to hold a dditional funds which are higher 
than the initial and ongoing capital requirements. Base d on data provided by some 
stakeholders, the own funds requirements incr ease therefore by more than 12 %. For one 
leading industry stakeholder, the ratio of own funds to risk weighted assets was 48 % while, 
under the regime applicable to credit institutions unde r the Capital Requir ements Directive, 
the ratio would have been at the level of 12–1 4 %. This was one of the reasons why this 
stakeholder decided to change  its regulatory status.  
3.3.2.  Inconsistent implementati on of some provisions 
3.3.2.1.  Inconsistent application of waivers 
Under the EMD, Member States are allowed to  waive some or all of the authorisation 
requirements for small EMIs in order to facilita te market entry and innovation by new players 
without subjecting them to the full ri gours of the authoris ation framework.  
Article 8 of the EMD stipulates that Member St ates may allow their competent authorities to 
waive the application of some or all of the provisions of the EMD a nd the application of 
Directive 2000/12/EC to EMIs in cases where at least one of three criteria18 is met, and where 
                                                 
18 The first criterion regards the maximum amount of outstanding electronic money which should 
normally not exceed EUR 5 million and never exceed EUR 6 million; th e second criterion concerns the 
acceptance of the electronic money only by subsidiaries of the institution or the parent institution; the 
third criterion concerns the accep tance of the electronic money by only a limited number of 
undertakings, which can be distinguished by their location or close financial or business relationship 
with the issuing institution. 
EN 17   EN the electronic storage device at the disposal of bearers for th e purpose of making payments is 
subject to a maximum storage amount of not more than EUR 150. 
This option has been applied inconsistently between Member States. In some, the waiver is 
granted automatically, in others it is gran ted on a case-by-case basi s, depending on waivers 
criteria which differ from one country. Some co untries (4), as shown in Annex°6 have even 
not availed themselves of the possibility of granting waivers. Finall y, the provisions of the 
directive that can be waived also differ from  one country to the ot her (see Table 3 below) 
The current situation might lead to competitiv e distortions within national borders. The 2006 
evaluation report demonstrated th at the differences between Me mber States that are most 
likely to have hindered the development of th e e-money market are: the non-implementation 
or tightening of the waiver criterion (the maximum threshol d of outstanding electronic 
money19) in some Member States; a burdensome or excessively complicated application 
process in some Member States; and proced ures in some Member States whereby the 
regulatory authorities decide on a case-by case basis which provisions can be waived. Where 
waivers have been applied, they appear to have  enabled new players to enter the market, as 
shown in the table below. 
The waiver procedure is not  considered to be burdensome and complicated in all  
Member States, but only in some of them. It  was indeed reported to  the Commission (and 
reflected in the 2006 evaluation report) that, in some countries, the application procedure is 
onerous, since applicants have to fill in a very long form. 
Table 3: Overview of application of waivers by Member States in terms of waivers criteria, 
application process and direc tive's 'waivable' provisions  
Waivers criteria 
Country 
(a) (b) (c) Application process 'Waivable directive 
provisions' 
Austria – – – N/A N/A 
Belgium 9 9 9 Not automatic Case-by-case 
Bulgaria – – – No information No information 
Cyprus 9 9 9 Not automatic No information 
Czech Republic 9 9 9 Not automatic All 
Denmark 9 9 9 Automatic All 
Estonia – 9 9 Not automatic Some 
Finland  9 9 Not automatic All 
France 9 9 9 Not automatic Case-by-case 
Germany 9 9 9 Not automatic Some 
Greece 9 9 9 Not automatic Case-by-case 
Hungary – – – N/A N/A 
Ireland 9 9 9 Not automatic Case-by-case 
                                                 
19 Article 8(1)(a) of EMD:  
'...the total business activities of the type referred to in  Article 1(3)(a) of this Directive of the institution 
generate a total amount of financial liabilities re lated to outstanding electronic money that normally 
does not exceed EUR 5 million and never exceeds EUR 6 million.' 
EN 18   EN Italy 9 9 9 Not automatic Case-by case 
Latvia 9 – – Automatic Some 
Lithuania – – – N/A N/A 
Luxembourg 9 9 9 Not automatic Case-by-case 
Malta 9 9 9 Not automatic Case-by-case 
Netherlands 9 9 9 Automatic All 
Poland – – 9* Not automatic Some 
Portugal – – – N/A N/A 
Romania – – – No information No information 
Slovakia – – – N/A N/A 
Slovenia – – – N/A N/A 
Spain – 9 – Not automatic All 
Sweden 9* 9 9 Not automatic All 
UK 9* 9* 9* Not automatic All 
Source: Evaluation report on the review of the EMD, February 2006 
3.3.2.2.  Passporting 
The passporting regime allows EM Is to go cross bor der and conduct the same business in host 
Member States as they are entitled to conduc t in their home Member State under the EMI 
licence, without additional hind rances. However, Article 2 of  the EMD refers to certain 
articles in the CRD providing fo r the authorisation of branches  in other Member States and 
setting out the scope of permitted activities. According to some stakeholders, additional 
requirements imposed in some Member States in crease the complexity and eventually hinder 
EMIs to set up branches in  other Member States.  
3.3.2.3.  Anti-Money Laundering Rules 
According to some members of the payments industry, the requirements aimed at countering 
money laundering and terrorist financing pose a pa rticular challenge in the case of electronic 
money, and have been highlighted by a number of respondents as be ing a key concern. In 
view of the low average amounts involved in el ectronic money transactions, full application 
of identification and record keeping requireme nts could render such systems uneconomic. 
The EMD contains no specific provisions covering anti-money laundering. However 
Directive 2005/60/EC on anti money laundering (AML) does introduce a simplified customer 
due diligence regime which applies to e-money,  and a similar regime has been inserted in 
Article 3 of Regulation (EC) No 1781/2006 on  information on the payer accompanying 
transfers of funds. Member States may, for e-m oney services, decide not to apply customer 
due diligence if the device cannot be recharged or if the maximum amount stored in the device is no more than EUR 150. If the devi ce can be recharged, a limit of EUR 2 500 is 
imposed on the total amount transacted in a calendar year, except when an amount of 
EUR 1 000 or more is redeemed in that same calendar year. If the se rvices provided exceed 
these thresholds, full customer due diligence is required. From a consumer's point of view, these 'Know Your Customer' (KYC) requirements prove to be cumbersome and impractical. 
For example, after two transactions, the cons umer has to undergo full KYC identification 
procedures before the next online payment ca n be effected. The identify card verification 
EN 19   EN (often by sending a copy of the ID card by post al services) procedures may take days or 
weeks, thereby adding to the consumer's inconve nience. From a business point of view, these 
requirements, and the costs associated with  addressing them, might pose a significant 
challenge to the business case for this type of services. 
3.4. Summary of problems impa ct on stakeholders  
The following table summarises which stakeholde rs are affected by the identified problems. 
Table 4: Screening of problems affec ting different stakeholders 
Stakeholders 
Enterprises Problem 
Consumers 
EMIs Waived 
institutio
ns Hybrid 
institutions 
(such as 
MNOs) Service 
voucher 
operators Credit 
instituti
ons Public 
authoriti
es 
Unclear scope & definition hampers market development 
Unclear definition of 
electronic money  9 9 9 9 9 9 
Unclear scope of EMD  9 9 9 9 9 9 
Too narrow defined 
activities of EMIs  9 9 9 9   
Application of 
redeemability by some 
business models 9   9 9   
Inconsistent legal framework  
High prudential 
requirements in terms 
of initial capital , 
ongoing capital and 
limitations of 
investments  9 9 9 9 9 9 
Inconsistent provisions 
in terms of waivers, 
passporting 9  9    9 
To stringent AML rules 9 9 9 9 9   
Main effects of existing situation 
 Limited 
availability of services
 Unclear definition & 
Prudenti
al regime 
prevent Absence 
of incentive 
to 
become EMI
 Unclarity prevents the developmen
t of prepaid 
payment services
 Unclarity prevents from 
developm
ent of dematerial
ised Limite
d compet
ition 
for banks Supervi
sion of instituti
ons 
EN 20   EN develop
ment services  
3.5. Is action necessary at EU level? 
According to the principle of subsidiarity, action at Community level should be taken only 
when the aims envisaged cannot be achieve d sufficiently by Member States alone. A 
Community-wide approach is appropriate because the applicable rules and principles have to 
be the same in all Member States in order to achieve legal certainty and a level playing field 
for all market participants. Th e proposal therefore complies with  the subsidiarity principle. 
The approach is consistent with the policies of the Financial Services Action Plan, contributing to the creation of a true internal mark et for financial services. It is consistent with 
the Lisbon agenda, to promote technological in novation and contributes to growth and jobs. 
4. T
HE OBJECTIVES  
4.1. General and specific policy objectives 
The following policy objectives are identified: 
General objective  
• Promote the emergence of a true single mark et for electronic money services in Europe. 
Contribute to the design and implementati on of new, innovative and secure electronic 
money services. Provide market access to new players and real and effective competition 
between all market participants, thereby ge nerating significant benefits to the wider 
European economy. 
Specific objectives  
• To enhance legal certainty for all service providers 
• To create a harmonised legal framework 
• To promote the development of  new and innovative services 
Operational objectives  
The specific objectives are translated in following operational objectives: 
• To clarify the definition and scope of electronic money services and electronic money 
institutions. 
• To ensure consistency with the PSD, creati ng a true level playing field for all market 
participants. 
The various levels of objectives, together with ho w they relate to each other, are presented in 
Graph 6 below. 
Graph 6:  The policy objectives and the relationships among them 
EN 21   EN 
 
4.2. Consistency of the objectiv es with other EU policies 
The objectives outlined  above are consistent with the polic ies and objectives of the European 
Commission. Indeed, their main aim is to furthe r improve the functioning of European market 
for financial services, by promoting the develo pment of new and innovative financial services 
such as e-money services. Ultimately, this should contribute to the attainment of the 
objectives of the Lisbon Agenda, i.e. higher competitiveness, faster economic growth and 
more job creation. The objectives are consistent with the Financial Services Action Plan and 
in line with the initiative to create  a Single Euro Payments Area (SEPA). 
5. THE POLICY OPTIONS AND THE POLICY INSTRUMENTS  
Based on the initial scre ening of the different options desc ribed in Annex 2 the options have 
been grouped in five 'packages'. 
5.1. The policy options and their scope 
A wide range of solutions have been consider ed to address the problems affecting e-money 
services and meet the objectives that have be en defined. The two main problems are caused 
by issues related to: 
1. The definition of e-money and scope of the EMD (first problem strand) 
2. Inadequacies in the legal framework (three  problem strands rela ting to the prudential 
regime, waivers and anti-money laundering). 
Some potential options were discarded fairly quickly. There is no real indication from the 
problem statement that more stringent legisla tion i.e. a Regulation co uld be required; nor 
would it appear that a new Direct ive is called for – if changes to legislation are needed, they 
should be achievable within the current legislat ive framework. Since th e current problems are 
EN 22   EN not really within the control of the various stak eholders, various soft-law options e.g. code of 
conduct, would also not be suitable. 
To address the issues around definition and sc ope, the most effective policy instruments 
would be tools appropri ate to providing clarif ication e.g. guidance no tes, Communication or 
to changing existing legislation e .g. amending Directive, repeal of  Directive. Tools relating to 
changing existing legislation would also be eff ective in solving the problems with the legal 
framework.  
For the four main problem strands identified20, as shown in Graph 7, four sets of options were 
identified and in total, over 20 options were retained for further consideration. These options 
are presented in detail in Annex 1. For each of the two main problems21, an outline of the 
'broad' range of options proposed is given below. 
Graph 7:  The policy options and the packages of measures 
 
Firstly, in terms of addressing the issues raised in relation to the definition of e-money and the 
scope of the EMD  the actions foreseen can be summarised as: 
a) Do nothing; 
                                                 
20 Graph 7: 1. Scope and definition, 2.1 prudentia l regime, 2.2 waivers regime and 2.3 anti money 
laundering. 
21 Graph 7: 1) Scope and definition and 2) Inconsistency between EMD and PSD. 
EN 23   EN b) Provide further guidance, clarifying what falls under the EMD, the PSD and the 
CRD; 
c) Amend the EMD or PSD; and d) Repeal the relevant provisions of the EMD. 
Secondly, to address the issues relating to th e three problem strands identified within the 
current legal framework
, the solutions considered would al l affect the existing legislation. 
Whilst the exact details of the option would depend on the problem strand being addressed 
e.g. issues relating to the pr udential regime, the 'broad' so lutions can be summarised as: 
a) Do nothing b) Align with PSD, applying prin ciples/methods proposed in the PSD 
c) Align with PSD, introduc ing new principles/methods de signed specifically for e-
money services 
d) Repeal the relevant provisions of the EMD. 
Based on an initial screening of these options  against the policy obj ectives (see Annex 2 
packages containing a selection of activities that  could be taken were identified. Rather than 
assessing individual options, the impacts of thes e packages will be evaluated later on in this 
report. The relationship between the different policy options and the packages identified is 
shown in Graph 7. 
 
5.2. The policy options grouped in packages of measures 
Based on an initial screening of  the different policy options ag ainst the policy objectives, as 
described in Annex 2, the policy options have been grouped in concrete packages which are a selection of initiatives that can be taken. The following table summarises the packages which will be evaluated further: 
Table 5:  Overview of packages 
 Package 1: 
Do nothing Package 2: 
Guidance note Package 3: 
Align with PSD 
applying 
prudential regime 
of PSD to EMIs Package 4: 
Align with 
PSD, with 
specific 
prudential 
regime for 
EMIs Package 5: 
Repeal EMD 
Definition & 
scope Definition of 
electronic money remains  
Scope of 
activities EMIs remains 
2 licences 
necessary: EMI vs. Payment Definition of 
electronic money is 
clarified for 
Prepaid Mobile Payments & 
Service 
Vouchers. 
Scope of 
activities EMIs New definition of 
electronic money is clarified for 
Prepaid Mobile 
Payments & Service Vouchers 
Scope of activities 
extended to all activities of 
payment Idem to 
Package 3 Definition of 
electronic money repealed 
Scope of 
activities EMIs repealed 
Payment 
Institutions license or 
EN 24   EN Institutions 
Redeemability 
requirements 
do not change remains. 
2 licences 
necessary: EMI 
vs. Payment Institutions 
Redeemability 
requirements do not change institutions and 
issuance of 
electronic money. 
1 licences for e-
money & payment 
services 
Redeemability 
requirements 
modified  Credit 
Institution 
license 
Redeemability 
requirements 
repealed  
Prudential 
requirements Qualitative 
prudential 
requirements 
linked to CRD 
EUR 1 million 
initial capital 
2 % ongoing 
capital 
requirements 
Bank and 
Credit cards 
receivables 
excluded from eligible 
investments  Qualitative 
prudential 
requirements 
linked to CRD 
EUR 1 million 
initial capital 
2 % ongoing 
capital 
requirements 
Bank and 
Credit cards 
receivables 
excluded from eligible 
investments  Qualitative 
prudential 
requirements equal 
to PSD 
EUR 0.125 million 
initial capital 
Ongoing capital 
based on methods 
from PSD 
Safeguarding 
requirements of 
payment 
institutions under the PSD Qualitative 
prudential 
requirements 
equal to PSD 
EUR 0.125–
0.250 million 
initial capital 
Degressive 
ongoing 
capital requirements 
Safeguarding 
requirements of payment 
institutions 
under the PSD Prudential 
requirements 
EMIs repealed.  
Waivers regime EUR 5 million 
threshold for 
waived 
institutions EUR 5 million 
threshold for 
waived 
institutions Waivers regime 
PSD: 
EUR 3 million 
threshold for waived institutions Idem 
Package 3 Waivers regime 
repealed 
Passporting Passporting 
requirements 
linked to CRD Passporting 
requirements 
linked to CRD Passporting 
requirements PSD Idem 
Package 3 Passporting 
requirements 
repealed 
AML 
requirements Maintain 
current AML 
thresholds for KYC 
requirements: 
EUR 150 
maximum 
storage on 
device 
EUR 2 500 
maximum 
yearly usage Maintain 
current AML 
thresholds for KYC 
requirements: 
EUR 150 
maximum 
storage on 
device 
EUR 2 500 
maximum 
yearly usage Increase of AML 
thresholds to  
EUR 500 
maximum storage 
on device 
EUR 3 000 
maximum yearly 
usage Idem 
Package 3 Maintain 
current AML 
thresholds for KYC 
requirements: 
EUR 150 
maximum 
storage on 
device 
EUR 2 500 
maximum 
yearly usage 
• Package 1: Keep the EMD as it is ('do nothing'  approach) 
EN 25   EN This is the so-called 'baseline scenario'. In this option there would be  no legislative proposal 
(see Options 1.1, 2.1, 2.4, 2.8, 2.12, 3.1 and 4.1 in Annex 1). 
• Package 2: Issue a guidance note on the sc ope and definition of electronic money 
Under this non-legally binding op tion a guidance note would be i ssued to clarify the current 
definition and scope of electronic money institutions (see Option 1.2 in Annex 1). The prudential regime, the waivers and AML requi rements would remain unchanged (see option 
2.1, 2.4, 2.8, 2.12, 3.1 and 4.1 in Annex 1) as they cannot be modified by a guidance note. 
• Package 3: Align with PSD, applying the pr udential regime of Payment Institutions to 
EMIs 
This option would mean the desi gn a legal framework which is c onsistent with the PSD (see 
Options 1.3, 2.2, 2.5, 2.9, 2.13, 3.2 and 4.2 in Annex 1), applying the prudential requirements 
of Payment Institutions to EMI. This coul d be implemented by amending the EMD or the 
PSD. 
• Package 4: Align with the PSD, but wi th specific prudential regime for EMIs 
(degressive ongoing ca pital requirements).  
Package 4 is almost the same as Package 3 except that Options 2.6 and 2.10 would apply 
instead of Options 2.5 and 2.9. This could be implemented by amending the EMD or the PSD 
• Package 5: Repeal the EMD directive 
Under this package, the EMD directive w ould be repealed (see Options 1.4, 2.3, 2.7, 2.11, 
2.14 and 3.3 in Annex 1).  
6. A
NALYSIS OF IMPACTS AND CHOICE OF PREFERRED OPTION (S) 
All options were first analysed in view of their potential of achieving the policy objectives 
which is described in Annex 2. Based on this initial screening, packages were designed. The 
packages are expected not to have an envir onmental impact. Only anecdotal evidence exists 
on a positive impact of Packages 3 and 4 on social inclusion and employment. In the next section, the economic impact is assessed. 
6.1. Impact of the packages 
6.1.1.  Impact of Package 1 – Keeping the current EMD as it is 
Under this scenario, no change s would be made to the EMD. As from November 2009, EMD 
and PSD will start to co-exist. The problems de scribed in Sections 3.2 and 3.3 would remain 
unaddressed (legal uncertainty, incompatibility between EMI and payment institution licence, 
inconsistency between prudential requirement s for EMIs regulated under the EMD and 
payment institutions regulated under the PSD, diverging application of waivers by Member States etc.).  
Under this scenario, we can expect that the de velopment of electronic money services in the 
EU would remain slow, and that the developm ent of new and innovative services would be 
hindered in the EU. The number of EMIs and waived institutions would be expected to 
EN 26   EN stabilise at a range of [20–25] and [127–150] re spectively and the total amount of electronic 
money in circulation would be estimated  in the range EUR [1.2–1.5] billion by 2012. 
Under package 1 none of the operatio nal objectives would be achieved. 
6.1.2.  Impact of Package 2 – Issue a guidance note on the scope and definition of 
electronic money institutions 
Based on the experience of the previous guida nce note on the applicability of the EMD to 
Mobile Network Operators issued by the Comm ission in 2005, this option is expected to 
generate limited impact on legal certainty. 
Prudential requirements can not be  modified by a guidance note. The absence of a true level 
playing field between all market participan ts would persist. The estimated number of 
institutions and issued electronic money in circulation would be similar to Package 1. 
6.1.3.  Impact of Package 3 – Align with PSD and application of the PSD prudential regime 
to EMIs 
Impact of the new definition and scope 
The main impact of having a clear definition  of electronic money, a clear scope of the 
directive and of modifying the redeemability prov ision would be to bring more legal certainty. 
In combination with allowing fo r a wider range of ac tivities under an EMI li cense, this would 
incentivise new enterprises to enter the mark et, and would contribute to an increase of 
electronic money in circulation.  
The underlying assumptions  in Option 3 are that, the proposed  modifications to the directive 
would determine new operators to enter the e-money market (supply  side), offering new 
products adapted to people's needs (demand side). In particular, we have credible expectations 
that, should the directive be cleared and less stri ngent as regards capital and activities, mobile 
network operators, service vouche rs providers ('titre s-services', 'chèques cadeaux' etc…) and 
other new entrants would enter the market.  
Since there are currently 100 mobile network op erators in the EU, 3 large service vouchers 
providers and 127 waived institutions, an increase of 20 to 125 licenced e-money institutions 
could be expected.  
– For mobile operators , the total mobile payments market is estimated at EUR 8 billion by 
2012 (source: Capgemini). This includes both 'postpaid' and 'prepaid' payment services. 
Since 60.9 % of mobile subscribers are 'prepaid  customers', the total potential of issued 
electronic money is estimated at EUR 1–6 billion.  
– The market for service vouchers  currently represents EUR 13 billion, including 'paper 
vouchers' and electronic vouchers. Current market  penetration of electronic vouchers is 
estimated at 3 % and could increase up to 30 % or more by 2012, according to the association of meal vouchers EAPTDS. This would represent additi onal electronic money 
in the range of EUR 1 to 4 billion. 
Concerning new entrants
 and existing waived institutions  applying for a full licence, the 
medium uptake scenario assumes a growth from EUR 1 to 2 billion. This assumption is based 
on the existing market which represents EUR 1 billion. 
EN 27   EN Table 6:  Estimated impact of Package 3 in terms of institutions and issued electronic money 
Estimation for 2012 
 Current 
situation Mobile 
operators Electronic 
vouchers Other new 
entrants Total impact 
Number of 
institutions 20 20–100 3–5 5–25 20–125 
Issued 
electronic 
money  EUR 1 billion EUR 1–
6 billion EUR 1–
4 billion EUR 1–
2 billion EUR 3–12 
billion 
Source: Internal Market and Services  DG, elaboration based on data from ECB, e-money association (EMA), 
APETDS and Capgemini22 
Under the new definition, an electronic money institution shall cease to be considered a credit 
institution. Funds would not  be considered deposits and would remain redeemable. E-money 
institutions can only receive funds from cons umers, transforming it into e-money and are not  
allowed to grant credit from funds received by consumers. Therefore, the total amount of 
money in circulation remains equal and e-m oney does not compromise  monetary policy. 
Impact of using the PSD prudential requirements 
The qualitative risk analysis (described in A nnex 3) comparing EMIs, credit institutions and 
payment institutions, shows that the risk presen ted by electronic money institutions' activities 
is much closely linked to the risks of payment in stitutions than to those of credit institutions. 
As the high initial capital represented an entry barrier, resulting in only  20 EMIs operating in 
a limited number of countries in the EU, a full and relevant statistical ri sk analysis could not 
be conducted. 
As electronic money held by consumers is us ually lower than EUR 150 (EUR 8 on average) 
and is used for low value transa ctions (EUR 40 on average), the ri sks related to the funds held 
by EMIs are not at all comparable with th e risks faced by credit institutions for holding 
deposits . An insolvent bank might undermine the stab ility and integrity of the wider economy 
and of the financial system. An insolvent EMI would not have any comparable impact. This 
supports a lowering of the pruden tial requirements in line with the PSD's. The main risk for 
consumers is that (unused) electronic money stor ed at an EMI is lost when an EMI becomes 
insolvent. In view of the low amounts that cons umers held at EMIs as described above and the 
direct link with executing payments (consumer s only store electronic money in view of 
conducting payment transactions within a limited timeframe) this risks and potential impact 
remains limited and currently no such cases have  been reported to the Commission services. 
Lowering the initial capital requirement  to EUR 125 000 would remove a significant entry 
barrier and enable smaller entities, with outstanding electronic money up to EUR 10 million 
(as shown in Table 7), to enter the market a nd apply for an EMI license. The initial capital 
which is currently in the range of [10–33 %] of own funds would be lowered to [3.3–4.2 %]. 
The potential impact would be that the 127 curre ntly waived institutions as well as new 
enterprises could apply for an e-money license.  
                                                 
22 Source Capgemini: http://www.capgemini.com/industries/media/consulting/solutions/mobile-
payments/ . 
EN 28   EN Table 7:  Comparison of total capital requirements  
Current method Method B PSD Issued e-money 
in million euro % million euro % million euro 
3 33 % 1.0 4.2 % 0.125 
5 20 % 1.0 4.0 % 0.200 
10 10 % 1.0 3.3 % 0.325 
50 2 % 1.0 1.5 % 0.7 
100 2 % 2.0 1.2 % 1.2 
250 2 % 5.0 1.1 % 2.7 
350 2 % 7.0 0.9 % 3.2 
Simulations of the application of the PSD  methods for ongoing capital requirements  show that 
this would lead to a decrease in ongoing funds requirements for EMIs.  
However, as shown in Annex 2, doing our si mulation, we found no direct correlation between 
the issuance of electronic money and the PSD methods. Only Method B of the PSD could be 
of indirect relevance (Annex 10) since it is based on payment volume, as consumers store 
electronic money in view of paym ent transactions. Therefore, it  would be up to the competent 
authorities to determine the appropriate ongoi ng capital requirements method for EMIs if the 
PSD methods were to be applied to EMIs. 
The specific safeguarding requirements of the PSD23 would ensure adequate safeguarding, 
replacing the current provisions on limitations of investments. 
Impact of applying the PSD's waiver regime 
Any changes in the waiver regime should be seen in the context of lowering the overall 
capital requirements. Lowering the waiver's threshold from EUR 5 million of issued electronic money to EUR 3 million would have an impact on smaller entities, which would 
have the incentive to apply for an EMI license. A EUR 3 million threshold would mean a decrease in customers concerned to the ra nge of 20 000 to 60 000, depending on whether they 
hold, in average, EUR 150 or EUR 50 (see table below).  
Table 8:  Comparison of thresholds for waived institutions 
 Threshold Number of customers 
(average 
EUR 150/customer) Number of customer 
(average 
EUR 50/customer 
Current situation 5 million and never 33 333 99 999 
                                                 
23 Funds received, 'shall be deposited in a separate acc ount in a credit institution or invested in secure, 
liquid low-risk assets as defined by the competent authorities of the home Member State' or shall be 
'insulated in accordance with national law in the interest of the paymen t service users against the claims 
of other creditors of the payment institution, in particular in the event of insolvency.' 
EN 29   EN higher then 6 million in 
terms of issued 
electronic money 
Proposal 3 million of higher of 
issued electronic money or payment volume 20 000 60 000 
Impact of Anti Money Laundering rules 
If anti money laundering rules are maintained and th resholds are increased to EUR 500, less 
online products would need to  conduct the know-your-custo mer (KYC) procedure, which 
would be more convenient for customers and less costly for businesses. As a result, the uptake 
of new and innovative online serv ices would be promoted, which could lead to new entrants 
as described above. 
6.1.4.  Impact of Package 4 – Align with PSD and apply EMI-specific prudential regime 
Only the prudential requirements would diffe r from Package 3. The impact of all other 
changes would be the same as for Package 3. Assumptions of market uptake are therefore 
similar to Package 3 
– Initial prudential requirements would be lowered from EUR 1 million to a number in the 
range of EUR 125 000–250 000. 
– For ongoing capital requirements, a new Meth od D would be designed, under which the 
own funds would follow a 'degressive' formul a, based on the issu ed electronic money 
(described in Annex 3). 
Graph 8:  Comparison of total capital requirements in million euros 
Comparison total capital requirements (in M EUR)
1111257
2,24,45,4
0,1250,2001,2
0,375 0,250 0,1503,2
2,7
1,2
0,7
0,325
012345678
3 5 10 50 100 250 350
Issued electronic money (M EUR)Total capital requirements (M EUR)Current method
New method D
method B PSD
 
EN 30   EN The graph above shows a comparison of the imp act of three different methods regarding 
initial and ongoing capital requir ements: the current EMD, the new Method D, and Method B 
from the PSD.  
Under the new Method D, the total capital follows a curve,  starting from the initial 
EUR [125 000/250 000] and growing with the el ectronic money issued. The simulation shows 
that this new method would gi ve capital requirements whic h would be lower than those 
respected by EMIs today, but still more st ringent than those deriving from the PSD.  
The total capital requirements for EMIs would remain low for small players, issuing 
electronic money up to EUR 10 million. However, mainly for larger players (with outstanding 
electronic money in the range EUR [100–350]  million, the new method would be more 
stringent than the methods for pa yment institutions under the PSD.  
Capital requirements under the new Method D ar e calculated based on estimations of payment 
volume (PV) and issued electronic money (EM). As shown in Annex 10, this ensures that 
capital requirements under the EMD would remain at  least as restrictive as those calculated 
under Method B of the PSD. It would also enab le institutions engage d partly in payment 
services and partly in issuan ce of electronic money services to take into account the total 
payment volume to determine their capital requi rements. Therefore, businesses engaged only 
in a minor part in issuance of electronic m oney and a larger part  in other payments 
transactions would find it easie r to comply with the requirements of the EMD. This would 
facilitate hybrid institutions, such as mobile  operators, to apply ongoi ng capital requirements 
to their business model. 
This package option appears to be better linked to the risks of issuance of  electronic money as 
there would remain a direct link between capital requirements and issuance of electronic money. It would also ensure th at capital requirements remain higher than these from payment 
institutions. The potential impact is estimated similar to Package 3: [20–125] EMIs and issued 
electronic money EUR [3–12] billion by 2012.  
6.1.5.  Impact of Package 5 – Repeal the EMD 
This option would lead to an in crease of legal uncertainty and create a legal vacuum. A lack 
of harmonised framework would hinder market  access of new service providers and the 
uptake of new and innovative electronic money se rvices within the EU. The electronic money 
market would stabilise at the level of Package 1. 
None of the operational objectives would be achieved. 
6.2. Impact on administrative burden 
The administrative burden of the different pack ages has been determined in Annex 4 and a 
comparison table is described in Section 7. The main impacts concerning administrative 
burden are due to the existen ce of reporting requirements for EMIs as they are currently 
considered 'special purpose credit institutions' and therefore have to comply with relevant reporting requirements as specified by Article 6 of the existing EMD, which requests that 
competent authorities verify that EMIs comply with capital requirements and limitations on investments not less then twice each year. Maintaining existing twice-a-year reporting 
requirements ensures that competent authorities  can verify compliance of electronic money 
institutions and entities with the prudentia l requirements on initia l and ongoing capital. It 
would equally facilitate the follow up of market  development of electronic money in the EU. 
EN 31   EN If the market were to develop, the total cost would increase in line with the evolution of the 
number of EMIs. Existing report ing (and thus administrative bur den) would disappear if the 
corresponding PSD provisions would be applie d to EMIs, as the PSD does not request 
reporting requirements by pa yment institutions.  
7. COMPARISON OF THE PACKAGES  
This section compares the impacts of the different packages analysed. 
7.1. Comparison on achievement of the specific objectives 
The table below summarises the ability of the packages to achieve the specific objectives. 
Table 9:  Comparison of the packages 
Objective/ 
package Legal certainty Consistent legal 
framework Promote the 
development of new 
and innovative 
services 
Keep the EMD as is 0 888  0 
Issue a guidance note 0/9 888  0 
Align with PSD, applying the 
prudential regime of the PSD to EMIs 999  99 9 
Align with PSD, applying a specific 
prudential regime for EMIs 999  999  9 
Repeal the EMD 8 9 0/8 
Contribution to objectives compared to the situation today, before transposition of the PSD.  
999  (Strong) – 99 (Moderate) – 9 (Weak) positive contribution  
888  (Strong) – 88 (Moderate) – 8 (Weak) negative contribution – 0 neutral contribution  
7.2. Comparison of the impact of the packages  
The table below summarises and compares the impact of the packages. 
Table 10:  Impact of packages 
 Package 1: 
Do nothing Package 2: 
Guidance 
note Package 3: 
Align with PSD 
applying 
prudential regime 
of PSD to EMIs Package 4: 
Align with PSD, 
with specific 
prudential regime 
for EMIs Package 5: 
Repeal EMD 
Estimated 
institutions in 
2012 EMIs: [20–25] 
Waived: [127–
150] EMIs: [20–
25] 
Waived: 
[127–150] EMIs: [125–300] 
Waived: [300–
750] EMIs: [125–300] 
Waived: [300–
750] EMIs: [20–25] 
Waived: [127–
150] 
Issued 
electronic EUR [1.2– EUR [1.2– EUR [2– EUR [2– EUR [1.2–1.5 
EN 32   EN money in 
2012 1.5 billion] 1.5 billion] 10 billion] 10 billion] billion] 
Definition & 
scope Low uptake 
remains in terms 
of issued electronic money 
and number of 
institutions 
2 licenses 
necessary = 
administrative 
burden 
MNOs prepaid 
services and 
electronic 
vouchers development are 
hindered Low uptake 
remains in 
terms of issued 
electronic 
money and number of 
institutions 
2 licenses 
necessary = 
administrative burden 
MNOs 
prepaid services and 
electronic 
vouchers development 
are hindered Ç in issued e-
money up to 
EUR 12 billion 
Ç in number of 
institutions with ≈ 
50–100 
È administrative 
burden as 1 
license sufficient 
& no need to split 
up business Idem Package 4 Low uptake or 
decrease due 
to legal vacuum  
Prudential 
requirements Absence of level 
playing field between EMIs 
and PIs Absence of 
level playing field between 
EMIs and PIs Creation of level 
playing field between EMIs and 
PIs 
Solution for 
hybrid institutions  
Same system for 
Payment Institutions and 
EMIS: more easy 
application Creation of level 
playing field between EMIs 
and PIs 
Solution for 
hybrid 
institutions 
Different system 
for Payment 
Institutions and 
EMIs: More 
complicated 
application Absence of 
specific prudential 
requirements 
for EMIs: only higher 
requirements 
for Credit Institutions 
available 
Waivers 
regime No incentive for 
waived 
institutions to 
become EMI No incentive 
for waived 
institutions to 
become EMI Incentive for 
waived institutions 
to become EMI Incentive for 
waived 
institutions to 
become EMI Waivers 
regime 
disappears. 
Unclarity for current waived 
institutions 
Passporting EMIs hindered in 
setting up branches EMIs 
hindered in setting up 
branches Passporting 
requirements PSD Passporting 
requirements PSD Passporting of 
credit institutions or 
Payment 
Institutions 
AML 
requirements Cumbersome 
procedure for 
customers and 
costly for business hinders 
take up of new Cumbersome 
procedure for 
customers 
and costly for business 
hinders take More convenient 
procedure for 
consumers and 
less costly for business due to 
increase of More convenient 
procedure for 
consumers and 
less costly for business due to 
increase of Cumbersome 
procedure for 
customers and 
costly for business 
hinders take up 
EN 33   EN services up of new 
services threshold to 
EUR 500  threshold to 
EUR 500  of new 
services 
7.3. Comparison of the impact on the stakeholders 
Following table summarises the impact of the di fferent packages on the different stakeholders 
Table 11: Screening of problems affec ting different stakeholders 
Stakeholders 
Enterprises 
Problem 
Consumers 
EMIs Waived 
instituti
ons Hybrid 
institutions 
(such as 
MNOs) Service 
voucher 
operators Credit 
instituti
ons Compet
ent 
public 
authorit
y/super
visor 
Package 1: 
Do nothing 88 
Low market 
uptake 8 8 888  888  0 0 
Package 2: 
Guidance note 88 
Low market 
uptake 8 8 888  888  0 0 
Package 3: 
Align with PSD 
applying prudential 
regime of PSD to 
EMIs 99 
Increased 
choice 99 999  99 99 8 9 
Package 4: 
Align with PSD, with 
specific prudential 
regime for EMIs 99 99 999  99 99 8 99 
Package 5: 
Repeal EMD 88 88 88 888  888  0 0 
Impact to stakeholders in comparison with the situation today, before transposition of the PSD  
999  (Strong) – 99 (Moderate) – 9 (Weak) positive impact  
888  (Strong) – 88 (Moderate) – 8 (Weak) negative impact – 0 Neutral impact 
7.4. Comparison of the administrative burden 
In the table below, an overview is given of  the administrative burden of the different 
packages. A detailed estimation of the imp act on administrative burden can be found in 
Annex 4. 
Table 12:  Impact of packages on administrative burden after transposition of PSD in 2009 
 Package 1: 
Do nothing Package 2: 
Guidance note Package 3: 
Align with PSD, 
applying 
prudential Package 4: 
Align with 
EMD, 
applying Package 5: 
Repeal EMD 
EN 34   EN requirements of 
PSD specific 
prudential 
requirements 
Member States 2 prudential 
regimes to 
support as from 
November 
2009 Idem Package 1 Same prudential 
regime for PI & 
EMI Specific 
prudential 
regime for 
EMIs 1 prudential 
regime is 
removed 
EMIs 2 prudential 
regimes Idem Package 1 1 prudential 
regime 
No reporting 
requirements 1 prudential 
regime 
Single 
reporting 
requirements Comply with 1 
prudential 
regime: PI or 
CRD 
Single 
reporting 
requirements 
Hybrid 
institutions Idem EMIs 
Split up 
business Idem Package 1 1 prudential 
regime 
No reporting 
requirements 1 prudential 
regime 
Single 
reporting 
requirements Single 
reporting 
requirements 
Member States 
with institutions 9 9 9–15 9–15 9–15 
EMIs 20 20 125–300 125–300 20 
Waived 
institutions 127 127 300–750 300–750 127 
Yearly 
administrative 
burden EUR 4–
5 million EUR 4–
5 million 0 EUR 11–
26 million EUR 3–
6 million 
Initial investment 
and compliance 
cost EUR 16 million EUR 16 million 0 EUR 46–
105 million 3.1 million 
Under Packages 1 and 2, reporting requirement s for EMIs would remain as they are. 
Therefore, as the market uptake would remain as  it is, the administra tive burden would remain 
around EUR 4–5 million.  
Under Packages 3 and 4, EMIs would be able  to issue electronic money and perform all 
payment services. Under Package 3, where th e prudential regime of the PSD is applied 
mutatis mutandis to electronic money institut ions, no specific reporting requirements would 
be required for EMIs. Under Package 4, the existing reporting requirements would be 
maintained for electronic money institutions. This facilitates a follow up of the market 
evolution and ensures follow up by competent au thorities the complian ce of electronic money 
institutions with the prudential requirements , improving the credibility of electronic money 
services. As under this scenario a medium  to high market uptake is expected, the 
administrative burden is expected to increase accordingly, up to EUR 11–26 million in recurring costs and EUR 46-105 million in initia l investment costs. Administrative burden 
goes up under Package 4 as the number of countries with institutions as well as the number of 
EN 35   EN institutions increase. The total yearly administ rative burden for an indi vidual institution (EMI 
+ waived institutions) remains stable under P ackage 4, at of EUR 28 000 per institution. 
Under Package 5 EMIs would have to apply for a license of a credit in stitution and therefore 
be subject to reporting requirements. As the repor ting requirements for credit institutions are 
higher than for electronic money institutions, it ca n be assumes that the overall administrative 
burden would be in the range of EUR 3–6 million. 
8. CONCLUSIONS  
Based on the evaluation of the packages, we cons ider that an alignment with the PSD, as 
suggested in Package 3  and Package 4, is the most appropriate way forward . 
The main advantages of Package 4 are the av ailability of a specific prudential regime 
commensurate with the risks posed by electronic money institutions and the maintenance of the existing reporting requirements for EMIs to ensure market monitoring. The disadvantage 
is a higher administrative burden, which remain s however proportionate to its objective.  
Package 3, applying the prudentia l requirements of payment institutions would have the 
advantage that it would lowe r the administrative burden as no reporting would be required. 
The main disadvantage is that this complicates  market monitoring. In addition its prudential 
regime is only indirectly linked to the risks of electronic money institutions. 
Package 1, 'do nothing' or Package 2, 'guidance note' would maintain the complexity of the 
legal framework after the tran sposition of the PSD in 2009 a nd would hinder further market 
development. Package 5, 'repeal of the direc tive' would create legal uncertainty and hindering 
the development of new el ectronic money services.  
9. E
VALUATION AND MONITORING  
A first intermediate evaluation could be performe d on the moment of the first review of the 
PSD, three years after its transposition. Second, no later than five years after implementation, 
the Commission services will present an evaluation report on the legislative initiative. Thus, the forthcoming legislation will be subject to a complete evaluation in order to assess, among 
other things, how effective and efficient it has been in terms of achieving the objectives 
presented in this impact assessment and to decide whether new measures or amendments are needed. It will also consider the integration of the Directive into the payment services 
directive.  
The main indicators that could be used durin g the evaluation are th e amount of electronic 
money in circulation, the amount  of e-money purchase transactio ns and the average value per 
transaction, as this reflects th e usage of the services by consum ers. This could be compared 
with the amount of cash in circulation and th e number of cashless pa yment transactions by 
other instruments to determine their relative  importance. The number of electronic money 
institutions and waived institut ions operating in the EU would be  monitored. To facilitate the 
monitoring and evaluation, a reporting from co mpetent authorities on the above indicators 
could be required twice a year. 
EN 36   EN BIBLIOGRAPHY  
Legislation 
Directive 2000/46/EC of the European Parlia ment and of the Council of 18 September 2000 
on the taking up, pursuit of and prudential supe rvision of the business of electronic money 
institutions, OJ L 275, 27.10.2000 
Directive 2007/64/EC of the European Parlia ment and of the Council of 13 November 2007 
on payment services in the internal market, OJ L 319, 5.12.2007 
Directive 2006/48/EC of the European Parliame nt and of the Council of 14 June 2006 relating 
to the taking up and pursuit of the business of  credit institutions (recast of directive 
2000/12/EC) 
Directive 2006/49/EC of the European Parlia ment and of the Council of 14 June 2006 on the 
capital adequacy of investment firms and cr edit institutions (recast of directive 93/6/EEC) 
Documentation 
Commission staff working document on th e Review of the E-Money Directive 
SEC(2006) 1049 of 19.7.2006 
Final report of the study on the Evaluati on of the E-Money Directive 2000/46/EC of 
17.2.2006, http://ec.europa.eu/in ternal_market/bank/docs/ e-money/evaluation_en.pdf  
Application of the E-Money Di rective to Mobile Operator s, Guidance Note of the 
Commission services of 18.1.2005, http://ec.europa.eu/inte rnal_market/bank/docs/e-
money/guidance_en.pdf  
Report on electronic money, European Central Bank, August 1998, 
http://www.ecb.int/pub/pdf/other/emoneyen.pdf  
EN 37   EN GLOSSARY  
AML Anti Money Laundering 
CRD The key Directives in the banking sector are the Capital Requirements 
Directives (CRD), which were ame nded in 2006: Dire ctive 2006/48/EC of 
the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the busin ess of credit institutions (recast of 
directive 2000/12/EC); and Direc tive 2006/49/EC of the European 
Parliament and of the Council of 14 June 2006 on the capital adequacy of 
investment firms and credit institutio ns (recast of directive 93/6/EEC) 
Credit card A credit card is a payment instrument that allows purchases within a 
certain credit limit. The balance is se ttled in full by the end of a specified 
period. Alternatively, it is partly sett led. The remaining balance is taken as 
extended credit on which the cardholder must pay interest.  
Credit transfer A payment initiated by the pa yer. The payer sends a payment instruction 
to his/her bank. The bank moves the f unds to the receiver's bank. This can 
happen via several intermediaries.  
Debit card a debit card is a payment instrume nt that allows the cardholder to charge 
purchases directly and individually to an account. 
Direct debit A transfer initiat ed by the receiver via his/her bank. Direct debits are often 
used for recurring payments, such as for utilities. They require a pre-authorisation ('mandate') by the payer. Direct debits are also used for one-
off payments. There, the payer authorises an individual payment. 
ECB The European Central Bank 
EMD Directive 2000/46/EC of  the European Parliament  and of the Council of 
18 September 2000 on the taking up, pursu it of and prudent ial supervision 
of the business of electr onic money institutions. 
EMI 'electronic money institution' me ans an undertaking or any other legal 
person, other than a credit instituti on as defined in Article 1(1)(a) of 
Directive 2000/12/EC which issues m eans of payment in the form of 
electronic money (regulated under directive 2000/46/EC, the e-money 
directive). 
KYC 'Know Your Customer'. 'KYC' requi rements in the framework of anti 
money laundering aim to identify the identity of a customer and to gather enough information about the customer to assess whether the transactions through their account or in relation to a policy are ordinary or suspicious.  
MNO Mobile network operator 
Money 
remittance Money remittance is a simple payment service that is usually based on 
cash provided by a payer to a payment service provider, which remits the corresponding amount, for example via communication network, to a 
EN 38   EN payee or to another payment service provider acting on  behalf of the 
payee.  
Passporting The right for electronic money institutions to operate cross border and 
conduct the same business in host Memb er States as they are entitled to 
conduct in their home Member Stat e under the EMI li cence, without 
additional hindrances. 
PI A 'payment institution' means a le gal person that has been granted 
authorisation in accord ance with Article 10 of Directive 2007/64/EC to 
provide and execute payment se rvices throughout the Community; 
PSD The Directive on Payment Services  (PSD) provides the legal foundation 
for the creation of an EU-wide single market for payments. The PSD aims at establishing a modern and comprehens ive set of rules applicable to all 
payment services in the European Union.  
PSGEG The Payment Systems Government Experts Group (PSGEG) is a 
consultative body composed of governm ent experts from Member States 
of the EEA, typically drawn from nati onal finance ministries and national 
central banks as well as a representa tive from the European Central Bank 
members as observers, with expertis e in the payments area with the 
objective of providing advice a nd guidance to the Commission. 
PSMG The Payment Systems Market Group (PSMG) is a consultative body 
composed of market experts, typica lly drawn from banks, enterprises, 
retailers and associations representi ng interested stakeholders such as 
SMEs and consumers, with expertise in the payments area with the objective of providing advice a nd guidance to the Commission. 
SEPA The Single Euro Payments Area (SEPA)  is an initiative of the European 
banking industry, strongly supported by the European Commission, that 
will make all electronic payments across the euro area – e.g. by credit 
card, debit card, bank transfer or dire ct debit – as easy as domestic 
payments within one country are now 
Waivers regime The possibility for Member Stat es to allow their competent authorities to 
waive the application of all or part of the procedures and conditions set 
out in some provisions of the directive. 
 
EN 39   EN ANNEX 1  
The policy options and their scope  
(1) Policy options regarding scope and definiti on of electronic money and scope of 
activities of electron ic money institutions 
• Option 1.1:  Keep the existing provisions of the EMD concerning: 1) the definition of 
electronic money; 2) the scope of activities of electronic money institutions and 3) the 
redeemability ('do nothing'). 
Under this option the current definition of electro nic money is maintained and the activities of 
electronic money institutions remain restricted  to issuance of electronic money and closely 
related services. Provisions on redeemability are maintained as they are. 
• Option 1.2:  Issue a 'guidance note' to clarify the definition of electronic money, the scope 
of activities and redeemability. 
Under this option a guidance not e would be issued by the Co mmission services. It would 
clarify that both 'cards based' electronic mone y and 'server based' electronic money fall under 
the directive and stress the 'prepaid' aspects of the services regulated. This guidance note 
would also clarify which services can be offe red under a electronic money institution license 
regulated under the EMD and which services fall under the license of payment institution 
regulated under the PSD. It would clarify the frontier between prepaid payment services and 
postpaid payment services. The guidance note w ould confirm that electronic vouchers fall 
under the EMD. Finally, the guidance note would cl arify, for the benefit of mobile operators 
and issuers of gift vouchers, how to apply th e provisions on redeemablity to their services. 
• Option 1.3:  Issue a new definition of  electronic money and elec tronic money institutions, 
extend the scope of activities authorised to electronic money institutions, modify 
redeemability requirements. This can be implemented by Amending the EMD or PSD. 
The new definition, which would have to be te chnologically neutral, would clarify that e-
money institutions can issue electronic money and all other services that payment institutions can provide under the PSD. This would enable hybrid operators such as mobile network 
operators to operate with one single license. The new definition would clarify that electronic 
vouchers fall in the scope. EMIs would also be allowed to grant credit (in the same conditions 
as payment institutions are, under the PSD ). The amendment would also clarify how 
redeemability can be applied to prepaid mob ile payment services and electronic vouchers. 
Extending the scope of activities of electroni c money institutions would also imply that 
companies engaged in other activities than issuing e-money apply the same safeguarding 
requirements as payment institutions which conduct the same activities.  
• Option 1.4:  Repeal the relevant provis ions of the directive.  
Under this option, the current legal provisions  defining electronic money and electronic 
money institutions would disappear.  
Existing electronic money institutions would ha ve to apply either for a license of payment 
institution under the PSD or fo r a license of credit institut ion. This option would equally 
repeal the redeemability provisions. To avoid the creation of a legal vacuum, the payment 
EN 40   EN services directive or the capital requirements di rective would have to be amended, in order to 
ensure that existing businesse s can continue to operate. 
(2) Policy options to ensure consistency be tween the EMD and the PSD so as to 
contribute to the creation of a true le vel playing field between all market 
participants 
(a) Policy options regarding the prudential regime 
A first set of options concerning the applic ation of qualitative prudential measures 
• Option 2.1:  Maintain the current provisi ons of the EMD ('do nothing'). 
Under this option, the current prudential regi me, which is based on the CRD, would be 
maintained. 
• Option 2.2:  Align with the PSD applying qualitativ e prudential requirements of payment 
institutions to EMIs to ensure equal treat ment between EMIs and payment institutions. 
In order to facilitate the possible future inte gration of the EMD provisions into the PSD and 
given the close interrelationship between el ectronic money and electronic payments, the 
current qualitative requirements of the EM D would be replaced  by the qualitative 
requirements applicable to payment institutions under the PSD (Articles 5, 10–15 and 17–25 under Title II of Directive 2007/64/EC). 
 
• Option 2.3: Repeal the relevant EMD provisions. 
Existing electronic money institutions would ha ve to apply either for a license of payment 
institution under the PSD or fo r a license of credit institution. Depending on their choice, the 
corresponding qualitative prudential requirements w ould be either those of the PSD or those 
of the CRD.  
A second set of options concerning the application of quantitative prudential measures on 
initial capital requirements 
• Option 2.4:  Maintain current initial capital requirements of the EMD i.e. EUR 1 000 000 
('do nothing'). 
• Option 2.5:  Apply the highest initia l capital requirement under the PSD i.e. EUR 125 000. 
• Option 2.6:  Consider e-money as a specific paymen t service with a specific risk profile 
and create an additional initial capital requirement [EUR 125 000–250 000]. 
• Option 2.7:  Repeal the releva nt EMD provisions. 
Under this option existing EMIs would have to apply either for a credit institution license 
(with initial capital requirement s of EUR 5 000 000) or for a payment institution license (with 
initial capital requirements of EUR 125 000). 
A third set of options concerning the applic ation of quantitative prudential measures on 
ongoing capital requirements 
EN 41   EN • Option 2.8:  Maintain the current approach for o ngoing capital requirements of the EMD: 
2 % of the total amount of fina ncial liabilities related to out standing electronic money ('do 
nothing'). 
• Option 2.9:  Consider that EMIs, like payment institutions, do not pose a systemic risk to 
the financial system. Therefore, the same three methods of calcu lation of own funds 
proposed under Article 8 of the PSD24 would apply mutatis mutandis to EMIs. 
• Option 2.10:  Consider e-money as a specific paymen t service with a specific risk profile 
and propose an additional method to the th ree proposed by the PSD for calculating on-
going capital requirement (Method D, described in Annex 9).  
Under this method, own funds would be calcu lated in function of the highest of the 
outstanding electronic money and payments  volume. This would ensure that capital 
requirements would be higher than Method C of the PSD, but lower than those resulting from 
the current linear method of the EMD. By taki ng into account the total payments volume, it 
would ensure that institutions  issuing electronic money and other payment services of the 
PSD can be regulated with only one formula. Me thod D would be 'degressive' in line with the 
approach for payment institutions under the PSD (Method C).  
• Option 2.11:  Repeal the releva nt EMD provisions. 
Under this option, the ongoing cap ital requirements for EMIs would be repealed. Existing 
EMIs would have to apply either for a credit institution license or for a payment institution 
license, and comply with their resp ective ongoing capital requirements. 
Policy options regarding the limitation of investments 
• Option 2.12:  Keep current investment limitations ('do nothing'). 
This option implies that only the most liquid asse ts would comply as eligible investments.  
• Option 2.13:  Apply the safeguarding requirements of  the PSD and therefore extend the 
current limitations of investments to  bank and credit card receivables.  
Under this option, some liquid assets such as bank and credit card recei vables would be added 
to the list of eligible investments. For EMIs this would decrease the 'funding gap' 
considerably. 
• Option 2.14:  Repeal the releva nt EMD provisions. 
Existing EMIs would have to apply either for a credit institution license or for a payment 
institution license, and comply with their re spective safeguarding prudential requirements. 
(b) Policy options regarding the wa iver and passporting regime 
                                                 
24 According to Article 8 of the PSD, the competen t authorities of Member States may choose between 
one of three methods: Method A: 10% of fixed overheads (admin expenses, rent, salaries, etc), Method B: Degressive percentage (from 4% to 0.25%) of amount of monthly payment transactions in 
previous year or Method C: Degressive percentage (from 10% to 1.5%) of sum of relevant indicator 
(sum of interest income, interest expense, commissions & fees, other operating income) 
EN 42   EN • Option 3.1:  Maintain the current waiver regime and passporting regime of the EMD ('do 
nothing'). 
Under this option Member States could conti nue to apply waivers up to a threshold of 
EUR 5 000 000 of issued e-money. Existing pa ssporting requirements are maintained. 
• Option 3.2:  Align the electronic money waiver regi me and passporting with the provisions 
of the PSD.  
The maximum threshold for the application of waivers would be decreased to EUR 3 000 000 
of the highest of outstanding e-money and monthly payments volume. The relationship 
between outstanding e-money and monthly pa yment volume is explained in Annex 10. 
This would ensure that the total risk of the activity is taken into account by the waiver regime. 
This option implies also that the waiver regime would become more stringe nt than it is today. 
This change should be seen in view of a lighter prude ntial regime for fully licensed electronic 
money institutions. Therefore, waived institutio ns would have an increased incentive to apply 
for a full license. 
Under this option the passporting requirement s for payment institutions under the PSD are 
applied to EMIs. 
• Option 3.3:  Repeal the relevant  EMD provisions.  
Under this option the waiver regime of the cu rrent EMD would be repealed. Presumably, the 
entire directive would be repe aled. Waived institutions would not, therefore, be able to 
become full-licensed EMIs. Existing waived institu tions would therefore have to apply either 
for a credit institution license or for a Paymen t institution license. Under this option the 
passporting provisions of EM Is would be repealed. 
(c) Policy options regarding Anti Money Laundering 
• Option 4.1:  Do not adapt AML thresholds for e-money services ('do nothing'). 
• Option 4.2:  Amend the Directive 2005/60/EC to take  into account the thresholds used in 
Articles 34 and 53 of the PSD as well as economic developments. 
The amounts of the thresholds in Article 11(5)(d) of Directive 2005/60/EC would be 
increased from EUR 150 to EU R 500 for the maximum amount stored on the device, and 
from EUR 2 500 to EUR 3 000 for the total amou nt of transactions in a calendar year.  
The current thresholds would be relaxed regard ing the ability of Member States to exempt 
EMIs from full due diligence requirements. This  would enable EMIs to design products with 
larger amount stored and enable consumers to  use the products more  intensively without 
cumbersome due diligence requirements. For EMIs this would lower also the costs of complying with the due diligence requirement.  
EN 43   EN ANNEX 2  
Initial screening of options  
– Screening of options regarding the defini tion of electronic money and scope of 
activities of electron ic money institutions 
Under Option 1.1 scenario, no changes are made to the EMD and as from November 2009, 
EMD and PSD will start to co-exist.  
First, the current 'legal uncertainty' will remain and hinder the further development of e-
money services. The unclarity regarding definiti on of electronic money and scope of activities 
of EMIs regulated under the EMD, in comp arison with scope of activities of payment 
institutions regulated under the PSD, is not  addressed. The incompatibility between an 
electronic money institution license and paymen t institution licence will not be addressed. 
Therefore, hybrid institutions, having multiple  activities (For example, MNOs' prepaid and 
postpaid services offering payments ), will be forced to split up their business in different 
entities to ensure they can develop prepaid pa yment services and other services to comply 
with the current inconsistenc ies between the current EMD a nd the PSD after transposition. 
Redeemability of funds is not addressed and this will continue to pose problems for 
application of the EMD to mobile  operators and service vouchers.  
Under Option 1.2 the Commission services issue a guidance note on the scope and definition 
of electronic money and electronic money institu tions. The guidance note will clarify how the 
provisions of the EMD have to be applied in  view of the newly adopted PSD. For business 
willing to offer electronic money services an d payment services, it should clarify how to 
operate under the two licenses (electronic mone y institutions and payment institutions). The 
guidance note could clarify how to apply the redeemability requirement more flexible to 
MNO and service vouchers.  
Based on the experience of the previous guida nce note on the applicability of the EMD to 
MNOs, this option might generate limited impact on legal certainty. According to the majority 
of the stakeholders, the prev ious guidance note had limited impact on legal certainty. 
Stakeholders expect that indivi dual interpretation of the guidan ce note by Member States will 
undermine legal certainty. Member States will be free to apply th e recommendations on 
application of redeemability to  mobile operators and service vouchers. This uncertainty will 
continue to hinder the deve lopment of new services. 
Under Option 1.3 the current 'definition of electr onic money' will be amended, to ensure that 
cards based electronic money a nd server based electronic m oney is taken into account and 
stresses the 'prepaid' character of electronic money services. 
Under this option, the 'scope of activities' of  electronic money institutions will be extend, 
aligned with the scope of activities and its re lated safeguarding requirements of payment 
institutions under the PSD. Electronic money in stitutions will be enable d to issue electronic 
money as well as all activities that payment institutions can conduct with a single license of 
an EMI. This would ensure that hybrid institutions can be accommodated under the EMD.  
'Redeemability' of funds by customers will remain at par value and the threshold, to take into 
account monetary policy considerations the maxi mum threshold for redemption is remained at 
EUR 10 to ensure consumer protection. In order to accommodate mobile operators and 
electronic service vouchers, the modalities for redemption should be left to contractual 
EN 44   EN freedom and the contract between the issuer and the holder shall clearly state the conditions of 
redeemability. 
As a result of these amendments prepaid 3rd pa rty payment services by MNOs are covered by 
the EMD. It would equally ensure that el ectronic service vouchers  are covered by the 
directive. The improved legal cer tainty would also simulate enterprises to enter the market. 
The most material impact would be that thes e services will have legal certainty and can 
pursue development and as a result, the potenti al amount of electronic money in circulation 
could increase highly, up to EUR 12 billion as  demonstrated the table below. As 60.9 % of 
mobile subscribers are prepaid, and mobile paym ents are expected to generate EUR 8 billion 
by 2012, we can estimate that a major part w ould fall under the scope of the amended EMD. 
The market for service vouchers will furthe r dematerialise and electronic vouchers can 
increase from 3 % today to 30 % or more by 2012 with the appropriat e legal framework in 
place according to service voucher issuers. Ne w entrants could generate EUR [1–2] billion 
additional electronic money in circulation. 
Table 1:  Impact of the new scope and definition on the number of EMIs a nd issued electronic 
money in circulation by 2012 
Estimation for 2012 
 Current 
situation Mobile operators Electronic 
vouchers Other new 
entrants Total impact 
Number of 
institutions 20 20–100 3–5 5–25 20–125 
Issued 
electronic 
money EUR 1 bil
lion EUR 1–6 billion EUR 1–4 billion EUR 1–2 billion EUR 3–12 billion 
Source: Internal Market and Services  DG, elaboration based on data from ECB, e-money association (EMA), 
APETDS and Capgemini25 
Under Option 1.4 the directive is repealed. This option would lead to 'an increase of legal 
uncertainty' concerning the accommodation of curre nt electronic money institutions with the 
framework of the PSD, as the ac tivity of issuance of electronic money is explicitly excluded 
from the PSD. Repealing the directive will crea te a legal vacuum, with as implication that 
national regulators will be free to impose national requirements. Therefore a guidance note should be issued to clarify how existin g electronic money institutions should be 
accommodated by the payment services directive or  the capital requirements directive. As the 
EMD is repealed, the existing overall legal fr amework in place would be simplified as only 
two regulatory frameworks (the PSD & CRD) will be in place, w ith the risk that 
Member States start to impose national requirements. 
EMIs have the option to apply for a license as  a payment institution under the PSD or to 
become a credit institution. Under the PSD, it is unclear if they will be able to continue their 
current activities. If they choos e to become a credit in stitution, they will ha ve to comply with 
more stringent capital requirements from credit  institutions. We can expect this will hinder 
                                                
 
25 Source Capgemini: http://www.capgemini.com/industries/media/consulting/solutions/mobile-payments/ 
EN 45   EN market access of new service providers and the uptake of new and innovative electronic 
money services within the EU. 
A stabilisation or a decrease in market can be e xpected in terms of the number of institutions 
and the amount of electronic money issu ed if the direc tive is repealed. 
Evaluation of the options cont ribution to the objectives: 
Table 2:  Screening of policy options  on scope and definition  
Scope and definition Legal certainty Create a consistent legal 
framework Promote the development 
of new and innovative 
services 
Option 1.1  
Do nothing 888  88 88 
Option 1.2  
Guidance note 88 8 88 
Option 1.3  
Amend definition of e-
money and scope of 
activites of EMIs 999  999  9 
Option 1.4  
Repeal EMD 88 9 8 
Contribution to objectives in comparison with the situation today, before transposition of the PSD:  
999  (Strong) – 99 (Moderate) – 9 (Weak) positive contribution  
888  (Strong) – 88 (Moderate) – 8 (Weak) negative contribution  
– Screening of policy options regarding the harmonisation of the EMD and the PSD 
with objective to create a true level playi ng field between all market participants 
(1) Screening of policy options regardin g qualitative prudential requirements 
Under Option 2.1 the qualitative prudential requirements remain linked to the capital 
requirements directive. This do es not lead to any legal un certainty. However, with the 
transposition of the PSD as from November 2009, new qualitative prudential requirements 
will come into force for payment institutions, and this leads to inconsistent overall framework. The combination of two different qualitative  prudential requirement s (one for payment 
institutions under the PSD and one for electroni c money institutions under the EMD) will add 
complexity for hybrid institutions, such as Mobi le operators, willing to apply for both licenses 
which will be subject to different prudential requirements. A complex qualitative prudential 
framework therefore will not contribute to the development of new services in the EU. 
Under Option 2.2, the current qual itative requirements which are closely related to the CRD 
are replaced by qualitative requirements for paym ent institutions under Title II of the PSD: 
Articles 5, 10–15 and 17–25 of Directive 2007/64/ EC will apply to electronic money 
institutions. This has a positive impact on lega l certainty ensuring there are only two types of 
qualitative prudential requireme nts: those for banks under the CRD and those for EMIs and 
payment institutions which would be equal under the amended EMD and the PSD. This will facilitate a possible future integration of th e EMD provisions into th e PSD and contribute to 
EN 46   EN the harmonisation of the overall legal framework. As the overall complexity will decrease we 
can expect a positive impact on the development of new services in the EU.  
Under Option 2.3, the existing electronic money institutions should apply for a license of payment institution under the PSD or apply for a license of a full blown credit institution and 
corresponding qualitative prudential requirements will apply. In the short terms this might 
lead to some legal uncertainty for existing el ectronic money instituti ons as they have to 
choose between one of the two licenses and appl y the qualitative prudential requirements of 
the chosen regime. Under this option the overall qualitative pr udential requirement framework 
will be simplified as only the PSD and the CRD will be in force. If existing EMIs have to 
become a credit institution to continue their operations, this more st ringent qualitative rules 
for credit institutions will have a negative impact on the development of new services.  
Table 3:  Screening of policy options on qua litative prudential requirements 
Qualitative prudential 
requirements Legal certainty Create a consistent legal 
framework Promote the development 
of new and innovative 
services 
Option 2.1 
Do nothing 
Maintain qualitative 
prudential requirements 
of EMD 9 88 8 
Option 2.2 
Align with PSD and 
apply qualitative 
requirements with 
reference to Title II of the 
PSD to EMIs 9 999  9 
Option 2.3  
Repeal EMD 9 9 8 
Contribution to objectives in comparison with the situation today, before transposition of the PSD:  
999  (Strong) – 99 (Moderate) – 9 (Weak) positive contribution  
888  (Strong) – 88 (Moderate) – 8 (Weak) negative contribution  
(2) Screening of policy options regarding initial capital requirements 
Under Option 2.4, the current initial capital is ma intained at EUR 1 million. This implies that 
for small entities the relative capital requirement  is high: if an amount of EUR 3 million is 
issued this represents a capital requirement of 33 % and if an am ount of EUR 5 million is 
issued this represents a capital requirement of 20 %. This is a blocking factor for small entities 
to apply for an electronic money license. If compared with payment institutions regulated 
under the PSD, where initial cap ital required is maximum EU R 125 000, this represents an 
initial capital requirement of 4 % in cas e of EUR 3 million and 2.5 % in the case of 
EUR 5 million issued electronic money. Under the PSD, small entities are therefore not 
blocked to apply for a license of payment institu tion. In view of the difference between initial 
capital for electronic money institutions and payment institutions under the PSD, maintaining 
the current EUR 1 million thresholds for initial capital leads to an inconsistent framework. 
Maintaining initial capital as is will therefor e prevent the development of new and innovative 
services . 
EN 47   EN Under Option 2.5 the threshold for electronic money institutions is lowered to EUR 125 000, 
and therefore issuance of electronic money is cons idered as 'other payment services activities' 
for which this threshold applies under the PSD. This will enable smaller entities to apply for a 
license and brings more cohe rence between EMD and PSD and therefore contributes to the 
development of new and innovative services. It brings e-money in stitutions at the same level 
as 'other payment services activities' regulated under the PSD. 
Under Option 2.6 the threshold for electronic m oney institutions is lowe red to the range of 
EUR 125 000–1 000 000, considering that electronic m oney institutions have a specific risk 
profile and therefore apply a specific initial ca pital equal or higher then this for payment 
institutions under the PSD, however lower th en the current EUR 1 million which blocks 
market entrance of small entities. This approach  brings a coherent prude ntial regime in place 
as e-money institutions will have a prudential regime more stringent then payment institutions, however lower then credit instit utions. A lower initial capital threshold will 
encourage new entities to apply for a license  and promote the development of new and 
innovative services. 
Under Option 2.7 the EMD is repealed. This will imply EMIs will have to apply for a license 
of a credit institution to maintain their curren t activities, or apply for a license as payment 
institution of the PSD, which will not enable them  to continue existing services. This implies 
that, to continue their activitie s, the initial capital of credit institutions will be applied which 
amounts to EUR 5 million. This higher initial cap ital will block the development of new 
services in the EU, and is inconsistent with the much lower initial capital requirements for 
payment services under the PSD. 
Table 4:  Screening of policy options on prude ntial requirements: initial capital 
Quantitative prudential 
requirements: initial 
capital Legal certainty Create a consistent legal 
framework Promote the development 
of new and innovative 
services 
Option 2.4 
Do nothing 
Maintain EUR 1 000 000 
initial capital 9 888  888  
Option 2.5 
Align with PSD applying 
initial capital 
requirements of PSD for 
'other service': 
EUR 125 000 to EMIs 9 99 999  
Option 2.6  
Align with PSD,and 
apply initial capital in the 
range of EUR 125 000–
250 000 to EMIs 9 999  99 
Option 2.7  
Repeal EMD 9 8 88 
Contribution to objectives in comparison with the situation today, before transposition of the PSD:  
999  (Strong) – 99 (Moderate) – 9 (Weak) positive contribution  
888  (Strong) – 88 (Moderate) – 8 (Weak) negative contribution  
EN 48   EN (3) Screening of policy options rega rding ongoing capital requirements 
The ongoing capital requirements should be consider ed in view of the lower initial capital 
requirements. Under Option 2.8 the current linea r approach is maintained. For small amount 
of issuance of electronic money, this could imply that ongoing capital requirement would be 
lower then the capital requirements under the PSD, therefore we consider it less consistent 
with the approach that prudent ial requirements should be at l east as stringent as these of 
payment institutions. In combination with lowe r initial capital maintaining the current own 
funds requirements would contribut e to the development of new services as total capital.  
Table 5: Comparison total capital requirements (ini tial + ongoing capital requirements) 
Current method Lowering initial 
capital only New Method D Method B PSD Issued e-
money 
million eu
ro % million euro % million euro % million euro % million euro 
3 33 1.0 4 0.125 5.0 0.150 4.0 0.125
5 20 1.0 3 0.125 5.0 0.250 4.0 0.200
10 10 1.0 2 0.200 3.8 0.375 2.5 0.325
50 2 1.0 2 1.0 2.3 1.15 1.0 0.725
100 2 2.0 2 2.0 2.2 2.15 1.0 1.225
250 2 5.0 2 5.0 1.8 4.40 1.0 2.725
350 2 7.0 2 7.0 1.5 5.4 0.5 3.225
1 000 2 20.0 2 20.0 1.2 11.9 0.3 4.850
Application of the current met hods A–B–C from the payment se rvices directive as proposed 
in Option 2.9, could be applied to electronic money institutions. As shown in Annex 3, which 
compares the risks of EMIs, credit institutions and payment institutions, the risk of activities of electronic money institutions is much closer  linked to the risks of payment institutions 
under the PSD in comparison with the risks of  Credit Institutions. However, as shown in 
Annex 11, where the three methods were applie d to exiting EMIs, we found no correlation 
between the three PSD methods fo r electronic money institutions. Therefore, it is up to the 
competent authorities to dete rmine the appropriate ongoing capital requirements method for 
EMIs. Overall the consistency of the system will be improved and electronic money institutions will be subject to prudential requ irements of payment institutions. The overall 
lower capital requirement will contribute to the development of new services. 
Under Option 2.10 total capit al requirements will follow a degr essive curve. Starting from the 
new lower initial capital requirement, for sma ll companies, ongoing cap ital requirements will 
be slightly higher then the under the linear me thod, and for larger enterprises, ongoing capital 
requirements will be lower then  the current one. Capital requ irements under the new method 
are calculated under the higher of payment volume and issued electronic money. Both PV & 
EM are determined as the higher of the current or the calculated as average of the preceding 
six months. This ensures that  capital requirements under th e EMD remain at least as 
restrictive as capital requirements under Method B of the PSD. It also enables for institutions engaged partly in payment services and partly in issuance of electronic money services, to 
take into account the total pa yment volume to determine capit al requirements. Therefore, 
businesses engaged only in a minor  part in issuance of electroni c money and a larger part in 
other payments transactions will be facilitated to comply with the re quirements of EMD. The 
new Method D ensures a consistent legal framew ork as it ensure more stringent prudential 
EN 49   EN requirements for electronic money institutions th en payment institutions, maintaining them 
lower then credit institutions which can provide  a much larger area of activities. The overall 
lower capital requirements will contribute to the development of new services. 
Under Option 2.11 the EMD is repealed. Theref ore electronic money institutions will not 
continue to exist and businesses will have to apply for a banki ng license with higher initial 
capital requirements and ongoing cap ital requirements. This will ove rall ensure legal certainty 
however; the high total capital requirements w ill not improve the overa ll consistency in view 
of the lower capita l requirements (initial + ongoing) capital require ments from payment 
institutions of the PSD. This  prudential framework is exp ected to hamper the further 
development of the market.  
Table 6:  Screening of policy options on prude ntial requirements: ongoing capital 
Quantitative prudential 
requirements: ongoing 
capital Legal certainty Create a consistent legal 
framework Promote the development 
of new and innovative 
services 
Option 2.8 
Do nothing 
Maintain 2 % own funds 
requirements 9 8 9 
Option 2.9 
Align with PSD, apply 
own funds requirements 
of PSD (Method A, B, C) 
to EMIs 9 9 9 
Option 2.10  
Align with PSD, apply 
specific own funds 
method D for EMIs 9 99 9 
Option 2.11  
Repeal EMD 9 8 88 
Contribution to objectives in comparison with the situation today, before transposition of the PSD:  
999  (Strong) – 99 (Moderate) – 9 (Weak) positive contribution  
888  (Strong) – 88 (Moderate) – 8 (Weak) negative contribution  
(4) Screening of policy options rega rding limitations on investments  
Under Option 2.12 existing limitation s on investments are maintain ed. EMIs are requested to 
have investments no less than their financial li abilities regarding issued  electronic money. The 
list of eligible investments is limited to the most  liquid assets and fulfils  an important function 
of protecting the float of i ssued electronic money. Debit and credit card receivables are 
continued to be excluded from eligible inve stments. As shown in Annex 12 this leads for 
electronic money institutions to the obligation to hold additional capital which could become 
more stringent then if they w ould operate under a license of a credit institution. Therefore 
maintaining these requirements does not contribute  to the consistency of the legal framework 
and the higher additional capital hinders the growth and development of new and innovative 
services. 
EN 50   EN Under Option 2.13, safeguarding requirements under the PSD are applied. According to those 
requirements, the funds that have been received,  'shall be deposited in a separate account in a 
credit institution or invested in secure, liqui d low-risk assets as defined by the competent 
authorities of the home Member State' or shall be  'insulated in accordance with national law in 
the interest of the payment serv ice users against the claims of other creditors of the payment 
institution, in particular in the event of in solvency'. This ensures adequate safeguarding 
replacing the current provisi ons on limitations of invest ments. Under Option 2.13, the 
consistency of the framework is improved and the growth and development of new services 
will not be hindered. 
Under Option 2.14, the directive is repealed. Ther efore electronic money institutions will not 
continue to exist and businesses will have to apply for a banki ng license to continue issuance 
of electronic money and apply according safegua rding requirements for funds hold, which are 
in the range of 12–14 %. As overall initial capi tal under this option will be EUR 5 million, the 
development of new services wi ll be hindered. If EMIs a pply for a license of payment 
institution under the PSD, safeguarding requirements of the PSD will be applied. 
Table 7:  Screening of policy options  on prudential requirements: limitations on investments 
Quantitative prudential 
requirements: limitations 
on investments  Legal certainty Create a consistent legal 
framework Promote the development 
of new and innovative 
services 
Option 2.12 
Do nothing 
Maintain existing 
limitations on 
investments 9 8 8 
Option 2.13 
align with PSD 
Apply safeguarding 
requirements of PSD 9 9 9 
Option 2.14  
Repeal EMD 9 9 8 
Contribution to objectives in comparison with the situation today, before transposition of the PSD:  
999  (Strong) – 99 (Moderate) – 9 (Weak) positive contribution  
888  (Strong) – 88 (Moderate) – 8 (Weak) negative contribution  
(5) Screening of policy options regard ing waivers and passporting regime 
Under Option 3.1 the existing waivers regime  under the EMD is maintained. After the 
transposition of the PSD in November 2009, two waivers regimes will exits: a waivers regime 
under the PSD and a waivers regime under the EM D. Both waivers regime have different 
thresholds and therefore the waivers regimes w ill lead to an increasing complexity and an 
overall inconsistent legal fr amework. Existing passporting regime is maintained and will 
continue to hinder se tting up of branches. 
Under Option 3.2 the waivers and passporting regi me for payment institutions is applied to 
electronic money institutions. This will simp lify the overall legal framework and ensure 
consistency. A simplified legal framework will contribute to the development of new services.  
EN 51   EN Under Option 3.3 the current waiv ers and passporting regime is repealed. Therefore existing 
waived institutions will have to apply for a lic ense of credit institutions and comply with 
according capital requirements or apply for a waiver under the PSD. For existing waived 
institutions this creates legal uncertainty as it is unsure if they will be enabled to issue 
electronic money under a waiver  from the PSD. Overall the consistency of the current 
framework is slightly improved as only two legal frameworks will be in place: a framework 
for credit institutions and a framework for paym ent institutions. However, the development of 
new services by small entities issuing electr onic money is expected to be hindered.  
Table 8:  Screening of policy options on waivers and passporting regime 
Waivers and passporting 
regime  Legal certainty Create a consistent legal 
framework Promote the development 
of new and innovative 
services 
Option 3.1 
Do nothing 
Maintain existing waivers 
regime 9 8 9 
Option 3.2 
Align with PSD: 
Apply waivers regime of 
PSD 9 9 9 
Option 3.3  
Repeal EMD 8 9 8 
Contribution to objectives in comparison with the situation today, before transposition of the PSD:  
999  (Strong) – 99 (Moderate) – 9 (Weak) positive contribution  
888  (Strong) – 88 (Moderate) – 8 (Weak) negative contribution  
(6) Screening of policy options regarding anti money laundering requirements 
Under Option 4.1 current thresholds for AM L requirements are maintained. Hereby, 
Member States may for e-money services decide  not to apply customer due diligence if the 
device cannot be recharged or if  the maximum amount stored in  the device is no more than 
EUR 150, or if the device can be  recharged, a limit of EUR 2 500 is imposed on the total 
amount transacted in a calendar year, except when an amount of EUR 1 000 or more is 
redeemed in that same calendar year. As applying the KYC requirements are considered 
cumbersome for consumers and costly to implem ent for business, this does not contribute to 
the promotion of new and innovative services. Le gal certainty and consistency remain as is. 
Under Option 4.2 Directive 2005/60/EC is amended to take into account the thresholds used 
in Articles 34 and 53 of the PSD as well as economic developments and, therefore, increase 
the amounts of the thresholds in Article 11(5 )(d) of Directive 2005/60/EC from EUR 150 to 
EUR 500 for the maximum amount stored on the device, and EUR 2 500 to EUR 3 000 for 
the total amount of transactions in a calenda r year. This will increase consistency in the legal 
framework, aligning the EMD and the PSD a nd the higher thresholds will enable the 
development of more services which do not need  to comply with KYC requirements. This is 
expected to promote the de velopment of new services. 
Table 9:  Screening of policy options on anti money laundering requirements 
EN 52   EN Anti money laundering 
requirements Legal certainty Create a consistent legal 
framework Promote the development 
of new and innovative 
services 
Option 4.1 
Do nothing 
Maintain existing AML 
thresholds 9 9 8 
Option 4.2 
Increase threshold of 
AML requirements  9 9 9 
Contribution to objectives in comparison with the situation today, before transposition of the PSD:  
999  (Strong) – 99 (Moderate) – 9 (Weak) positive contribution  
888  (Strong) – 88 (Moderate) – 8 (Weak) negative contribution  
EN 53   EN ANNEX 3  
Screening of risk profiles  
Business activity  Credit institutions: Deposit taking + payment service provision 
Systemically 
importance in the 
market (size, 
number of 
providers) Credit institutions as deposit taking institutions undertake a wide range of financial 
activities, of which the provision of payment services may be only a small part, and have 
commensurate range of skills and infrastructure. They also pursue comprehensive risk 
management policies designed to ensure fundamentally, that depositors can be confident of withdrawing their funds in full on demand. In contrast payment institutions provide 
more specialised activities and generate risks that are much narrower and easier to monitor 
and control than those across the spectrum of activities of a deposit-taking institution.  
The systemic importance of credit institutions payment operations for the payment system 
is illustrated by the enormous number of tr ansactions running through banks payment 
systems and balances held by banks. Banks ha ndle 231 billion transactions per year with a 
total value of EUR 52 trillion. The funds held by banks on customer bank/payment 
accounts amount to a total of EUR 3 165 billion.  
Deposit taking and 
related risks The nature of deposit taking as an activity, where banks take depositors' money offering a 
promise of repayment on demand and subsequently invest this money in assets less liquid 
than this promise to repay (for example making loans to consumers and businesses), and 
the systemic importance of banks to the wi der economy is reflected in the regulatory 
regime applied to them. 
Credit risk  
Operational risk 
(technical failure, 
fraud, etc.) Capital requirements have been introduced for credit institutions to protect depositors of 
the credit and operation risk credit institutions run.  
Capital charges shall ensure the viability of the single institution and ultimately the 
financial system whereby the capital charges reflect the risk exposure of the credit 
institution and shall prevent them from failure. 
Financial 
soundness/Risk of 
bankruptcy The operational risk model used for the re vised (BASEL II) solvency requirements for 
credit institutions, for example the 18 % capital charge for payment and settlement services reflects the operational risk run by credit institutions. According to BASEL II, the 
losses incurred by credit institutions from payment and settlement services merits an 18 % 
capital charge.  
This 18 % capital charge has been developed on the basis of a modelling exercise of the 
loss data of banks collected by the BASEL Committee. Therefore this ratio is only 
relevant to the particular risk profile of cred it institutions and only where the ‘standardised 
approach' is applied. It describes the substa ntial risk banks face in payments, clearing and 
settlement of payments and securities. 
Money laundering 
and terrorist 
financing Credit institutions like other financial or payment service providers handle the flow of 
funds and are therefore exposed to the risk of money laundering and terrorist financing. 
 
Business activity  Electronic money institutions  
Systemically 
importance in the 
market (size, 
number of 
providers) EMIs have a very limited market importance. Only 20 enterprises have an EMI license and 
137 companies operate under a waiver. The tota l transactions of EMIs represent less then 
1 % of the non-cash related payments in the EU.  
In comparison with banks, individual consumers hold only a limited number of electronic 
money at EMIs. Because users only use this products to perform payments the average 
amount stores is on average less then EUR 100 and for waived institutions the maximum 
EN 54   EN amount is limited to EUR 150.  
Deposit taking and 
related risks Issuance of electronic money does not constitu ted deposits. However, they are allowed to 
hold prepaid funds. Electronic money institutions are requested to have investments of an 
amount of no less than their financial liabilitie s related to outstanding money, in qualified 
liquid assets In comparison with credit institu tions, EMIs are not allowed to invest money 
in assets les liquid such as consumer or business loans.  
As consumers only hold much smaller amount of e-money institutions usually lower than 
EUR 150, and only hold funds at the e-money institutions if they are willing to perform transactions, the risks in relation to the funds ho ld by EMIs is not comparable with the risk 
related to deposits hold at a credit institutions , where deposits can represent large amounts 
for a longer timeframe.  
In contrast to an insolvent bank which might undermine the stability and integrity of the 
wider economy and the financial system, an insolvent EMI would not have any comparable impact. An insolvent EMI would not have the capacity to damage the wider 
financial system.  
Credit risk  
Operational risk 
(technical failure, 
fraud, etc.) Capital requirements have been introduced for EMIs to protect the float of outstanding 
electronic money, and therefore protect  the operational risk EMIs run.  
Due to high initial capital requirements, small EMIs, with issued electronic money of 
EUR 5 million have a capital requirement of 20 % which is higher than the 18 % for credit 
institutions. This regardless of the limitations of investments. 
Next to this, electronic money institutions sha ll have investments of an amount of no less 
than their financial liabilities related to outstanding money, in qualified liquid assets. Debit 
and Credit card receivables are thereby ex cluded from qualified liquid assets.  
As the majority of consumers use debit car ds and credit cards to add money to their 
account at EMIs, this poses additional capital requirements for EMIs which are forced to 
hold more capital (for one industry stakeholder up to 40 %) in comparison with the 18 % for credit institutions on deposits.  
Financial 
soundness/Risk of 
bankruptcy In order to ensure sound and prudent operations for EMIs are required to hold sufficient 
capital. They are equally required to have sound and prudent management, accounting 
procedures and adequate internal control measures.  
Since the introduction of the EMD no problems regarding financial soundness of EMIs nor 
from waived institutions have been reported by Member States. 
Money laundering 
and terrorist 
financing EMIs handle mainly low value payments and have therefore a limited exposure to the risk 
of money laundering (ML) and terrorist financing (TF). The e-money industry has 
however developed a detailed typologies for ML and TF as well as industry guidance for 
ML and TF. These have been in place for the 5th consecutive year.  
 
Business activity  Payment institutions  
Systemically 
importance in the 
market (size, 
number of 
providers)  The adoption of the PSD will create a new institutions, payment institutions, covering the 
following payment activities:  
1. Services enabling cash to be placed on a payment account as well as  all the operations 
required for operatin g a payment account. 
2. Services enabling cash withdrawals fr om a payment account as well as all the 
operations required for operating a payment account. 
3. Execution of payment tran sactions, including transfers of funds on a payment account 
with the user's payment serv ice provider or with another payment service provider: 
EN 55   EN - execution of direct debits, including one-off direct debits, 
- execution of payment transactions thro ugh a payment card or a similar device, 
- execution of credit transfers,  including standing orders. 
4. Issuing and/or acquiring of payment instruments. 5. Money remittance. 
6. Execution of payment transactions where th e consent of the payer to execute a payment 
transaction is given by means of any telecommunication, digital or IT device and the payment is made to the telecommunication, IT system or network operator, acting only as 
an intermediary between the payment service user and the supplier of the goods and 
services. It covers all types of payment services excep t from issuance of electronic money. Hybrid 
institutions, offering payment services and other non-payment services are equally 
covered. 
Deposit taking and 
related risks Payment institutions are prohib ited to accept deposits and are only permitted to use funds 
accepted from users for rendering payment serv ices so that custom er funds will not be 
used or mixed with funds for other business activities. 
Credit risk  
Operational risk 
(technical failure, 
fraud, etc.) Payment institutions run operational risks for the well-functioning of their systems, 
internal controls, administrative procedures etc.  
The prudential regime for payment institutions makes a differentiation regarding the type 
of activity of payment institutions. A distinction is made based on the risks of the activity, between Money remittance, Mobile services, and all other payment services, with 
respectively EUR 20 000, 50 000 and 125 000 initial capital requested Competent 
Authorities can choose the ongoing capital requirement for payment institutions out of three methods. 
Financial 
soundness/Risk of 
bankruptcy Risks of payment institutions are highly diff erent and lower then consumer deposits at 
credit institutions. 
Money laundering 
and terrorist 
financing Payment Institutions will handle mainly low value payments and have therefore a limited 
exposure to the risk of money laundering and terrorist financing. Payment institutions are 
subject to the Third Money Laundering Direc tive and will have to put in place the same 
provisions as credit institutions and electronic money institutions, applied on a risk basis. 
They will have to address the risks of m oney laundering and terrorist financing. 
 
Business activity  Mobile operators 
Systemically 
importance in the 
market (size, 
number of 
providers) The European mobile market represents 553.46 million subscribers of which 60 % of 
subscribers are prepaid and 40 % receive a monthl y bill (also referred to as 'postpaid'), and 
approximatively 100 mobile operators are operational in the EU. 
Telecom operators 'core' business is the provision of mobile voice and digital content/data 
services (90 % of total services). 
Many mobile operators offer their customers the possibility to purchase third-party goods 
and services (in particular digital content such as ring tones, logos, games, etc.) using their 
prepaid funds or via their 'postpaid' monthly bill. After the transposition of the PSD, some similar payment services, will, depending on the type of subscription (prepaid versus 
postpaid) will be regulated under different regimes: the EMD, for prepaid services, or the 
PSD for postpaid.  
Currently, only approximately 1 % of the total prepaid funds are used for third-party 
services, while the rest is spent on services offered by the mobile operator itself. 
According to Capgemini the European market for mobile payments will be worth 
EN 56   EN EUR 913 million in 2008, and are expect to rise up to over EUR 8.7 billion in 2012. 
Deposit taking and 
related risks Telecom operators are not entitled to take de posits. Under the current scope of an e-money 
license as defined in Directive 2000/46/EC  authorised telecoms might accept prepaid 
funds from their customers in exchange for e-money which can be used for payments. 
Comprehensive prudential rules are laid dow n for this case. Telecoms might offer 
remittance services which are not connected to deposit taking. In this case telecom 
operators would be faced with a ri sk similar to money remitters. 
Credit risk 
 Telecoms might offer post-paid payment se rvices, allowing customers to purchase 
products and service via mobile phone and e.g. invoice the amount to the customers via their regular phone bill. In th is case mobile operators would be faced with a credit risk. 
However, there is no risk for the user of mobile payment services to lose money. Given 
the low amounts per transaction the credit risk  for providers is marginal, in particular 
compared to the credit risks already managed today by telecom operators for their millions 
of customers without being subjected to solvency (capital) requirements. 
Operational risk 
(technical failure, 
fraud, etc.) Telecoms run, just as payment institutions, operational risks for the well-functioning of 
their systems, internal controls, administrative procedures (e.g. billing, fraud) etc. 
Telecoms are already today dea ling with. all these risk and are subject to the relevant 
legislation for telecommunication operators 
Financial 
soundness/Risk of 
bankruptcy Due to the marginal size of payment operations run by telecoms operators is seems 
inappropriate to require particular financial soundness provisions. However, in most cases 
where telecom operators have started to offer payment services they were fully compliant 
with either the e-Money Direc tive or the Banking Directive. 
Money laundering 
and terrorist 
financing The risks of money laundering and terrorist financing are only relevant for the payments 
activities of an operator not for his other activities. 
 
Business activity  SERVICE VOUCHERS OPERATORS 
Systemically 
importance in 
payments market 
(size, number of 
providers) The total market for services vouchers in EU was worth EUR 13 billion, of which 97 % 
were paper based vouchers, and 3 % electronic vouchers. The market is mainly dominated 
by a limited number (3) of companies who have a consolidated market share of more then 70 % in the EU. Electronic Vouchers are considered 'prepaid' products, where value is 
stored on a card. 
The majority of the products issued by serv ices vouchers are meal vouchers, representing 
80 % of total turnover in 2007. New services which are currently emerging are gift 
vouchers. 
Deposit taking and 
related risks Service vouchers are not allowed to take deposits.  
Credit risk  
Operational risk 
(technical failure, 
fraud, etc.) Service Voucher Operators run, just as payment institutions, operational risks for the well-
functioning of their systems, internal controls, administrati ve procedures etc. Service 
Vouchers are already today dealing with these risks for their paper-based products.  
Financial 
soundness/Risk of 
bankruptcy Currently, for paper-based products no capital requirements are made to service vouchers 
operators. Therefore, it seems inappropriate to  install high capital requirements for the 
same products in an electronic version. 
Money laundering 
and terrorist  Service vouchers operators are handle financ ial transactions, usually from low value and 
have therefore a limited exposure to the risk of money laundering and terrorist financing. 
EN 57   EN financing 
 
Business activity  Money remittance 
Systemically 
importance in 
payments market 
(size, number of 
providers) Money remittance systems are classified as systemically not important payment 
systems26. A two tear structure of the money remi ttance sector can generally be found in 
most Member States: consisting of officially  registered larger internationally operating 
remitters and a majority of small remitte rs operating without license. These small 
remitters operate in most cases in a limited network of friends and families (often 
immigrants or socially underp rivileged groups with no acces s to the banking system) and 
provide remittance services as a non-for-profit or low profit activity associated with other 
businesses (e.g. related activities such as bureaux de change, travel agencies and import-
export businesses, or unrelated activities such as shops or taxi companies). The number of 
officially operating money remitters in Member States (a range of five in some 
Member States to 1 435 in the UK) depends largely on the type of prudential regime adopted. Member States with a registration regime, focussing mainly on prevention of 
money laundering have a higher number of registered providers than countries which 
generally demand a banking license. At European level, the total number of money remitters seems to be represented by 2000 of actors (most of them small remitters). A 
Commission study based on Member States records shows some EUR 17 billion flowing 
from the EU to non-EU countries. This figure highlights the core role money remitter's play in facilitating cross-border payments in particular to developing countries 
(remittance flows are the second largest fina ncial flow to developing countries after 
foreign direct investment, more than double the size of net official finance) – a market segment only insufficiently served by banks. 
Deposit taking and 
related risks In contrast to deposit taking or issuing e-money, money remitters offer a straight 
remittance service that involves taking in money to pay out to a named beneficiary 
usually within 24 hours. The threat of a 'bank run' – deposit makers requesting their funds back at the same time and the bank having inadequate capital reserves to comply – is not 
applicable to money remitters. The remitter does not invest the remittance in between 
receiving it and paying it out, and usually ma kes the funds available for collection within 
approximately 20 minutes of being entered onto the accounting system. The average 
transactions going through money remittance systems are of relatively low value (average 
EUR 200–400 depending on country). If an individual money remitter were to become 
insolvent and unable to pay out remittances, consumers would stand to loose 
comparatively small amounts of money. In contrast to an insolvent bank which might undermine the stability and integrity of the wider economy and the financial system, an 
insolvent money remitter would not have any comparable impact. An insolvent money 
remitter would not have the capacity to damage the wider financial system. 
Credit risk Money remitters do not face a credit risk , as the customer will make the funds available 
before the transfer takes place. Customers face a short-term credit risk during the time 
they have handed over funds and until the tr ansfer is completed, which is almost 
instantaneously. This credit risk is in no ways different from th e credit risk present 
everyday in the economy where all transactions  which are not settled in a payment versus 
delivery mode are subject to a short-term cred it risk. It is deemed inappropriate to impose 
on all economic actors therefore solvency requirements. The same rationale should apply on the business of money remitters where firs t payment takes place and shortly afterwards 
delivery. Settlement risks are very short-term ed as most of the transactions are settled 
immediately. Settlement obligations to others regularly do not exist as money remittance systems are usually closed systems. Where they  do exist it is only as intra-system credit 
(credit towards agents) or exceptionally as  a participant in a clearing and settlement 
system, which usually should be addresse d by system-internal and adequate risk 
                                                 
26 Based on the G10 standards entitled 'Core Principles for Systemically Important Payment Systems 
(Core Principles)', which were adopted by the Governing Council of the ECB in January 2001. 
EN 58   EN management procedures. 
Operational risk 
(technical failure, 
fraud, etc.) Money remitters face like other payment servi ce providers operational risks depending on 
the size of their operations due to technical fa ilure of systems (own IT systems are mostly 
used by large but not by small remitters), legal compliance, fraud, etc. Money remitter's 
operational risk is however, very narrow as  the systems are usually closed systems (no 
other parties involved) and it therefore does not create counterparty risks or chain effects. 
This is in stark contrast to the banks payment system, which is embedded in a multilateral 
network, and creates substantial counterparty risk and chain effects which could potentially destabilise the financial system. 
Financial 
soundness/Risk of 
bankruptcy Available evidence and reports from money re mitters suggest that money remitter employ 
sufficient capital to provide payment services with an adequate level of reliability and 
financial soundness and to cover both their risk towards customers and their operational 
risk. Different examples show that in a comparison with the revised banking capital 
requirements money remitters' actual capital stands far above 100 %. It implies that money remitters devote to payment services a capital higher than banks under the banking 
capital requirements. Insolvency records of Memb er States show that so far there were no 
cases of bankruptcy of money remitters reported including any negative consequences for the stability of the financial system. 
Money laundering 
and terrorist 
financing Money remitters are dealing with the transfers of funds and risk therefore to be used for 
money laundering or terrorist financing purposes. 
EN 59   EN ANNEX 4  
Screening of administrative burden  
Article 6 of the existing EMD states that compet ent authorities shall verify that EMIs comply 
with capital requirements and limita tions on investments 'not less  then twice each year'. The 
2006 review report showed that most Member Stat es have kept the minimum frequency of the 
EMD, while several others require EMIs to report more often. In on e case (Poland), the 
National authorities reported th at EMIs would have to report only once a year. The following 
table explains the report ing requirements in the different Member States: 
Country Reporting requirements Country Reporting requirements 
Austria Quarterly Latvia Twice a year 
Belgium Twice a year Lithuania Quarterly 
Bulgaria No information available Luxembourg Twice a year 
Cyprus Twice a year Malta Monthly 
Czech Republic Twice a year Netherlands Monthly/Quarterly 
Denmark Twice a year Poland Once a year 
Estonia Not specified Portugal Twice a year 
Finland Twice a year Romania No information available  
France Twice a year Slovakia Quarterly 
Germany Monthly Slovenia Twice a year 
Greece Twice a year Spain Not yet specified 
Hungary Twice a year Sweden Twice a year 
Ireland Twice a year UK Twice a year 
Source: European Commission, Evaluation report EMD, 200627 
Calculation of the administrative  burden of the e-mone y directive, in relation to the different 
policy options is based on following assumptions:  
• Number of current EMIs and waived in stitutions (based on data provide from 
Member States), is estimated at 20 EMIs and 127 waived institutions currently operating in 
the EU. 
• The main drivers of administrative burden fo r EMIs are the authorisation procedures, 
reporting requirements.  
                                                 
27 In 2008 no EMIs were reported in Poland. 
EN 60   EN • Reporting costs for EMIs are based on a bi -yearly reporting requirement which was 
observed during the 2006 review as the averag e reporting requirement in the majority of 
the Member States28.  
Administrative burden for public authorities in Member States 
Cost of reporting requirements for public auth orities in Member States are estimated on the 
basis of an on an investment cost of adapta tion of the reporting system of EUR 0.75 million 
for small Member States and EUR 1 million for large Member States and a yearly depreciation of 15 % and a main tenance cost of 10 % of invest ment corresponding in a yearly 
recurring cost of EUR 187 000 or EUR 250 000. Only Member St ates which EMIs or waived 
institutions (currently 9) are assumed to invest in the adap tation of reporting systems, for 
other Member States, no cost s were taken into account.  
Treatment of reporting of individual businesse s is assumed to consume 7 hours by a civil 
servant per institution (both for EMIs and waived institutions). This includes receive of data 
(1 hour), treatment and adjustment  of data (3 hours), analysis of history (1 hour), draft of 
status report (1 hour), fil ling of report (1 hour).  
Administrative burden for EMIs and waived institutions 
Hourly costs of reporting for businesses are based on average hourly wages of financial 
intermediaries as approxima tion for accountants or bookkeepers,  who will presumably do the 
reporting. However, it could be reasonably expect ed that junior employees undertake most of 
the activities. There is thus a risk of overestimation in hour ly tariffs, for some Member States, 
as in some instances the hourly wage of a j unior employee could be half of the national 
average.  
It has been estimated that EMIs and waived institutions need to allocate a financially qualified 
employee (e.g. a junior accountant) for one work ing day (7.5 hours) to obtain the requested 
information. This activity is c onducted twice a year to comply  with the bi-annual reporting 
requirement. 
This 7.5-hour estimate comprises th e following main types of action: 
(1) familiarising with the information obligation (1.0 hours); 
(2) retrieving information from existing data (2.5 hours); 
(3) adjusting existing data (1.5 hours); 
(4) filling forms (1.0 hours); 
(5) holding internal meeting to veri fy submission (1.0 hours); and 
(6) submitting information and filing (0.5 hours). 
                                                
 
28 Some Member States requested more frequent reporting, which is usually based on the rationale to keep 
reporting requirements in line with those of traditiona l credit institutions. For example, Austria requests 
a quarterly reporting to the Financial Markets Superv isory Authority and the Austrian National Bank. In 
the Netherlands EMIs have to submit their balance sheets monthly and have to report on more specific 
issues quarterly. 
EN 61   EN To comply with reporting requirements, EMIs are expected to invest in a new reporting 
system or adapt their existing reporting system . Investment cost of adaptation of reporting 
systems is estimated at EUR 150 000 for EMIs and EUR 50 000 for waived institutions, this 
is a fraction of a balance of payment reporting system from banks which is estimated at 
EUR 500 000. Annual depreciation of capital is es timated at 15 % and maintenance cost 10 % 
of initial investment, leadi ng to a yearly recurring cost of EUR 37 500 for EMIs and 
EUR 12 500 for waived institutions  
Estimated market uptake  
To determine the impact of the reviewed directive assumptions were made regarding the 
potential uptake as shown in the table below. Cu rrent market uptake is c onsider low, with 20 
EMIs and 127 waived entities operating in only ni ne countries. A scenario of medium market 
uptake extends the number of EMIs to 125 and waiv ed institutions to 250,  operating in a total 
of 15 Member States. Under this  scenario, mobile telecom ope rators and vouche rs operators 
are expected to apply for an EMI license to offer prepaid mobile payment services and a 
license for payment institution for their postp aid service. A high market uptake scenario 
considers that 300 EMIs and 750 waived instituti ons would be operating in all Member States 
of the EU. 
Table 1:  Estimated market uptake of electr onic money institutions in the EU 
 Current situation 
(Low market uptake) Medium market uptake High market uptake 
Number of countries with 
EMIs or waived 
institutions 9 15 27 
Number of EMIs 20 125 300 
Number of waived 
institutions 127 250 750 
Administrative burden  
Based on the assumptions above, th e current administrative burden of the e-money directive is 
estimated at EUR 4.2 million, which is a yearly  recurring cost for public authorities in 
Member States and businesses. As the actua l costs may vary among Member States, we 
estimate the realistic range of the current administrative burden is EUR 4–5 million29.  
Table 2:  Estimate yearly administrative bur den of the e-money directive in 2007 
 Number of institutions (2007) Estimated yearly administrative burden (EUR) 
Country EMIs Waivers Total MS EMIs Waived 
institutions 
                                                 
29 For small Member States such as Cyprus, this way of calculating might have overestimated the cost for 
the Member States as investment costs for ad apting the reporting system might have been 
underestimated and for larger Memb er States, such as UK with a la rge adoption of EMIs and waived 
institution, the administrative costs might have been underestimated.  
EN 62   EN Belgium 0 5 255 546 191 282 0 64 265 
Cyprus 1 0 226 029 187 986 38 044 0 
Czech 
Republic 0 54 879 845 199 326 0 680 519 
Denmark 0 7 280 561 191 292 0 89 269 
Germany 1 7 320 242 192 362 38 547 89 333 
Italy 3 0 306 031 190 345 115 686 0 
Netherlands 1 5 294 701 191 918 38 737 64 046 
Sweden 0 3 207 269 187 500 0 19 769 
UK 14 46 1 413 337 287 554 539 155 586 627 
Total EU 20 127 4 183 561 1 819 564 770 169 1 593 828 
Norway 3 1 233 922 188 403 26 011 19 508 
Under a scenario of medium market uptake , with EMIs and waived institutions operating in 
15 Member States, total overall yearly ad ministrative burden would increase up to 
EUR 11 million . This is the medium take up scenario in the table below. Under a scenario of 
a high market uptake , 300 EMIs and 750 waived institutio ns operating and market presence 
in all the Member States of the EU would l ead to a yearly administrative burden of 
EUR 26 million . 
Table 3:  Estimate yearly administrative burden of  the e-money directiv e depending on market 
uptake 
 Current 
situation 
(million euro) Medium 
(million euro) High 
(million euro) 
Total administrative burden EU 4.2 11.0 26.8 
Member States public authorities 1.8 3.0 5.7 
EMIs 0.8 4.8 11.6 
Waived institutions 1.6 3.2 9.5 
Next to this yearly recurring administrative bur den, the initial investment cost to set up the 
prudential regime for EMIs is estimate at EUR 16.6 million. This set up costs includes the 
setting up an execution of application process to obtain a license as EMI or to become a 
waived institution. Another element of the se t-up cost is the investment linked to the 
adaptations of reporting systems by Member St ates and businesses. This investment cost 
should be considered as a 'sunk cost', as this it has been incurred to set up the existing system 
in Member States with electronic money institutions.  
Table 4:  Estimated initial investment cost to comp ly with e-money directive by Member State  
EN 63   EN  Number of institutions 2007 Estimated initial investment cost (EUR) 
Country EMIs Waivers Total MS EMIs Waived 
institutions 
Belgium 0 5 1 012 824 755 042 0 257 782 
Cyprus 1 0 902 629 750 486 152 144 0 
Czech 
Republic 0 54 3 520 794 765 768 0 2 755 026 
Denmark 0 7 1 114 447 755 055 0 359 392 
Germany 1 7 1 268 345 756 171 152 647 359 527 
Italy 3 0 1 210 831 752 845 457 986 0 
Netherlands 1 5 1 165 673 755 523 152 837 257 314 
Sweden 0 3 831 330 751 747 0 79 583 
UK 14 46 5 544 131 1 045 860 2 136 555 2 361 716 
Total EU 20 127 16 571 004 7 088 496 3 052 169 6 430 339 
Norway 3 1 1 086 378 752 203 307 833 26 342 
Under a scenario of medium  market take up, initial investment could reach up to 
EUR 43.4 million in November 2009. Under a more a ggressive scenario of a high market take 
up with electronic money institutions operating  in all Member States, estimated investment 
cost would amount up to EUR 105 million. 
Table 5:  Estimated initial investment cost to comply with e-money directive depending on 
market uptake 
Million euro Current 
situation 
(million euro) Medium 
(million euro) High 
(million euro) 
Initial investment cost 16.6 43.4 105.2 
Member States 7.1 11.5 21.0 
EMIs 3.1 19.1 45.8 
Waived institutions 6.4 12.8 38.5 
In the table below, an overvie w is given of the impact of  administrative burden of the 
different packages.  
Table 6:  Impact of packages on administrative bu rden after transposition of PSD in 2009 
 Package 1: 
Do nothing  Package 2: 
Guidance note  Package 3: 
Align with PSD 
applying 
prudential Package 4: 
Align with 
PSD, with 
specific Package 5: 
Repeal EMD  
EN 64   EN regime of PSD 
to EMIs  prudential 
regime for 
EMIs 
Member States 2 prudential 
regimes to 
support as from 
November 
2009 Idem Package 1 Same prudential 
regime for PI & 
EMI Specific 
prudential 
regime for 
EMIs 1 prudential 
regime is 
removed 
EMIs 2 prudential 
regimes Idem Package 1 1 prudential 
regime, 
No reporting 
requirements 1 prudential 
regime, 
Single 
reporting 
requirements Comply with 1 
prudential 
regime: PI or 
CRD 
Single reporting 
requirements 
Hybrid institutions Idem EMIs 
Split up 
business Idem Package 1 1 prudential 
regime, 
No reporting 
requirements 1 prudential 
regime 
Single 
reporting 
requirements Single reporting 
requirements 
Member States 
with institutions 9 9 15–27 15–27 9–15 
EMIs 20 20 125–300 125–300 20 
Waived 
institutions 127 127 300–750 300–750 127 
Yearly 
administrative 
burden EUR 4–
5 million EUR 4–
5 million 0 EUR 11–
26 million EUR 3–
6 million 
Initial investment 
and compliance 
cost EUR 16 million EUR 16 million 0 EUR 46–
105 million EUR 3.1 million 
As from November 2009, in the 'Do nothing' a nd 'Guidance note' packages, EMIs will be 
requested to become payment institutions a nd therefore have a double license. Under this 
scenario, reporting requirements for EMIs will  remain as is as there are no additional 
reporting requirements for payment institutions. Th erefore, as the market uptake will remain 
as is, the administrative burden will remain at EUR 4–5 million.  
Under Packages 3 and 4, only a single license is  requested for EMIs, as they would be enable 
to conduct issuance of electronic money and all payment services. This will avoid that EMIs 
would need to apply for a second license. Unde r Package 3, where the prudential regime of 
the PSD is applied to electronic money instit utions, EMIs. As under the PSD no reporting 
requirements are requested, the administrative bu rden would be reduced to a strict minimum. 
The disadvantage of this appro ach is that central banks woul d be hindered in monitoring the 
evolution of the electronic money market. Unde r the specific regime of Package 4, reporting 
requirements would be maintained for electro nic money institutions. Maintaining existing 
twice a year reporting requirements ensures that  competent authorities can verify compliance 
of electronic money institutions and entities with the prudential requirements on initial and 
EN 65   EN ongoing capital, improving the cred ibility of electroni c money services. It would equally 
facilitate the follow up of market development of electronic money in the EU. As under this 
scenario a medium of high market uptake is  expected, increasing the EMIs and waived 
institutions operating in an in creasing number of Member Stat es, the administrative burden is 
expected to increase accordingly up to EUR 11–26 million in recurring cost and EUR 46–
105 million in initial investment cost. 
Under Package 5, repealing the EMD, EMIs woul d have to apply for a license of a credit 
institution and therefore be subject to reporting requirements. Under this scenario, the market 
uptake is expected to be stabilising. For Member  States only the reporting and authorisation 
system for credit institutions would be in pl ace, but reporting tasks would maintain. As the 
reporting requirements for credit institutions are higher then for electronic money institutions, 
we estimate that the overall administrative burden will be in the range of EUR 3–6 million.
EN 66   EN ANNEX 5  
Overview of consultative work  
Date Item 
May 2004 A consultation paper on the treatment of mobile operators under the E-money Directive 
2000/46/EC was published, 60 contributions were received 
January 2005 A Guidance note was issued on the ap plication of the E-Money Directive 2000/46/EC to 
mobile operators 
July 2005 Public consultation on the review of the e-money directive was launched, and 58 
contributions were received. 
January.2006 Final report of the external study on the review of the e-money directive was published 
July 2006 Commission Staff working document, SEC(2006)1049, on the Review of the E-Money 
Directive 2000/46/EC was published  
December 2007 The intentions on th e Commission services on the review  of the e-money directive were 
discussed with the Member States (PSGEG ), payments industry (PSMG), ECB and 
within the Commission 
January 2008 Meeting with the e-money industry to discuss the way forward on the review of the e-
money directive 
February 2008 An inter-service working group was es tablished, with particip ation of the Secretariat-
General and Competition DG, Informatio n Society and Media DG, Economic and 
Financial Affairs DG, to disc uss the impact assessment.  
March 2008 The draft provisions on the review of the EMD were discussed with the Member States 
(PSGEG)30 , payments industry (PSMG)31 and ECB 
April 2008 A specific bilateral meeting was held with the ECB  
 
                                                 
30 The Payment Systems Government Experts Group (PSGEG) is a consultative body composed of 
government experts, typically drawn from national fi nance ministries and national central banks as well 
as a representative from the European Central Bank as  an observer, with exper tise in the payments area 
with the objective of providing advice and guidance to the Commission. 
31 The Payment Systems Market Group  (PSMG) is a consultative body composed of market experts, 
typically drawn from banks, corporates, retailers and associations representing interested stakeholders 
such as SMEs and consumers, with expertise in the payments area with th e objective of providing 
advice and guidance to the Commission. 
EN 67   EN ANNEX 6  
Number of electronic money issuers in EU  
Table 1:  Number of electronic money i ssuers as of end 2005 and end 2007  
f 2005 2007 
Country ELMIs Waivers EMIs Waivers EMIs Waivers 
Austria 0 N/A 0 N/A 
Belgium 0 0 0 5 
Bulgaria N/A N/A 0 0 
Cyprus 0 0 1 0 
Czech Republic 0 24 0 54 
Denmark 1* at least 3 0 7 
Estonia 0 0 0 0 
Finland 0 0 0 0 
France 0 0 – – 
Germany 1 4 1 7 
Greece 0 0 0 0 
Hungary 0 0 – – 
Ireland 0 0 0 0 
Italy 2** 0 3 0 
Latvia 0 2 – – 
Lithuania 0 N/A 0 0 
Luxembourg 0 0 0 0 
Malta 0 0 – – 
Netherlands 1 at least 5 1 5 
Poland 0 0 0 0 
Portugal 0 N/A 0 N/A 
Romania N/A N/A 0 0 
Slovakia 0 N/A 0 N/A 
Slovenia 0 N/A 0 N/A 
EN 68   EN f 2005 2007 
Country ELMIs Waivers EMIs Waivers EMIs Waivers 
Spain 0 0 0 0 
Sweden 0 1 0 3 
UK 4 33 14 46 
Total EU 9 72 20 127 
Norway 3 1 3 1 
Source: Evaluation of the E-money Directive, Final report 2006, Reponses from Member States in April 2008. 
Notes: * The Danish ELMI (PBS Danmønt) closed down at the end of 2005  
** Although licenses have been granted, the Italian ELMIs were not yet active end 2005  
*** N/A denotes 'not applicable' because  the country has no waiver regime  
**** Romania an Bulgaria were  not yet EU member end 2005  
***** From France, Malta and Latvia , no data were received in 2008 
EN 69   EN ANNEX 7  
List of licensed EMI end 2007  
Table 1:  List of licensed e-money institutions end 2007 
Company name Country 
CSC24Seven.com Limited Cyprus 
NCS Mobile Payment Bank GmbH Germany 
CARTALIS IMEL SPA Italy 
IMEL.EU SPA Italy 
MOBILMAT IMEL SPA Italy 
Interpay elektronische geldinstelling B.V NL 
APS Financial Limited (21/06/07)  UK 
Blackhawk Network (UK) Ltd (09/07/07)  UK 
Citadel Commerce UK Ltd (30/11/06)  UK 
ClickandBuy (Europe) Ltd (19/11/06)  UK 
Costa Card ELMI Limited (12/10/07)  UK 
FirePay UK Ltd (19/12/06)  UK 
Google Payment Limited (19/03/07)  UK 
G-T-P financial Services Ltd (11/09/07)  UK 
Moneybookers Limited (05/02/03)  UK 
Neteller (UK) Ltd (20/10/04)  UK 
PrePay Technologies Limited (20/03/03)  UK 
Smart Voucher Limited (24/07/06)  UK 
Starbucks Card Europe Ltd (19/09/06)  UK 
Vincento Payment Solutions Limited (07/03/08) UK 
Source: Data provided by Member  States' public authorities, 2008 
EN 70   EN ANNEX 8  
Evolution of Electronic Commerce and Cards based electronic money in EU  
The graph shows that electroni c commerce has been growing steadily the last years and 
currently amounts to 4.2 % of  turnover of enterprises in the EU. As new types of server-based 
electronic money is used as an alternative to credit cards and cr edit transfers to purchase via 
the internet, this gives a reference for the poten tial market take-up for server based electronic 
money.  
Graph 1: E-commerce via internet – percentage of enterprises total turnover from e-
commerce in EU 27 
E-commerce via Internet 
-Percentage of enterprises' total turnover from e-commerce via Internet in EU27
2,1%2,7%4,2%
4,0%
0,0%0,5%1,0%1,5%2,0%2,5%3,0%3,5%4,0%4,5%
2004 2005 2006 2007% of enterprises turnover from e-commerce via internet
 
Source: Eurostat 2008 
The graph below shows the evolut ion of card based e-money in circulation issued by credit 
institutions. The data show an annual increas e of approximately 20 % during the last 3 years 
although growth seems to slow down in 2007. Although the growth is relative high in 
percentage, the total issued electronic money in circulation issued by banks remains low in 
comparison with the EUR 637 billion cash in circ ulation in EU in August 2007. Beginning of 
2008, the total issued electronic mone y in circulation was EUR 717 million.  
Graph 2: E-money issued by credit institutions in circulation in the euro area 
EN 71   EN  Total  iss ued c ar ds based  e- m oney in ci r culat ion i n t he eur o ar ea
(€ M il l ions,  not seas onall y adj ust ed; end o f per iod)
010 020 030 040 050 060 070 080 090 0
19 97 Se
1998Ja
199 8Ma
19 98Sep
1999Ja
19 99 Ma
1 999 Se
2000Ja
2000 Ma
20 00Sep
2001 Ja
200 1 Ma
2001Se
200 2Ja
2002Ma
200 2Sep
20 03 Ja
200 3Ma
2 003 Se
20 04 Ja
2004Ma
20 04Se
200 5 Ja
2005Ma
2 0 05Se
2006Ja
2006 Ma
20 06 Sep
2007 Ja
200 7Ma
20 07Sep
2008Ja
 
Source: ECB Blue Book 2008  
EN 72   EN ANNEX 9  
Method D for calculation of own funds  for electronic money institutions  
Under the new method D, electronic money institu tion’s own funds shall amount to at least to 
the sum of the following elements  
(a) 5 % of the slice of electronic money up to EUR 5 million, plus (b) 2.5 % of the slice of electronic money above EUR 5 million up to EUR 10 million, plus 
(c) 2 % of the slice of electronic money above EUR 10 million up to EUR 100 million, plus 
(d) 1.5 % of the slice of electronic m oney above EUR 100 million up to EUR 250 million, 
plus 
(e) 1 % of the slice of electronic money above EUR 250 million, where electronic money represents the higher of outstanding electr onic money and payment 
volume defined as following:  
Outstanding electronic money means the mont hly average of the preceding 12 months' 
financial liabilities related to  outstanding electronic money 
Payment volume means the monthly average pa yment volume of the preceding 12 months; 
EN 73   EN ANNEX 10  
Relationship between payment volume and issued electronic money  
It the relationship between electronic money (EM) and payment volume (PV) is based on the 
(monthly) turnover of electronic mo ney as shown in the table below 
Table 1:  Relation issued electroni c money and payment volume 
Example 
 Turnover of 
electronic 
money Impact Turnover of 
EM EM 
(million euro) PV 
(million euro) 
Low <1 EM>PV 0.5 1 0.5 
Medium 1 EM=PV 1 1 1 
High >1 EM<PV 10 1 10 
If the monthly turnover of electronic money is low, the monthly outstanding electronic money 
is higher then payment volume. In this situat ion, the outstanding electronic money is the more 
relevant indicator of the risk of  the activity. Of the other hand if the monthly turnover is high, 
the issued electronic money is lower then th e monthly payment volume. In this situation, 
payment volume is the more rele vant indicator for electronic  money. Based on data provide 
from the EMI, monthly turnover is on average 2, which means that on average, el ectronic 
money stays only 2 weeks at the EMI.