Draft - Commission staff working document - Accompanying document to the proposal for a Directive of the European 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 - Impact assessment {COM(2008)627 final} {SEC(2008)2572}
Date: 2008-10-09
Institutions: European Commission
Subjects: banking, electronic money, financial institution, financial legislation, issuing of currency, management audit

EN 

EN 

   EN 

 
COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 9.10.2008 
SEC(2008)2573 

Draft 

COMMISSION STAFF WORKING DOCUMENT 

Accompanying document to 

the proposal for a Directive of the European 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 

IMPACT ASSESSMENT 

{COM(2008)627 final} 
{SEC(2008)2572} 

EN 

   EN 

 
 
  
 
 
 
TABLE OF CONTENTS 

Introduction .................................................................................................................. 4 

Procedural issues and consultation of interested parties .............................................. 4 

Problem definition........................................................................................................ 6 

General background ..................................................................................................... 7 

The lack of legal certainty and the scope of the directive hampers market 
development ............................................................................................................... 11 

An inconsistent legal framework ............................................................................... 14 

Summary of problems impact on stakeholders .......................................................... 19 

Is action necessary at EU level?................................................................................. 20 

The objectives ............................................................................................................ 20 

General and specific policy objectives....................................................................... 20 

Consistency of the objectives with other EU policies................................................ 21 

The policy options and the policy instruments .......................................................... 21 

The policy options and their scope............................................................................. 21 

The policy options grouped in packages of measures................................................ 23 

Analysis of impacts and choice of preferred option(s) .............................................. 25 

Impact of the packages............................................................................................... 25 

Impact on administrative burden................................................................................ 30 

Comparison of the packages ...................................................................................... 31 

Comparison on achievement of the specific objectives ............................................. 31 

Comparison of the impact of the packages ................................................................ 31 

Comparison of the impact on the stakeholders .......................................................... 33 

Comparison of the administrative burden .................................................................. 33 

Conclusions ................................................................................................................ 35 

Evaluation and monitoring......................................................................................... 35 

1. 

2. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

4. 

4.1. 

4.2. 

5. 

5.1. 

5.2. 

6. 

6.1. 

6.2. 

7. 

7.1. 

7.2. 

7.3. 

7.4. 

8. 

9. 

BIBLIOGRAPHY .................................................................................................................... 36 

GLOSSARY............................................................................................................................. 37 

ANNEX 1 The policy options and their scope......................................................................... 39 

EN 

2 

   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 and Cards based electronic money in EU...... 70 

ANNEX 9 Method D for calculation of own funds for electronic money institutions ............ 72 

ANNEX 10 Relationship between payment volume and issued electronic money ................. 73 

EN 

3 

   EN 

Draft 

COMMISSION STAFF WORKING DOCUMENT 

IMPACT ASSESSMENT 

Accompanying document to 

the proposal for a Directive of the European 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  the  Commission's  services  involved  in  its 
preparation and the text is prepared as a basis 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  financial  sector  has  evolved  and  grown  with 
incredible speed, spurred principally by four challenges: globalisation, European integration, 
financial and technological innovation. 

Directive 2000/46/EC on the taking 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 prudential supervision.  

Electronic money is defined by the EMD, as 'monetary 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  issued;  (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)  regulated  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 indications that the development of e-money 

1 

OJ L 275 of 27.10.2000, p. 39. 

EN 

4 

   EN 

 
 
                                                 
may have failed to live up to expectations, and that the original ambitions of the EMD may 
not have been achieved, the Commission decided to broaden the 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  take-up  of  the  e  money 
market.  The  report  also  suggested  awaiting  the  final  adoption  of  the  Payment  Services 
Directive  (PSD)  before  taking  further  action,  to  permit  completion  of  the  complex 
negotiations on the PSD.  

In order to prepare the present impact assessment, the following steps were taken: 

•  The  evaluation  of  the  directive,  five  years  after  its  implementation,  identified  the  main 
problems  described  in  Section 3  and  proposed  recommendations  regarding  the  future 
review of the EMD. The evaluation 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  stakeholders  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 

3 

4 

5 

6 

7 

8 

The Commission services were requested to report on: the measures to protect the bearers of electronic 
money, and the possible need to introduce a guarantee scheme; capital requirements; waivers; and the 
possible need to prohibit interest being paid on funds received in exchange for electronic money. 
SEC(2006) 1049  of  19.7.2006,  Commission  staff  working  document  on  the  Review  of  the  E-Money 
Directive. 
Evaluation of the e-money directive (2000/46/EC), Final Report, 
http://ec.europa.eu/internal_market/bank/docs/e-money/evaluation_en.pdf.  
E-Money  003/2005  questionnaire  on  the  EMD,  public  consultation  document  of  the  Commission 
services (Internal Market and Services DG). 
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. 
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  representative  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. 
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 

5 

   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,  contains  robust  analysis  and  makes  good  use  of  the 
Commission's IA guidelines. In spite of the technical 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  and  why  they  are  maintained  under  Package 4. 
Paragraph 3.3.2.1 was modified to explain the existing application process 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 clarifying assumptions behind market uptake. Assumptions on 
market uptake have been reflected in paragraph 6.1.3. and in Annex 4.  

institutions. 
Recommendation 4  suggested 
Paragraph 6.1.3  was  amended  to  reflect  better  the  risks  affecting  e-money  institutions.  In 
addition, A glossary of terms has been added in Annex. 

risks  affecting  e-money 

improving 

the 

3. 

PROBLEM DEFINITION 

The main problems identified by the evaluation and the consultation process can be grouped 
as follows:  

•  The  definition  of  electronic  money  and  the  scope  of  the  directive  are  unclear.  This 
creates  legal  uncertainty  as  to  whether  the  EMD  applies  to  certain  business  models, 
hindering the development of new and innovative services.  

•  The legal framework is inadequate. The current prudential requirements are considered 
excessive  with  regard  to  the  risk  of  the  activity  by  the  majority  of  industry  participants. 
Moreover,  the  different  use  made  by  Member States  of  some  options,  regarding  in 
particular  waivers  and  passporting,  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  latter  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 

6 

   EN 

3.1. 

General background 

3.1.1.  History and introduction 

A  well  functioning  market  for  electronic  money  services  is  important,  since  they  offer  an 
alternative  to  cash  and  contribute  to  the  development  of  electronic  commerce.  After  a  slow 
start, electronic commerce has been growing steadily 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 Danmønt, 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,  parking  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 transactions to be executed at a lower cost to the 
card issuer than credit or debit card payments since they do not require 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  deposits).  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), and allow transfers between 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-money 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 status 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 
10 

Annex 10 describes the evolution of electronic commerce in the EU. 
ECB Blue Book, January 2008. 

EN 

7 

   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 industry players is not available. Based on data coming from the 
industry and some Member States, the estimated amount of e-money 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 

EMIs and waived institutions 

Total 

450 

220 

670 

Source: ECB Bluebook & EMA (E-money Association), 2007 

658 

395 

1 053 

46 % 

79 % 

57 % 

Regardless  of  the  gradual  increase  that  can  be  observed  in  the  period  2005–2007,  the  total 
amount  of  electronic  money 
in  comparison  with  he 
in  circulation  remains 
EUR 637 billion cash in circulation in the EU in August 2007, which is less then 1 %. 

low 

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  the  EU.  They  show  a  slight  increase  in  the 
relative importance of e-money transactions, up from 0.4 % of all cashless transactions in the 
EU  in  1999,  to  0.7 %  in  2006  as  shown  in  Graph 1.  The  uptake  of  cards  based  electronic 
money therefore remains low.  

Graph 1: Relative importance of cashless payments instruments in euro area, 2006 

Re lative  imp ort an ce o f ca shle ss p ayme nt inst rum en ts,  Euro  Area, 2 006
(percen tage of  total volume of  ca sh less tra nsact ion s)

C he qu es
9,5%

Card -b ased  e-m o ney
0,7%

C ards
3 0,0%

Direc t d ebi ts
29,2 %

Source: ECB Blue Book, 2006 

Cre dit tran sfers
3 0,5%

The  development  of  cards  based  electronic  money  varies  by  country  and  has  been  most 
successful in the Benelux countries (where almost all debit cards are equipped with e-money 

EN 

8 

   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 function per inhabitant, 2006 

Cards with an e-money function per inhabitant, 2006

t
n
a
t
i
b
a
h
n

i
r
e
p
n
o
i
t
c
n
u
f
y
e
n
o
m
-
e
h
t
i

w
s
d
r
a
c
f
o
#

1,20

1,00

0,80

0,60

0,40

0,20

0,00

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

Source: ECB Blue Book, 2006 

Some  stakeholders  interviewed  during  the  evaluation  attributed  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  advantages,  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 operated 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.  Approximately  10  million  cards  have  the  Proton 
function, and around 20 % of these are actively used. Proton has three 'dominant' applications: 
Canteens and vending machines in big companies; public telephones (initially Proton's 'killer 
application', but now decreasing), and general vending machines and parking meters. 

Chipknip (Netherlands): The current Chipknip scheme is the result of the incorporation, in 
2000, of the Chipper-scheme (launched in 1997) into the original Chipknip scheme (launched 
in 1996). There is currently a reloadable version, issued by banks and integrated into around 
80 %  of  Dutch  debit  cards,  as  well  as  a  disposable  version  called  Prepaid  Chipknip.  Both 
kinds of cards are used mainly (90 %) for parking (said to be Chipknip's 'killer application' – 
many  parking  meters  in  the  Netherlands  today  only  accept  payment  via  Chipknip),  vending 
machines, and catering.  

EN 

9 

   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'  markets,  including  person-to-person  internet 
transactions, online gaming, and as payment instruments 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 
turnover  of  EUR 791 million,  representing  EUR 395 million  of 
reported  a  monthly 
outstanding electronic money.  

3.1.2.3.  Number of electronic money issuers 

The number  of  electronic money issuers in the EU has remained low but has been growing 
over  the  years.  In  total,  20  EMIs  and  127  entities  (in  seven  EU  Member 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 Member State without having to comply with all of 
the  authorisation  requirements  of  full  blown  EMIs.  As  shown  in  Annex 6,  the  majority  of 
EMIs are operating in UK.  

Table 2: Number of electronic money institutions and waived institutions 

EMIs 

Waived institutions 

2005 

9 

72 

2007 

20 

127 

Source: European Commission, Evaluation report EMD 2006; Member States survey in 2008 

Most  of  the  institutions  operating  under  a  waiver  are  operating  in  the  UK  and  the  Czech 
Republic. In the UK, 46 waivers ('small e-money issuer certificates') had been granted as of 
end 2007. In the Czech Republic, 54 waived institutions 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 Directive' (hereby referred to as the 'CRD')12.  

The Capital Requirements Directive 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 

12 

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. 
The key Directives in the banking 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  and  of  the  Council  of  14 June 2006  on  the  capital 
adequacy of investment firms and credit institutions (recast of directive 93/6/EEC). 

EN 

10 

   EN 

 
                                                 
under  the  CRD,  can  issue  electronic  money  within  the  framework  of  the  EMD13.  Operators 
wishing to issue e-money therefore have two options: 

–  to apply for a licence as an e-money institution under the EMD or 

–  to apply for a licence as a full blown credit institution. 

The  EMD  created  a  special  legal  framework  for  EMI.  This  legal  framework  restricted  the 
EMIs'  activities  to  the  issuance  of  electronic  money  and  the  provision  of  closely  related 
financial and non-financial services, such as the administering of e-money and the issuing and 
administering  of  other  means  of  payment.  This  implied  that  activities  such  as  mobile 
telecommunications  services  or  retailing  could  not  be  performed  by  EMIs.  Companies 
engaged  in  these  businesses  and  willing  to  issue  electronic  money  therefore  had  to  split  up 
their  activities  in  two  separate  entities.  Granting  any  form  of  credit  was  also  an  excluded 
activity. The framework included a strict prudential 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),  adopted  in  November 2007,  which  provides  the 
legal  foundation  for  the  creation  of  an  EU-wide  single  market  for  payments,  created 
additional complexity. The PSD aims at establishing a modern and comprehensive set of rules 
applicable  to  all  payment  services  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  prudential  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  Money  Institution' or a 'Payment  Institution' 
are  not  compatible  with  one  another,  as  the  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, companies cannot hold both licenses, which will create 
problems for 'hybrid' service providers, offering both payment services and e-money services. 

3.2. 

The  lack  of  legal  certainty  and  the  scope  of  the  directive  hampers  market 
development 

During  the  review  process,  stakeholders  expressed  concerns  that  the  current  directive  lacks 
legal certainty. First of all the definition of electronic money is considered unclear. Second it 
is unclear for stakeholders whether or not it is applicable to certain business models such as 
certain prepaid payment from mobile network operators and electronic vouchers.  

3.2.1.  The definition of e-money is unclear 

The definition of 'e-money' requires it to be 'stored on an electronic device'. This definition is 
therefore  considered  technically  limited  to  one  form  of  e-money  (notably  cards  based 
electronic  money)  and  does  not  encompass  the  various  pre-paid  products  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 

11 

   EN 

                                                 
where the value stored would be less than the amount actually paid to the 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 converted 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 operators and issuers of electronic vouchers would 
have  a  huge  impact  on  the  number  of  market  participants  and  on  the  amount  of  electronic 
money  in  circulation  as  they  would  be  enabled  to  design  new  services.  According  to  the 
stakeholders  consulted,  the  current  lack  of  clarity  prevents  the  development  of  these  two 
markets.  

3.2.2.1.  Mobile network operators' prepaid services  

The  European  mobile  market  currently  represents  553 million  subscribers.  60.9 %  of  these 
subscribers  use  prepaid  services,  and  39.9 %  receive  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 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.  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  EUR 913 million  in  2008,  and  is  expected  to  rise  up  to  over 
EUR 8.7 billion in 201214. 

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  similar  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 adoption of the PSD, the purchase of a movie ticket 
via  a  mobile  phone:  if  paid  for  by  the  money  stored  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  should  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 
15 

Capgemini, http://www.capgemini.com/industries/media/insights2/mobile_payments/. 
Paragraph  14  Commission's  Guidance  note 
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  

(http://ec.europa.eu/internal_market/bank/docs/e-

EN 

12 

   EN 

                                                 
 
the guidance note, the e-money industry 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%

%
4
4

%
%4
1

5
%4
8
5

%
6
%4
8
5

%
1
6

%
6
5

%
5
%5
2
4

%
4
%5
2
4

%
0
1

%
9
8

%
6
2

%
4
7

%
1
%4
5
5

%
9
%5
5
4

%
4
3

%
7
6

%
7
3

%
3
6

%
3
5

%
7
4

%
9

%
1
9

%
8
5

%
2
4

%
0
4

%
%2
2

0
3

%
%7
8

0
7

%
8
3

%
2
6

%
9
2

%
1
7

%
9
4

%
7
4

%
1
5

%
3
5

%
0
6

%
0
4

%
8
3

%
2
6

%
8
5

%
5
6

%
%4
2

4
3

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

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 UK

Source: European Commission, 200816 

Prepaid

Monthly paid

3.2.2.2.  Uncertainty as to the application of the EMD to electronic vouchers operators 

Different  issuers  of  paper  vouchers  (gift  vouchers,  meal  vouchers,  etc.)  have  expressed  an 
interest  in  switching  their  products  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  Voucher  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  vouchers,  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 application of the EMD, the digitalisation of these paper-based 
vouchers has not yet been materialised (data from APETDS show that currently only 3 % is 
dematerialised) and a large potential for digitalisation remains.  

Applying  the  current  directive  to  service  vouchers  would  pose  problems  as  some  of  the 
features of service vouchers products (like mobile payment products) are not compatible with 
certain provisions of the current E-Money Directive, such as the 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.' 
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. 
Members include: Accor Services, Sodexho and Groupe Cheque Déjeuner. 

16 

17 

EN 

13 

   EN 

 
                                                                                                                                                         
3.2.3.  The activities of EMIs are too narrowly defined 

The activities of electronic money institutions are restricted under Article 1(4) of the EMD to 
issuing electronic money and closely related services. This restriction of activities, which was 
originally  intended  to  ensure  the  financial  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 particularly true for business where prepaid payment 
services  represent  a  small  portion  of  their  activities.  Under  an  EMI  license,  they  are  not 
allowed  to  conduct  any  other  business  except  for  issuance  of  e-money  and  closely  related 
services. As a result, they have to split up their business in different legal entities which can 
be costly and inefficient. This provision differs from the non-exclusivity approach of the PSD, 
where  a  payment  institution  can  engage  in  non-payment  services  business  (e.g.  retailing  or 
telecom activities). 

3.2.4.  Redeemability 

Article 3  of  the  EMD  states  that  a  bearer  of  electronic  money  may,  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 ensures control of the money supply in the EU. 

Redeemability  appears  to  pose  a  problem  for  Mobile  Network  Operators  (MNOs)  and 
electronic vouchers' issuers. Mobile operators are unable to split 'ex ante' customers' prepaid 
funds  for  mobile  services  and  electronic  money.  The  only  way  to  apply  this  provision  is  to 
apply  it  to  all  the  money  stored  on  the  prepaid  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  restrictions  and  requirements  imposed  by  the  EMD,  have 
hindered  the  development  of  the  e-money  market.  The  adoption  of  the  PSD,  which  is 
currently  being  transposed  into  national  legislation,  will  increase  the  complexity  and  the 
inconsistency  of  the  overall  legal  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 the EMD in 2000, the main points 
of reference were the then existing capital requirements directives. The adoption of the PSD 
will allow payment institutions to conduct payment services under a lighter prudential regime 
than that of electronic money institutions under the EMD.  

EN 

14 

   EN 

The  review  process  provided  evidence  that  certain  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 with regard  to the  risk of the service. This 
high initial capital is an obstacle for smaller firms wishing to apply for an EMI license. 

Graph 4: Initial capital requirements EMD & PSD in euro 

Initial capital requirments in EURO

1.200.000

1.000.000

800.000

600.000

400.000

200.000

0

1.000.000

20.000

50.000

125.000

EMI

PSD- Money remittance

PSD- Mobile/digital
payments

PSD- 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 sending 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 are 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  combination  with  other  aspects  of  the  EMD 
(e.g., initial capital, limitation of investments, restriction of activities) 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  EUR 5 million  and  EUR 50 million  which  have 
similar  capital  requirement  of  EUR 1 million,  representing  a  capital  requirement  of 
respectively 20 % or 2 % capital. For large operators, capital requirements 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 function of issued e-money in euro 

EN 

15 

   EN 

 
M

n

i

s
t
n
e
m
e
r
i

u
q
e
r

l
a
t
i

p
a

c

l
a
t
o
T

2 5

2 0

1 5

1 0

5

0

T o ta l   c a p ita l re q u ir e m e n ts  in  f un c tio n  o f  i s s u e d  e - m o n e y   in  M i lli o n  E U R O

2 0

1 0

1

5

1

5 0

2

1 0 0

I s s u e d  e -m o n e y  i n   M il li o n  E U R O

5 0 0

1 .0 0 0

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  protecting  the  float  of  electronic  money  issued. 
This limitation of investments reduces the opportunity for EMIs to earn money on the funds 
they receive in return for issuing e-money, and puts them at a competitive disadvantage with 
fully licensed credit institutions. Bank and credit card receivables are excluded from the list of 
eligible investments. As many customers fund their 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. Therefore EMIs need to hold additional funds which are higher 
than  the  initial  and  ongoing  capital  requirements.  Based  on  data  provided  by  some 
stakeholders,  the  own  funds  requirements  increase  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  under  the  Capital  Requirements  Directive, 
the  ratio  would  have  been  at  the  level  of  12–14 %.  This  was  one  of  the  reasons  why  this 
stakeholder decided to change its regulatory status.  

3.3.2. 

Inconsistent implementation 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 facilitate market entry and innovation by new players 
without subjecting them to the full rigours of the authorisation framework.  

Article 8 of the EMD stipulates that Member States may allow their competent authorities to 
waive  the  application  of  some  or  all  of  the  provisions  of  the  EMD  and  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; the second criterion concerns the 
acceptance of the electronic money only by subsidiaries of the institution or the parent institution; the 
third  criterion  concerns  the  acceptance  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 

16 

   EN 

 
 
 
 
 
 
                                                 
the electronic storage device at the disposal of bearers for the 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  granted  on  a  case-by-case  basis,  depending  on  waivers 
criteria which differ from one country. Some countries (4), as shown in Annex°6 have even 
not  availed  themselves  of  the  possibility  of  granting  waivers.  Finally,  the  provisions  of  the 
directive that can be waived also differ from one country to the other (see Table 3 below) 

The current situation might lead to competitive distortions within national borders. The 2006 
evaluation  report  demonstrated  that  the  differences  between  Member States  that  are  most 
likely to have hindered the development of the e-money market are: the non-implementation 
or  tightening  of  the  waiver  criterion  (the  maximum  threshold  of  outstanding  electronic 
money19)  in  some  Member States;  a  burdensome  or  excessively  complicated  application 
process  in  some  Member States;  and  procedures  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 directive's 'waivable' provisions  

Country 

Austria 

Belgium 

Bulgaria 

Cyprus 

Czech Republic 

Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Ireland 

Waivers criteria 

(a) 

(b) 

(c) 

Application process 

'Waivable directive 
provisions' 

– 

(cid:57) 

– 

(cid:57) 

(cid:57) 

(cid:57) 

– 

(cid:57) 

(cid:57) 

(cid:57) 

– 

(cid:57) 

– 

(cid:57) 

– 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

– 

(cid:57) 

– 

(cid:57) 

– 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

– 

(cid:57) 

N/A 

N/A 

Not automatic 

Case-by-case 

No information 

No information 

Not automatic 

Not automatic 

Automatic 

Not automatic 

Not automatic 

Not automatic 

Not automatic 

Not automatic 

N/A 

No information 

All 

All 

Some 

All 

Case-by-case 

Some 

Case-by-case 

N/A 

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  related  to  outstanding  electronic  money  that  normally 
does not exceed EUR 5 million and never exceeds EUR 6 million.' 

EN 

17 

   EN 

 
                                                 
 
Italy 

Latvia 

Lithuania 

Luxembourg 

Malta 

Netherlands 

Poland 

Portugal 

Romania 

Slovakia 

Slovenia 

Spain 

Sweden 

UK 

(cid:57) 

(cid:57) 

– 

(cid:57) 

(cid:57) 

(cid:57) 

– 

– 

– 

– 

– 

– 

(cid:57)* 

(cid:57)* 

(cid:57) 

– 

– 

(cid:57) 

(cid:57) 

(cid:57) 

– 

– 

– 

– 

– 

(cid:57) 

(cid:57) 

(cid:57)* 

(cid:57) 

– 

– 

(cid:57) 

(cid:57) 

(cid:57) 

– 

– 

– 

– 

– 

(cid:57) 

(cid:57)* 

Not automatic 

Case-by case 

Automatic 

N/A 

Not automatic 

Not automatic 

Automatic 

(cid:57)* 

Not automatic 

N/A 

Some 

N/A 

Case-by-case 

Case-by-case 

All 

Some 

N/A 

No information 

No information 

N/A 

N/A 

Not automatic 

Not automatic 

Not automatic 

N/A 

N/A 

All 

All 

All 

Source: Evaluation report on the review of the EMD, February 2006 

3.3.2.2.  Passporting 

The passporting regime allows EMIs to go cross border and conduct the same business in host 
Member States  as  they  are  entitled  to  conduct  in  their  home  Member State  under  the  EMI 
licence,  without  additional  hindrances.  However,  Article 2  of  the  EMD  refers  to  certain 
articles  in  the  CRD  providing  for  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 increase 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 particular challenge in the case of electronic 
money,  and  have  been  highlighted  by  a  number  of  respondents  as  being  a  key  concern.  In 
view of the low average amounts involved in electronic money transactions, full application 
of identification and record keeping requirements 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-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.  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. If the services 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  consumer  has  to  undergo  full  KYC  identification 
procedures  before  the  next  online  payment  can  be  effected.  The  identify  card  verification 

EN 

18 

   EN 

(often  by  sending  a  copy  of  the  ID  card  by  postal  services)  procedures  may  take  days  or 
weeks, thereby adding to the consumer's inconvenience. 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 impact on stakeholders  

The following table summarises which stakeholders are affected by the identified problems. 

Table 4: Screening of problems affecting different stakeholders 

Problem 

Stakeholders 

Consumers 

Enterprises 

EMIs 

Waived 
institutio
ns 

Hybrid 
institutions 
(such as 
MNOs) 

Service 
voucher 
operators 

Unclear scope & definition hampers market development 

Credit 
instituti
ons 

Public 
authoriti
es 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

Unclear definition of 
electronic money 

Unclear scope of EMD 

Too narrow defined 
activities of EMIs 

Application of 
redeemability by some 
business models 

(cid:57) 

Inconsistent legal framework  

High prudential 
requirements in terms 
of initial capital , 
ongoing capital and 
limitations of 
investments 

Inconsistent provisions 
in terms of waivers, 
passporting 

To stringent AML rules 

(cid:57) 

(cid:57) 

Main effects of existing situation 

Limited 
availability 
of services 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

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 

(cid:57) 

Unclear 
definitio
n & 
Prudenti
al 
regime 
prevent 

EN 

19 

   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  achieved  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.  The  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 market for financial services. It is consistent with 
the Lisbon agenda, to promote technological innovation and contributes to growth and jobs. 

4. 

THE OBJECTIVES 

4.1. 

General and specific policy objectives 

The following policy objectives are identified: 

General objective 

•  Promote  the  emergence  of  a  true  single  market  for  electronic  money  services  in  Europe. 
Contribute  to  the  design  and  implementation  of  new,  innovative  and  secure  electronic 
money services. Provide market access to new players and real and effective competition 
between  all  market  participants,  thereby  generating  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,  creating  a  true  level  playing  field  for  all  market 

participants. 

The various levels of objectives, together with how they relate to each other, are presented in 
Graph 6 below. 

Graph 6: The policy objectives and the relationships among them 

EN 

20 

   EN 

4.2. 

Consistency of the objectives with other EU policies 

The objectives outlined above are consistent with the policies and objectives of the European 
Commission. Indeed, their main aim is to further improve the functioning of European market 
for financial services, by promoting the development 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 screening of the different options described 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  considered  to  address  the  problems  affecting  e-money 
services and meet the objectives that have been defined. The two main problems are caused 
by issues related to: 

1. 

2. 

The definition of e-money and scope of the EMD (first problem strand) 

Inadequacies in the legal framework (three problem strands relating 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  legislation  i.e.  a  Regulation  could  be  required;  nor 
would it appear that a new Directive is called for – if changes to legislation are needed, they 
should be achievable within the current legislative framework. Since the current problems are 

EN 

21 

   EN 

 
not really within the control of the various stakeholders, various soft-law options e.g. code of 
conduct, would also not be suitable. 

To  address  the  issues  around  definition  and  scope,  the  most  effective  policy  instruments 
would be tools appropriate to providing clarification e.g. guidance notes, Communication or 
to changing existing legislation e.g. amending Directive, repeal of Directive. Tools relating to 
changing  existing  legislation  would  also  be  effective  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 

21 

Graph 7:  1.  Scope  and  definition,  2.1  prudential  regime,  2.2  waivers  regime  and  2.3  anti  money 
laundering. 
Graph 7: 1) Scope and definition and 2) Inconsistency between EMD and PSD. 

EN 

22 

   EN 

 
                                                 
b) 

c) 

d) 

Provide  further  guidance,  clarifying  what  falls  under  the  EMD,  the  PSD  and  the 
CRD; 

Amend the EMD or PSD; and 

Repeal the relevant provisions of the EMD. 

Secondly,  to  address  the  issues  relating  to  the  three  problem  strands  identified  within  the 
current  legal  framework,  the  solutions  considered  would  all  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 prudential regime, the 'broad' solutions can be summarised as: 

a) 

b) 

c) 

Do nothing 

Align with PSD, applying principles/methods proposed in the PSD 

Align  with  PSD,  introducing  new  principles/methods  designed  specifically  for  e-
money services 

d) 

Repeal the relevant provisions of the EMD. 

Based  on  an  initial  screening  of  these  options  against  the  policy  objectives  (see  Annex 2 
packages containing a selection of activities that could be taken were identified. Rather than 
assessing individual options, the impacts of these 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 against 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 

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 

Package 4: 
Align with 
PSD, with 
specific 
prudential 
regime for 
EMIs 

Idem to 
Package 3 

Package 5: 
Repeal EMD 

Definition of 
electronic 
money repealed 

Scope of 
activities EMIs 
repealed 

Payment 
Institutions 
license or 

EN 

23 

   EN 

 
Institutions 

remains. 

Redeemability 
requirements 
do not change 

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 

Qualitative 
prudential 
requirements 
linked to CRD 

Qualitative 
prudential 
requirements equal 
to PSD 

Qualitative 
prudential 
requirements 
equal to PSD 

Prudential 
requirements 
EMIs repealed.  

EUR 1 million 
initial capital 

EUR 1 million 
initial capital 

EUR 0.125 million 
initial capital 

2 % ongoing 
capital 
requirements 

2 % ongoing 
capital 
requirements 

Ongoing capital 
based on methods 
from PSD 

Bank and 
Credit cards 
receivables 
excluded from 
eligible 
investments  

Bank and 
Credit cards 
receivables 
excluded from 
eligible 
investments  

Safeguarding 
requirements of 
payment 
institutions under 
the PSD 

EUR 0.125–
0.250 million 
initial capital 

Degressive 
ongoing 
capital 
requirements 

Safeguarding 
requirements 
of payment 
institutions 
under the PSD 

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 

AML 
requirements 

Passporting 
requirements 
linked to CRD 

Passporting 
requirements 
linked to CRD 

Passporting 
requirements PSD 

Idem 
Package 3 

Maintain 
current AML 
thresholds for 
KYC 
requirements: 

Maintain 
current AML 
thresholds for 
KYC 
requirements: 

EUR 150 
maximum 
storage on 
device 

EUR 150 
maximum 
storage on 
device 

EUR 2 500 
maximum 
yearly usage 

EUR 2 500 
maximum 
yearly usage 

Increase of AML 
thresholds to  

Idem 
Package 3 

EUR 500 
maximum storage 
on device 

EUR 3 000 
maximum yearly 
usage 

Passporting 
requirements 
repealed 

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 

24 

   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 scope and definition of electronic money 

Under this non-legally binding option a guidance note would be issued 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 requirements 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 prudential regime of Payment Institutions to 

EMIs 

This option would mean the design a legal framework which is consistent 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  could  be  implemented  by  amending  the  EMD  or  the 
PSD. 

•  Package 4:  Align  with  the  PSD,  but  with  specific  prudential  regime  for  EMIs 

(degressive ongoing capital 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  would  be  repealed  (see  Options 1.4,  2.3,  2.7,  2.11, 
2.14 and 3.3 in Annex 1).  

6. 

ANALYSIS 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 environmental 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 changes would be made to the EMD. As from November 2009, EMD 
and PSD will start to co-exist. The problems described in Sections 3.2 and 3.3 would remain 
unaddressed (legal uncertainty, incompatibility between EMI and payment institution licence, 
inconsistency  between  prudential  requirements  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 development of electronic money services in the 
EU would remain slow, and that the development of new and innovative services would be 
hindered  in  the  EU.  The  number  of  EMIs  and  waived  institutions  would  be  expected  to 

EN 

25 

   EN 

stabilise at a range of [20–25] and [127–150] respectively 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 operational 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  guidance  note  on  the  applicability  of  the  EMD  to 
Mobile  Network  Operators  issued  by  the  Commission  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  participants  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 provision would be to bring more legal certainty. 
In combination with allowing for a wider range of activities under an EMI license, this would 
incentivise  new  enterprises  to  enter  the  market,  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 stringent as regards capital and activities, mobile 
network operators, service vouchers providers ('titres-services', 'chèques cadeaux' etc…) and 
other new entrants would enter the market.  

Since  there  are  currently  100  mobile  network  operators  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 additional 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 

26 

   EN 

Table 6: Estimated impact of Package 3 in terms of institutions and issued electronic money 

Current 
situation 

Mobile 
operators 

Electronic 
vouchers 

Other new 
entrants 

Total impact 

Estimation for 2012 

20 

20–100 

3–5 

5–25 

20–125 

EUR 1 billion 

EUR 1–
6 billion 

EUR 1–
4 billion 

EUR 1–
2 billion 

EUR 3–12 
billion 

Number of 
institutions 

Issued 
electronic 
money  

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 consumers, 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-money does not compromise monetary policy. 

Impact of using the PSD prudential requirements 

The qualitative risk analysis (described in Annex 3) comparing EMIs, credit institutions and 
payment institutions, shows that the risk presented by electronic money institutions' activities 
is much closely linked to the risks of payment institutions 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 risk analysis could not 
be conducted. 

As electronic money held by consumers is usually lower than EUR 150 (EUR 8 on average) 
and is used for low value transactions (EUR 40 on average), the risks related to the funds held 
by  EMIs  are  not  at  all  comparable  with  the  risks  faced  by  credit  institutions  for  holding 
deposits. An insolvent bank might undermine the stability 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 prudential requirements in line with the PSD's. The main risk for 
consumers is that (unused) electronic money stored at an EMI is lost when an EMI becomes 
insolvent. In view of the low amounts that consumers held at EMIs as described above and the 
direct  link  with  executing  payments  (consumers  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  and  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  currently  waived  institutions  as  well  as  new 
enterprises could apply for an e-money license.  

22 

Source 
payments/. 

Capgemini: 

http://www.capgemini.com/industries/media/consulting/solutions/mobile-

EN 

27 

   EN 

 
                                                 
Table 7: Comparison of total capital requirements  

Issued  e-money 
in million euro 

Current method 

Method B PSD 

% 

million euro 

% 

million euro 

3 

5 

10 

50 

100 

250 

350 

33 % 

20 % 

10 % 

2 % 

2 % 

2 % 

2 % 

1.0 

1.0 

1.0 

1.0 

2.0 

5.0 

7.0 

4.2 % 

4.0 % 

3.3 % 

1.5 % 

1.2 % 

1.1 % 

0.9 % 

0.125 

0.200 

0.325 

0.7 

1.2 

2.7 

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 simulation, 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 payment transactions. Therefore, it would be up to the competent 
authorities to determine the appropriate ongoing 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 range 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  account  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 payment service users against the claims 
of other creditors of the payment institution, in particular in the event of insolvency.' 

EN 

28 

   EN 

 
                                                 
Proposal 

higher then 6 million in 
terms of issued 
electronic money 

3 million of higher of 
issued electronic money 
or payment volume 

Impact of Anti Money Laundering rules 

20 000 

60 000 

If anti money laundering rules are maintained and thresholds are increased to EUR 500, less 
online  products  would  need  to  conduct  the  know-your-customer  (KYC)  procedure,  which 
would be more convenient for customers and less costly for businesses. As a result, the uptake 
of new and innovative online services 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  differ  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  Method D  would  be  designed,  under  which  the 
own  funds  would  follow  a  'degressive'  formula,  based  on  the  issued  electronic  money 
(described in Annex 3). 

Graph 8: Comparison of total capital requirements in million euros 

Comparison total capital requirements (in M EUR)

)

R
U
E
M

(

s
t
n
e
m
e
r
i
u
q
e
r

l
a
t
i
p
a
c
l
a
t
o
T

8

7

6

5

4

3

2

1

0

7

5,4

5

4,4

2,7

Current method
New method D
method B PSD

3,2

1

0,150

0,125

1

1

0,250

0,200

0,375

0,325

1,2

1

0,7

2,2

2

1,2

3

5

10

50

100

250

350

Issued electronic money (M EUR)

EN 

29 

   EN 

 
 
 
 
 
The  graph  above  shows  a  comparison  of  the  impact  of  three  different  methods  regarding 
initial and ongoing capital requirements: 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 electronic money issued. The simulation shows 
that  this  new  method  would  give  capital  requirements  which  would  be  lower  than  those 
respected by EMIs today, but still more stringent 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 payment institutions under the PSD.  

Capital requirements under the new Method D are 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  enable  institutions  engaged  partly  in  payment 
services  and  partly  in  issuance  of  electronic  money  services  to  take  into  account  the  total 
payment volume to determine their capital requirements. Therefore, businesses engaged only 
in  a  minor  part  in  issuance  of  electronic  money  and  a  larger  part  in  other  payments 
transactions  would  find  it  easier  to  comply  with  the  requirements  of  the  EMD.  This  would 
facilitate hybrid institutions, such as mobile operators, to apply ongoing 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 that 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 increase 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 services 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  packages  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  existence  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  prudential  requirements  on  initial  and  ongoing  capital.  It 
would equally facilitate the follow up of market development of electronic money in the EU. 

EN 

30 

   EN 

If the market were to develop, the total cost would increase in line with the evolution of the 
number of EMIs. Existing reporting (and thus administrative burden) would disappear if the 
corresponding  PSD  provisions  would  be  applied  to  EMIs,  as  the  PSD  does  not  request 
reporting requirements by payment 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 

Issue a guidance note 

Align with PSD, applying the 
prudential regime of the PSD to EMIs 

Align with PSD, applying a specific 
prudential regime for EMIs 

Repeal the EMD 

0 

0/(cid:57) 

(cid:57)(cid:57)(cid:57) 

(cid:57)(cid:57)(cid:57) 

(cid:56) 

(cid:56)(cid:56)(cid:56) 

(cid:56)(cid:56)(cid:56) 

(cid:57)(cid:57) 

(cid:57)(cid:57)(cid:57) 

(cid:57) 

0 

0 

(cid:57) 

(cid:57) 

0/(cid:56) 

Contribution to objectives compared to the situation today, before transposition of the PSD. 
(cid:57)(cid:57)(cid:57) (Strong) – (cid:57)(cid:57) (Moderate) – (cid:57) (Weak) positive contribution 
(cid:56)(cid:56)(cid:56) (Strong) – (cid:56)(cid:56) (Moderate) – (cid:56) (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 

Estimated 
institutions in 
2012 

EMIs: [20–25] 

Waived: [127–
150] 

EMIs: [20–
25] 

Waived: 
[127–150] 

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 

EMIs: [125–300] 

EMIs: [125–300] 

EMIs: [20–25] 

Waived: [300–
750] 

Waived: [300–
750] 

Waived: [127–
150] 

Issued 
electronic 

EN 

EUR [1.2–

EUR [1.2–

EUR [2–

EUR [2–

EUR [1.2–1.5 

31 

   EN 

 
 
 
money in 
2012 

Definition & 
scope 

1.5 billion] 

1.5 billion] 

10 billion] 

10 billion] 

billion] 

Idem Package 4 

Low uptake or 
decrease due 
to legal 
vacuum  

(cid:199) in issued e-
money up to 
EUR 12 billion 

(cid:199) in number of 
institutions with ≈ 
50–100 

(cid:200) administrative 
burden as 1 
license sufficient 
& no need to split 
up business 

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 

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 

Creation of level 
playing field 
between EMIs 
and PIs 

Solution for 
hybrid institutions  

Solution for 
hybrid 
institutions 

Same system for 
Payment 
Institutions and 
EMIS: more easy 
application 

Different system 
for Payment 
Institutions and 
EMIs: More 
complicated 
application 

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 

Passporting 

EMIs hindered in 
setting up 
branches 

EMIs 
hindered in 
setting up 
branches 

Passporting 
requirements PSD 

Passporting 
requirements 
PSD 

Absence of 
specific 
prudential 
requirements 
for EMIs: only 
higher 
requirements 
for Credit 
Institutions 
available 

Waivers 
regime 
disappears. 
Unclarity for 
current waived 
institutions 

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 

32 

   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 different packages on the different stakeholders 

Table 11: Screening of problems affecting 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 

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 

(cid:56)(cid:56) 

Low market 
uptake 

(cid:56)(cid:56) 

Low market 
uptake 

(cid:57)(cid:57) 

Increased 
choice 

(cid:56) 

(cid:56) 

(cid:56)(cid:56)(cid:56) 

(cid:56)(cid:56)(cid:56) 

0 

0 

(cid:56) 

(cid:56) 

(cid:56)(cid:56)(cid:56) 

(cid:56)(cid:56)(cid:56) 

0 

0 

(cid:57)(cid:57) 

(cid:57)(cid:57)(cid:57) 

(cid:57)(cid:57) 

(cid:57)(cid:57) 

(cid:56) 

(cid:57) 

(cid:57)(cid:57) 

(cid:57)(cid:57) 

(cid:57)(cid:57)(cid:57) 

(cid:57)(cid:57) 

(cid:57)(cid:57) 

(cid:56) 

(cid:57)(cid:57) 

(cid:56)(cid:56) 

(cid:56)(cid:56) 

(cid:56)(cid:56) 

(cid:56)(cid:56)(cid:56) 

(cid:56)(cid:56)(cid:56) 

0 

0 

Impact to stakeholders in comparison with the situation today, before transposition of the PSD 
(cid:57)(cid:57)(cid:57) (Strong) – (cid:57)(cid:57) (Moderate) – (cid:57) (Weak) positive impact  
(cid:56)(cid:56)(cid:56) (Strong) – (cid:56)(cid:56) (Moderate) – (cid:56) (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  impact  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 

33 

   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 

Hybrid 
institutions 

Idem EMIs 

Split up 
business 

Idem Package 1 

1 prudential 
regime 

No reporting 
requirements 

1 prudential 
regime 

No reporting 
requirements 

1 prudential 
regime 

Single 
reporting 
requirements 

1 prudential 
regime 

Single 
reporting 
requirements 

Comply with 1 
prudential 
regime: PI or 
CRD 

Single 
reporting 
requirements 

Single 
reporting 
requirements 

9–15 

9–15 

9–15 

Member States 
with institutions 

EMIs 

Waived 
institutions 

Yearly 
administrative 
burden 

Initial investment 
and compliance 
cost 

9 

20 

9 

20 

127 

125–300 

125–300 

127 

300–750 

300–750 

20 

127 

EUR 4–
5 million 

EUR 4–
5 million 

EUR 16 million  EUR 16 million 

0 

0 

EUR 11–
26 million 

EUR 3–
6 million 

EUR 46–
105 million 

3.1 million 

Under  Packages 1  and 2,  reporting  requirements  for  EMIs  would  remain  as  they  are. 
Therefore, as the market uptake would remain as it is, the administrative 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  the  prudential  regime  of  the  PSD  is  applied 
mutatis  mutandis  to  electronic  money  institutions,  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 authorities the compliance 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  initial  investment  costs.  Administrative  burden 
goes up under Package 4 as the number of countries with institutions as well as the number of 

EN 

34 

   EN 

institutions increase. The total yearly administrative burden for an individual institution (EMI 
+ waived institutions) remains stable under Package 4, at of EUR 28 000 per institution. 

Under Package 5 EMIs would have to apply for a license of a credit institution and therefore 
be subject to reporting requirements. As the reporting requirements for credit institutions are 
higher than for electronic money institutions, it can 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  consider  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  availability  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 remains however proportionate to its objective.  

Package 3,  applying  the  prudential  requirements  of  payment  institutions  would  have  the 
advantage  that  it  would  lower  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 transposition of the PSD in 2009 and would hinder further market 
development. Package 5, 'repeal of the directive' would create legal uncertainty and hindering 
the development of new electronic money services.  

9. 

EVALUATION AND MONITORING 

A first intermediate evaluation could be performed 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  during  the  evaluation  are  the  amount  of  electronic 
money in circulation, the amount of e-money purchase transactions and the average value per 
transaction, as this reflects the usage of the services by consumers. This could be compared 
with  the  amount  of  cash  in  circulation  and  the  number  of  cashless  payment  transactions  by 
other  instruments  to  determine  their  relative  importance.  The  number  of  electronic  money 
institutions and waived institutions operating in the EU would be monitored. To facilitate the 
monitoring  and  evaluation,  a  reporting  from  competent  authorities  on  the  above  indicators 
could be required twice a year. 

EN 

35 

   EN 

Legislation 

BIBLIOGRAPHY 

Directive 2000/46/EC of the European Parliament and of the Council of 18 September 2000 
on  the  taking  up,  pursuit  of  and  prudential  supervision  of  the  business  of  electronic  money 
institutions, OJ L 275, 27.10.2000 

Directive 2007/64/EC of the European Parliament 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 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) 

Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the 
capital adequacy of investment firms and credit institutions (recast of directive 93/6/EEC) 

Documentation 

Commission  staff  working  document  on 
SEC(2006) 1049 of 19.7.2006 

the  Review  of 

the  E-Money  Directive 

Final  report  of  the  study  on  the  Evaluation  of  the  E-Money  Directive  2000/46/EC  of 
17.2.2006, http://ec.europa.eu/internal_market/bank/docs/e-money/evaluation_en.pdf 

Application  of  the  E-Money  Directive  to  Mobile  Operators,  Guidance  Note  of  the 
http://ec.europa.eu/internal_market/bank/docs/e-
services 
Commission 
money/guidance_en.pdf 

18.1.2005, 

of 

Report 
http://www.ecb.int/pub/pdf/other/emoneyen.pdf 

electronic  money, 

on 

European 

Central 

Bank,  August 

1998, 

EN 

36 

   EN 

AML 

CRD 

GLOSSARY 

Anti Money Laundering 

The  key  Directives  in  the  banking  sector  are  the  Capital  Requirements 
Directives (CRD), 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 and of the Council of 14 June 2006 on the capital adequacy of 
investment firms and credit institutions (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 settled in full by the end of a specified 
period. Alternatively, it is partly settled. The remaining balance is taken as 
extended credit on which the cardholder must pay interest.  

Credit transfer 

A payment initiated by the payer. The payer sends a payment instruction 
to his/her bank. The bank moves the funds to the receiver's bank. This can 
happen via several intermediaries.  

Debit card 

Direct debit 

a debit card is a payment instrument that allows the cardholder to charge 
purchases directly and individually to an account. 

A transfer initiated 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 

EMD 

EMI 

KYC 

The European Central Bank 

Directive  2000/46/EC  of  the  European  Parliament  and  of  the  Council  of 
18 September 2000 on the taking up, pursuit of and prudential supervision 
of the business of electronic money institutions. 

'electronic  money  institution'  means  an  undertaking  or  any  other  legal 
person,  other  than  a  credit  institution  as  defined  in  Article 1(1)(a)  of 
Directive  2000/12/EC  which  issues  means  of  payment  in  the  form  of 
electronic  money  (regulated  under  directive  2000/46/EC,  the  e-money 
directive). 

'Know  Your  Customer'.  'KYC'  requirements  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 

37 

   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  Member States  as  they  are  entitled  to 
conduct  in  their  home  Member State  under  the  EMI  licence,  without 
additional hindrances. 

PI 

PSD 

PSGEG 

PSMG 

SEPA 

A  'payment  institution'  means  a  legal  person  that  has  been  granted 
authorisation  in  accordance  with  Article 10  of  Directive  2007/64/EC  to 
provide and execute payment services throughout the Community; 

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 comprehensive set of rules applicable to all 
payment services in the European Union.  

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 representative 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. 

The  Payment  Systems  Market  Group  (PSMG)  is  a  consultative  body 
composed  of  market  experts,  typically  drawn  from  banks,  enterprises, 
retailers  and  associations  representing  interested  stakeholders  such  as 
SMEs  and  consumers,  with  expertise  in  the  payments  area  with  the 
objective of providing advice and guidance to the Commission. 

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  direct  debit  –  as  easy  as  domestic 
payments within one country are now 

Waivers regime 

The possibility for Member States 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 

38 

   EN 

 
ANNEX 1 
The policy options and their scope 

(1) 

Policy  options  regarding  scope  and  definition  of  electronic  money  and  scope  of 
activities of electronic 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 electronic 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  note  would  be  issued  by  the  Commission  services.  It  would 
clarify that both 'cards based' electronic money 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 offered 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  would  confirm  that  electronic  vouchers  fall 
under the EMD. Finally, the guidance note would clarify, for the benefit of mobile operators 
and issuers of gift vouchers, how to apply the provisions on redeemablity to their services. 

•  Option 1.3: Issue a new definition of electronic money and electronic 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  technologically  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  mobile  payment  services  and  electronic  vouchers. 
Extending  the  scope  of  activities  of  electronic  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 provisions of the directive.  

Under  this  option,  the  current  legal  provisions  defining  electronic  money  and  electronic 
money institutions would disappear.  

Existing  electronic  money  institutions  would  have  to  apply  either  for  a  license  of  payment 
institution  under  the  PSD  or  for  a  license  of  credit  institution.  This  option  would  equally 
repeal  the  redeemability  provisions.  To  avoid  the  creation  of  a  legal  vacuum,  the  payment 

EN 

39 

   EN 

services directive or the capital requirements directive would have to be amended, in order to 
ensure that existing businesses can continue to operate. 

(2) 

Policy  options  to  ensure  consistency  between  the  EMD  and  the  PSD  so  as  to 
contribute  to  the  creation  of  a  true  level  playing  field  between  all  market 
participants 

(a) 

Policy options regarding the prudential regime 

A first set of options concerning the application of qualitative prudential measures 

•  Option 2.1: Maintain the current provisions of the EMD ('do nothing'). 

Under  this  option,  the  current  prudential  regime,  which  is  based  on  the  CRD,  would  be 
maintained. 

•  Option 2.2: Align with the PSD applying qualitative prudential requirements of payment 
institutions to EMIs to ensure equal treatment between EMIs and payment institutions. 

In order to facilitate the possible future integration of the EMD provisions into the PSD and 
given  the  close  interrelationship  between  electronic  money  and  electronic  payments,  the 
current  qualitative  requirements  of  the  EMD  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  have  to  apply  either  for  a  license  of  payment 
institution under the PSD or for a license of credit institution. Depending on their choice, the 
corresponding qualitative prudential requirements would 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 initial capital requirement under the PSD i.e. EUR 125 000. 

•  Option 2.6:  Consider  e-money  as  a  specific  payment  service  with  a  specific  risk  profile 

and create an additional initial capital requirement [EUR 125 000–250 000]. 

•  Option 2.7: Repeal the relevant EMD provisions. 

Under  this  option  existing  EMIs  would  have  to  apply  either  for  a  credit  institution  license 
(with initial capital requirements 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  application  of  quantitative  prudential  measures  on 
ongoing capital requirements 

EN 

40 

   EN 

•  Option 2.8: Maintain the current approach for ongoing capital requirements of the EMD: 
2 % of the total amount of financial liabilities related to outstanding 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  calculation  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 payment service with a specific risk profile 
and  propose  an  additional  method  to  the  three  proposed  by  the  PSD  for  calculating  on-
going capital requirement (Method D, described in Annex 9).  

Under  this  method,  own  funds  would  be  calculated  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 taking 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. Method D would be 'degressive' in line with the 
approach for payment institutions under the PSD (Method C).  

•  Option 2.11: Repeal the relevant EMD provisions. 

Under  this  option,  the  ongoing  capital  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 respective 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 assets 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 receivables would be added 
to  the  list  of  eligible  investments.  For  EMIs  this  would  decrease  the  'funding  gap' 
considerably. 

•  Option 2.14: Repeal the relevant EMD provisions. 

Existing  EMIs  would  have  to  apply  either  for  a  credit  institution  license  or  for  a  payment 
institution license, and comply with their respective safeguarding prudential requirements. 

(b) 

Policy options regarding the waiver and passporting regime 

24 

According  to  Article 8  of  the  PSD,  the  competent  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 

41 

   EN 

                                                 
•  Option 3.1: Maintain the current waiver regime and passporting regime of the EMD ('do 

nothing'). 

Under  this  option  Member States  could  continue  to  apply  waivers  up  to  a  threshold  of 
EUR 5 000 000 of issued e-money. Existing passporting requirements are maintained. 

•  Option 3.2: Align the electronic money waiver regime 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 payment 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 stringent than it is today. 
This change should be seen in view of a lighter prudential regime for fully licensed electronic 
money institutions. Therefore, waived institutions would have an increased incentive to apply 
for a full license. 

Under  this  option  the  passporting  requirements  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 current EMD would be repealed. Presumably, the 
entire  directive  would  be  repealed.  Waived  institutions  would  not,  therefore,  be  able  to 
become full-licensed EMIs. Existing waived institutions would therefore have to apply either 
for  a  credit  institution  license  or  for  a  Payment  institution  license.  Under  this  option  the 
passporting provisions of EMIs 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  EUR 500  for  the  maximum  amount  stored  on  the  device,  and 
from EUR 2 500 to EUR 3 000 for the total amount of transactions in a calendar year.  

The  current  thresholds  would  be  relaxed  regarding  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 

42 

   EN 

ANNEX 2 
Initial screening of options 

–  Screening  of  options  regarding  the  definition  of  electronic  money  and  scope  of 

activities of electronic 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 definition of electronic money and scope of activities 
of  EMIs  regulated  under  the  EMD,  in  comparison  with  scope  of  activities  of  payment 
institutions  regulated  under  the  PSD,  is  not  addressed.  The  incompatibility  between  an 
electronic  money  institution  license  and  payment  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  payment  services  and  other  services  to  comply 
with  the  current  inconsistencies  between  the  current  EMD  and  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 institutions. 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  and  payment  services,  it  should  clarify  how  to 
operate under the two licenses (electronic money 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  guidance  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  previous  guidance  note  had  limited  impact  on  legal  certainty. 
Stakeholders expect that individual interpretation of the guidance note by Member States will 
undermine  legal  certainty.  Member States  will  be  free  to  apply  the  recommendations  on 
application of redeemability to mobile operators and service vouchers. This uncertainty will 
continue to hinder the development of new services. 

Under Option 1.3 the current 'definition of electronic money' will be amended, to ensure that 
cards  based  electronic  money  and  server  based  electronic  money  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  related  safeguarding  requirements  of  payment 
institutions under the PSD. Electronic money institutions will be enabled 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 maximum 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 

43 

   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 party payment services by MNOs are covered by 
the  EMD.  It  would  equally  ensure  that  electronic  service  vouchers  are  covered  by  the 
directive.  The  improved  legal  certainty  would  also  simulate  enterprises  to  enter  the  market. 
The  most  material  impact  would  be  that  these  services  will  have  legal  certainty  and  can 
pursue development and as a result, the potential 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 payments are expected to generate EUR 8 billion 
by 2012, we can estimate that a major part would fall under the scope of the amended EMD. 
The  market  for  service  vouchers  will  further  dematerialise  and  electronic  vouchers  can 
increase  from  3 %  today  to  30 %  or  more  by  2012  with  the  appropriate  legal  framework  in 
place  according  to  service  voucher  issuers.  New  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 and issued electronic 
money in circulation by 2012 

Current 
situation 

Mobile operators 

Electronic 
vouchers 

Other new 
entrants 

Total impact 

Estimation for 2012 

20 

20–100 

3–5 

5–25 

20–125 

EUR 1 bil
lion 

EUR 1–6 billion 

EUR 1–4 billion  EUR 1–2 billion  EUR 3–12 billion 

Number of 
institutions 

Issued 
electronic 
money 

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 current electronic money institutions with the 
framework of the PSD, as the activity of issuance of electronic money is explicitly excluded 
from  the  PSD.  Repealing  the  directive  will  create  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  existing  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 framework in place would be simplified as only 
two  regulatory  frameworks  (the  PSD  &  CRD)  will  be  in  place,  with  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 choose to become a credit institution, they will have 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 

44 

   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 expected in terms of the number of institutions 
and the amount of electronic money issued if the directive is repealed. 

Evaluation of the options contribution 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 

Option 1.2 
Guidance note 

Option 1.3 
Amend definition of e-
money and scope of 
activites of EMIs 

Option 1.4 
Repeal EMD 

(cid:56)(cid:56)(cid:56) 

(cid:56)(cid:56) 

(cid:56)(cid:56) 

(cid:56) 

(cid:57)(cid:57)(cid:57) 

(cid:57)(cid:57)(cid:57) 

(cid:56)(cid:56) 

(cid:57) 

(cid:56)(cid:56) 

(cid:56)(cid:56) 

(cid:57) 

(cid:56) 

Contribution to objectives in comparison with the situation today, before transposition of the PSD: 
(cid:57)(cid:57)(cid:57) (Strong) – (cid:57)(cid:57) (Moderate) – (cid:57) (Weak) positive contribution 
(cid:56)(cid:56)(cid:56) (Strong) – (cid:56)(cid:56) (Moderate) – (cid:56) (Weak) negative contribution  

–  Screening  of  policy  options  regarding  the  harmonisation  of  the  EMD  and  the  PSD 

with objective to create a true level playing field between all market participants 

(1) 

Screening of policy options regarding qualitative prudential requirements 

Under  Option 2.1  the  qualitative  prudential  requirements  remain  linked  to  the  capital 
requirements  directive.  This  does  not  lead  to  any  legal  uncertainty.  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  requirements  (one  for  payment 
institutions under the PSD and one for electronic money institutions under the EMD) will add 
complexity for hybrid institutions, such as Mobile 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 qualitative requirements which are closely related to the CRD 
are  replaced  by  qualitative  requirements  for  payment  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 legal certainty ensuring there are only two types of 
qualitative prudential requirements: 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 the EMD provisions into the PSD and contribute to 

EN 

45 

   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  electronic  money  institutions  as  they  have  to 
choose between one of the two licenses and apply the qualitative prudential requirements of 
the chosen regime. Under this option the overall qualitative prudential 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  stringent  qualitative  rules 
for credit institutions will have a negative impact on the development of new services.  

Table 3: Screening of policy options on qualitative 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 

Option 2.2 
Align with PSD and 
apply qualitative 
requirements with 
reference to Title II of the 
PSD to EMIs 

Option 2.3 
Repeal EMD 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:56)(cid:56) 

(cid:57)(cid:57)(cid:57) 

(cid:57) 

(cid:56) 

(cid:57) 

(cid:56) 

Contribution to objectives in comparison with the situation today, before transposition of the PSD: 
(cid:57)(cid:57)(cid:57) (Strong) – (cid:57)(cid:57) (Moderate) – (cid:57) (Weak) positive contribution 
(cid:56)(cid:56)(cid:56) (Strong) – (cid:56)(cid:56) (Moderate) – (cid:56) (Weak) negative contribution  

(2) 

Screening of policy options regarding initial capital requirements 

Under Option 2.4, the current initial capital is maintained 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  amount  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  capital  required  is  maximum  EUR 125 000,  this  represents  an 
initial  capital  requirement  of  4 %  in  case  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 institution. 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 therefore prevent the development of new and innovative 
services. 

EN 

46 

   EN 

 
 
 
Under Option 2.5 the threshold for electronic money institutions is lowered to EUR 125 000, 
and therefore issuance of electronic money is considered 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  coherence  between  EMD  and  PSD  and  therefore  contributes  to  the 
development of new and innovative services. It brings e-money institutions at the same level 
as 'other payment services activities' regulated under the PSD. 

Under  Option 2.6  the  threshold  for  electronic  money  institutions  is  lowered  to  the  range  of 
EUR 125 000–1 000 000,  considering  that  electronic  money  institutions  have  a  specific  risk 
profile  and  therefore  apply  a  specific  initial  capital  equal  or  higher  then  this  for  payment 
institutions  under  the  PSD,  however  lower  then  the  current  EUR 1 million  which  blocks 
market entrance of small entities. This approach brings a coherent prudential regime in place 
as  e-money  institutions  will  have  a  prudential  regime  more  stringent  then  payment 
institutions,  however  lower  then  credit  institutions.  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  current  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 activities, the initial capital of credit institutions will be applied which 
amounts  to  EUR 5 million.  This  higher  initial  capital  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 prudential requirements: initial capital 

Quantitative prudential 
requirements: initial 
capital 

Option 2.4 
Do nothing 
Maintain EUR 1 000 000 
initial capital 

Option 2.5 
Align with PSD applying 
initial capital 
requirements of PSD for 
'other service': 
EUR 125 000 to EMIs 

Option 2.6 
Align with PSD,and 
apply initial capital in the 
range of EUR 125 000–
250 000 to EMIs 

Option 2.7 
Repeal EMD 

Legal certainty 

Create a consistent legal 
framework 

Promote the development 
of new and innovative 
services 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:56)(cid:56)(cid:56) 

(cid:56)(cid:56)(cid:56) 

(cid:57)(cid:57) 

(cid:57)(cid:57)(cid:57) 

(cid:57)(cid:57)(cid:57) 

(cid:56) 

(cid:57)(cid:57) 

(cid:56)(cid:56) 

Contribution to objectives in comparison with the situation today, before transposition of the PSD: 
(cid:57)(cid:57)(cid:57) (Strong) – (cid:57)(cid:57) (Moderate) – (cid:57) (Weak) positive contribution 
(cid:56)(cid:56)(cid:56) (Strong) – (cid:56)(cid:56) (Moderate) – (cid:56) (Weak) negative contribution  

EN 

47 

   EN 

 
 
 
 
(3) 

Screening of policy options regarding ongoing capital requirements 

The  ongoing  capital  requirements  should  be  considered  in  view  of  the  lower  initial  capital 
requirements. Under Option 2.8 the current linear 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  prudential  requirements  should  be  at  least  as  stringent  as  these  of 
payment  institutions.  In  combination  with  lower  initial  capital  maintaining  the  current  own 
funds requirements would contribute to the development of new services as total capital.  

Table 5: Comparison total capital requirements (initial + ongoing capital requirements) 

Issued  e-
money 
million eu
ro 

3 

5 

10 

50 

100 

250 

350 

1 000 

Current method 

Lowering initial 
capital only 

New Method D 

Method B PSD 

% 

33 

20 

10 

2 

2 

2 

2 

2 

million euro 

% 

million euro 

% 

million euro 

% 

million euro 

1.0 

1.0 

1.0 

1.0 

2.0 

5.0 

7.0 

20.0 

4 

3 

2 

2 

2 

2 

2 

2 

0.125

0.125

0.200

1.0

2.0

5.0

7.0

20.0

5.0

5.0

3.8

2.3

2.2

1.8

1.5

1.2

0.150

0.250

0.375

1.15

2.15

4.40

5.4

11.9

4.0 

4.0 

2.5 

1.0 

1.0 

1.0 

0.5 

0.3 

0.125

0.200

0.325

0.725

1.225

2.725

3.225

4.850

Application of the current methods A–B–C from the payment services 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  applied  to  exiting  EMIs,  we  found  no  correlation 
between  the  three  PSD  methods  for  electronic  money  institutions.  Therefore,  it  is  up  to  the 
competent  authorities  to  determine  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  requirements  of  payment  institutions.  The  overall 
lower capital requirement will contribute to the development of new services. 

Under Option 2.10 total capital requirements will follow a degressive curve. Starting from the 
new lower initial capital requirement, for small companies, ongoing capital requirements will 
be slightly higher then the under the linear method, and for larger enterprises, ongoing capital 
requirements will be lower then the current one. Capital requirements 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  the  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  payment  volume  to  determine  capital  requirements.  Therefore, 
businesses engaged only in a minor part in issuance of electronic money and a larger part in 
other payments transactions will be facilitated to comply with the requirements of EMD. The 
new  Method D  ensures  a  consistent  legal  framework  as  it  ensure  more  stringent  prudential 

EN 

48 

   EN 

requirements  for  electronic  money  institutions  then  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.  Therefore  electronic  money  institutions  will  not 
continue  to  exist  and  businesses  will  have  to  apply  for  a  banking  license  with  higher  initial 
capital requirements and ongoing capital requirements. This will overall ensure legal certainty 
however; the high total capital requirements will not improve the overall consistency in view 
of  the  lower  capital  requirements  (initial  +  ongoing)  capital  requirements  from  payment 
institutions  of  the  PSD.  This  prudential  framework  is  expected  to  hamper  the  further 
development of the market.  

Table 6: Screening of policy options on prudential requirements: ongoing capital 

Quantitative prudential 
requirements: ongoing 
capital 

Option 2.8 
Do nothing 
Maintain 2 % own funds 
requirements 

Option 2.9 
Align with PSD, apply 
own funds requirements 
of PSD (Method A, B, C) 
to EMIs 

Option 2.10 
Align with PSD, apply 
specific own funds 
method D for EMIs 

Option 2.11 
Repeal EMD 

Legal certainty 

Create a consistent legal 
framework 

Promote the development 
of new and innovative 
services 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:56) 

(cid:57) 

(cid:57)(cid:57) 

(cid:56) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:56)(cid:56) 

Contribution to objectives in comparison with the situation today, before transposition of the PSD: 
(cid:57)(cid:57)(cid:57) (Strong) – (cid:57)(cid:57) (Moderate) – (cid:57) (Weak) positive contribution 
(cid:56)(cid:56)(cid:56) (Strong) – (cid:56)(cid:56) (Moderate) – (cid:56) (Weak) negative contribution  

(4) 

Screening of policy options regarding limitations on investments  

Under Option 2.12 existing limitations on investments are maintained. EMIs are requested to 
have investments no less than their financial liabilities 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  issued  electronic  money.  Debit  and  credit  card  receivables  are 
continued  to  be  excluded  from  eligible  investments.  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  would  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 

49 

   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,  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 payment service users against the claims of other creditors of the payment 
institution,  in  particular  in  the  event  of  insolvency'.  This  ensures  adequate  safeguarding 
replacing  the  current  provisions  on  limitations  of  investments.  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. Therefore electronic money institutions will not 
continue to exist and businesses will have to apply for a banking license to continue issuance 
of electronic money and apply according safeguarding requirements for funds hold, which are 
in the range of 12–14 %. As overall initial capital under this option will be EUR 5 million, the 
development  of  new  services  will  be  hindered.  If  EMIs  apply  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 

Option 2.13 
align with PSD 
Apply safeguarding 
requirements of PSD 

Option 2.14 
Repeal EMD 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:56) 

(cid:57) 

(cid:57) 

(cid:56) 

(cid:57) 

(cid:56) 

Contribution to objectives in comparison with the situation today, before transposition of the PSD: 
(cid:57)(cid:57)(cid:57) (Strong) – (cid:57)(cid:57) (Moderate) – (cid:57) (Weak) positive contribution 
(cid:56)(cid:56)(cid:56) (Strong) – (cid:56)(cid:56) (Moderate) – (cid:56) (Weak) negative contribution  

(5) 

Screening of policy options regarding 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  EMD.  Both  waivers  regime  have  different 
thresholds  and  therefore  the  waivers  regimes  will  lead  to  an  increasing  complexity  and  an 
overall  inconsistent  legal  framework.  Existing  passporting  regime  is  maintained  and  will 
continue to hinder setting up of branches. 

Under  Option 3.2  the  waivers  and  passporting  regime  for  payment  institutions  is  applied  to 
electronic  money  institutions.  This  will  simplify  the  overall  legal  framework  and  ensure 
consistency. A simplified legal framework will contribute to the development of new services.  

EN 

50 

   EN 

 
 
 
Under Option 3.3 the current waivers and passporting regime is repealed. Therefore existing 
waived  institutions  will  have  to  apply  for  a  license  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 payment institutions. However, the development of 
new services by small entities issuing electronic 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 

Option 3.2 
Align with PSD: 
Apply waivers regime of 
PSD 

Option 3.3 
Repeal EMD 

(cid:57) 

(cid:57) 

(cid:56) 

(cid:56) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:56) 

Contribution to objectives in comparison with the situation today, before transposition of the PSD: 
(cid:57)(cid:57)(cid:57) (Strong) – (cid:57)(cid:57) (Moderate) – (cid:57) (Weak) positive contribution 
(cid:56)(cid:56)(cid:56) (Strong) – (cid:56)(cid:56) (Moderate) – (cid:56) (Weak) negative contribution  

(6) 

Screening of policy options regarding anti money laundering requirements 

Under  Option 4.1  current  thresholds  for  AML  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 implement for business, this does not contribute to 
the promotion of new and innovative services. Legal 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 calendar year. This will increase consistency in the legal 
framework,  aligning  the  EMD  and  the  PSD  and  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 development of new services. 

Table 9: Screening of policy options on anti money laundering requirements 

EN 

51 

   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 

Option 4.2 
Increase threshold of 
AML requirements  

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:56) 

(cid:57) 

Contribution to objectives in comparison with the situation today, before transposition of the PSD: 
(cid:57)(cid:57)(cid:57) (Strong) – (cid:57)(cid:57) (Moderate) – (cid:57) (Weak) positive contribution 
(cid:56)(cid:56)(cid:56) (Strong) – (cid:56)(cid:56) (Moderate) – (cid:56) (Weak) negative contribution  

EN 

52 

   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 transactions running through banks payment 
systems and balances held by banks. Banks handle 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 wider 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 revised (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 credit institutions and only where the ‘standardised 
approach' is applied. It describes the substantial 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 total 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 

53 

   EN 

 
 
amount is limited to EUR 150.  

Deposit taking and 
related risks 

Issuance of electronic money does not constituted 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 liabilities related to outstanding money, in qualified 
liquid assets In comparison with credit institutions, EMIs are not allowed to invest money 
in assets les liquid such as consumer or business loans.  

Credit risk 
Operational risk 
(technical failure, 
fraud, etc.) 

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 hold 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.  

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 shall 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 excluded from qualified liquid assets.  

As the majority of consumers use debit cards 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 operating a payment account. 
2. Services enabling cash withdrawals from a payment account as well as all the 
operations required for operating a payment account. 
3. Execution of payment transactions, including transfers of funds on a payment account 
with the user's payment service provider or with another payment service provider: 

EN 

54 

   EN 

 
 
- execution of direct debits, including one-off direct debits, 
- execution of payment transactions through 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 the 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 except 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 prohibited to accept deposits and are only permitted to use funds 
accepted from users for rendering payment services so that customer funds will not be 
used or mixed with funds for other business activities. 

Credit risk 
Operational risk 
(technical failure, 
fraud, etc.) 

Financial 
soundness/Risk of 
bankruptcy 

Money laundering 
and terrorist 
financing 

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. 

Risks of payment institutions are highly different and lower then consumer deposits at 
credit institutions. 

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 Directive 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 money 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 monthly 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 

55 

   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 deposits. 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 down 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 risk similar to money remitters. 

Credit risk 

Telecoms might offer post-paid payment services, 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 this 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 dealing 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 Directive 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 services vouchers are meal vouchers, representing 
80 % of total turnover in 2007. New services which are currently emerging are gift 
vouchers. 

Service vouchers are not allowed to take deposits.  

Service Voucher Operators run, just as payment institutions, operational risks for the well-
functioning of their systems, internal controls, administrative procedures etc. Service 
Vouchers are already today dealing with these risks for their paper-based products.  

Deposit taking and 
related risks 

Credit risk 
Operational risk 
(technical failure, 
fraud, etc.) 

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 financial transactions, usually from low value and 
have therefore a limited exposure to the risk of money laundering and terrorist financing. 

EN 

56 

   EN 

 
 
 
financing 

Business activity 

Money remittance 

Systemically 
importance in 
payments market 
(size, number of 
providers) 

Deposit taking and 
related risks 

Credit risk 

Money remittance systems are classified as systemically not important payment 
systems26. A two tear structure of the money remittance sector can generally be found in 
most Member States: consisting of officially registered larger internationally operating 
remitters and a majority of small remitters operating without license. These small 
remitters operate in most cases in a limited network of friends and families (often 
immigrants or socially underprivileged groups with no access 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 financial 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. 

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 makes 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. 

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 transfer is completed, which is almost 
instantaneously. This credit risk is in no ways different from the 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 credit 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 first payment takes place and shortly afterwards 
delivery. Settlement risks are very short-termed 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 addressed 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 

57 

   EN 

 
                                                 
Operational risk 
(technical failure, 
fraud, etc.) 

Financial 
soundness/Risk of 
bankruptcy 

management procedures. 

Money remitters face like other payment service providers operational risks depending on 
the size of their operations due to technical failure 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. 

Available evidence and reports from money remitters 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 Member 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 

58 

   EN 

ANNEX 4 
Screening of administrative burden  

Article 6 of the existing EMD states that competent authorities shall verify that EMIs comply 
with capital requirements and limitations on investments 'not less then twice each year'. The 
2006 review report showed that most Member States have kept the minimum frequency of the 
EMD,  while  several  others  require  EMIs  to  report  more  often.  In  one  case  (Poland),  the 
National authorities reported that EMIs would have to report only once a year. The following 
table explains the reporting requirements in the different Member States: 

Country 

Austria 

Belgium 

Bulgaria 

Cyprus 

Reporting requirements 

Country 

Reporting requirements 

Quarterly 

Latvia 

Twice a year 

Twice a year 

Lithuania 

Quarterly 

No information available 

Luxembourg 

Twice a year 

Twice a year 

Malta 

Monthly 

Czech Republic 

Twice a year 

Netherlands 

Monthly/Quarterly 

Denmark 

Twice a year 

Poland 

Estonia 

Finland 

France 

Not specified 

Twice a year 

Twice a year 

Germany 

Monthly 

Greece 

Hungary 

Ireland 

Twice a year 

Twice a year 

Twice a year 

UK 

Portugal 

Romania 

Slovakia 

Slovenia 

Spain 

Sweden 

Once a year 

Twice a year 

No information available  

Quarterly 

Twice a year 

Not yet specified 

Twice a year 

Twice a year 

Source: European Commission, Evaluation report EMD, 200627 

Calculation of the administrative burden of the e-money directive, in relation to the different 
policy options is based on following assumptions:  

•  Number  of  current  EMIs  and  waived  institutions  (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  for  EMIs  are  the  authorisation  procedures, 

reporting requirements.  

27 

In 2008 no EMIs were reported in Poland. 

EN 

59 

   EN 

                                                 
•  Reporting  costs  for  EMIs  are  based  on  a  bi-yearly  reporting  requirement  which  was 
observed  during the  2006  review  as  the average  reporting  requirement  in  the  majority  of 
the Member States28.  

Administrative burden for public authorities in Member States 

Cost  of  reporting  requirements  for  public  authorities  in  Member States  are  estimated  on  the 
basis of an on an investment cost of adaptation 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 maintenance cost of 10 % of investment corresponding in a yearly 
recurring cost of EUR 187 000 or EUR 250 000. Only Member States which EMIs or waived 
institutions  (currently  9)  are  assumed  to  invest  in  the  adaptation  of  reporting  systems,  for 
other Member States, no costs were taken into account.  

Treatment  of  reporting  of  individual  businesses  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), filling 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 approximation for accountants or bookkeepers, who will presumably do the 
reporting. However, it could be reasonably expected that junior employees undertake most of 
the activities. There is thus a risk of overestimation in hourly tariffs, for some Member States, 
as  in  some  instances  the  hourly  wage  of  a  junior  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 working day (7.5 hours) to obtain the requested 
information.  This  activity  is  conducted  twice  a  year  to  comply  with  the  bi-annual  reporting 
requirement. 

This 7.5-hour estimate comprises the following main types of action: 

(1) 

(2) 

(3) 

familiarising with the information obligation (1.0 hours); 

retrieving information from existing data (2.5 hours); 

adjusting existing data (1.5 hours); 

(4) 

filling forms (1.0 hours); 

(5) 

(6) 

28 

holding internal meeting to verify submission (1.0 hours); and 

submitting information and filing (0.5 hours). 

Some Member States requested more frequent reporting, which is usually based on the rationale to keep 
reporting requirements in line with those of traditional credit institutions. For example, Austria requests 
a quarterly reporting to the Financial Markets Supervisory 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 

60 

   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 estimated at 15 % and maintenance cost 10 % 
of  initial  investment,  leading  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. Current market uptake is consider low, with 20 
EMIs and 127 waived entities operating in only nine countries. A scenario of medium market 
uptake extends the number of EMIs to 125 and waived institutions to 250, operating in a total 
of 15 Member States. Under this scenario, mobile telecom operators and vouchers operators 
are  expected  to  apply  for  an  EMI  license  to  offer  prepaid  mobile  payment  services  and  a 
license  for  payment  institution  for  their  postpaid  service.  A  high  market  uptake  scenario 
considers that 300 EMIs and 750 waived institutions would be operating in all Member States 
of the EU. 

Table 1: Estimated market uptake of electronic money institutions in the EU 

Current situation 
(Low market uptake) 

Medium market uptake 

High market uptake 

Number of countries with 
EMIs or waived 
institutions 

Number of EMIs 

Number of waived 
institutions 

Administrative burden  

9 

20 

127 

15 

125 

250 

27 

300 

750 

Based on the assumptions above, the 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  actual  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 burden 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  adapting  the  reporting  system  might  have  been 
underestimated and for larger Member States, such as UK with a large adoption of EMIs and waived 
institution, the administrative costs might have been underestimated.  

EN 

61 

   EN 

 
 
                                                 
Belgium 

Cyprus 

Czech 
Republic 

Denmark 

Germany 

Italy 

Netherlands 

Sweden 

UK 

Total EU 

Norway 

0 

1 

0 

0 

1 

3 

1 

0 

14 

20 

3 

5 

0 

54 

7 

7 

0 

5 

3 

46 

127 

1 

255 546 

191 282 

0 

64 265 

226 029 

187 986 

38 044 

0 

879 845 

199 326 

280 561 

191 292 

0 

0 

680 519 

89 269 

320 242 

192 362 

38 547 

89 333 

306 031 

190 345 

115 686 

0 

294 701 

191 918 

38 737 

64 046 

207 269 

187 500 

0 

19 769 

1 413 337 

287 554 

539 155 

586 627 

4 183 561 

1 819 564 

770 169 

1 593 828 

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  administrative  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 institutions operating and market presence 
in  all  the  Member States  of  the  EU  would  lead  to  a  yearly  administrative  burden  of 
EUR 26 million. 

Table 3: Estimate yearly administrative burden of the e-money directive depending on market 
uptake 

Current 
situation 
(million euro) 

Medium 
(million euro) 

High 
(million euro) 

Total administrative burden EU 

Member States public authorities 

EMIs 

Waived institutions 

4.2 

1.8 

0.8 

1.6 

11.0 

3.0 

4.8 

3.2 

26.8 

5.7 

11.6 

9.5 

Next  to  this  yearly  recurring  administrative  burden,  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  set-up  cost  is  the  investment  linked  to  the 
adaptations  of  reporting  systems  by  Member States  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 comply with e-money directive by Member State  

EN 

62 

   EN 

 
Number of institutions 2007 

Estimated initial investment cost (EUR) 

Country 

EMIs 

Waivers 

Total 

MS 

EMIs 

Waived 
institutions 

Belgium 

Cyprus 

Czech 
Republic 

Denmark 

Germany 

Italy 

Netherlands 

Sweden 

UK 

Total EU 

Norway 

0 

1 

0 

0 

1 

3 

1 

0 

14 

20 

3 

5 

0 

1 012 824 

755 042 

0 

257 782 

902 629 

750 486 

152 144 

0 

54 

3 520 794 

765 768 

1 114 447 

755 055 

0 

0 

2 755 026 

359 392 

1 268 345 

756 171 

152 647 

359 527 

1 210 831 

752 845 

457 986 

0 

1 165 673 

755 523 

152 837 

257 314 

831 330 

751 747 

0 

79 583 

5 544 131 

1 045 860 

2 136 555 

2 361 716 

16 571 004 

7 088 496 

3 052 169 

6 430 339 

1 086 378 

752 203 

307 833 

26 342 

7 

7 

0 

5 

3 

46 

127 

1 

Under  a  scenario  of  medium  market  take  up,  initial  investment  could  reach  up  to 
EUR 43.4 million in November 2009. Under a more aggressive 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 

Initial investment cost 

Member States 

EMIs 

Waived institutions 

Current 
situation 
(million euro) 

Medium 
(million euro) 

High 
(million euro) 

16.6 

7.1 

3.1 

6.4 

43.4 

11.5 

19.1 

12.8 

105.2 

21.0 

45.8 

38.5 

In  the  table  below,  an  overview  is  given  of  the  impact  of  administrative  burden  of  the 
different packages.  

Table 6: 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 
PSD, with 
specific 

Package 5: 
Repeal EMD 

EN 

63 

   EN 

 
 
regime of PSD 
to EMIs 

Member States 

2 prudential 
regimes to 
support as from 
November 
2009 

Idem Package 1 

Same prudential 
regime for PI & 
EMI 

EMIs 

2 prudential 
regimes 

Idem Package 1 

Hybrid institutions 

Idem EMIs 

Split up 
business 

Idem Package 1 

1 prudential 
regime, 

No reporting 
requirements 

1 prudential 
regime, 

No reporting 
requirements 

prudential 
regime for 
EMIs 

Specific 
prudential 
regime for 
EMIs 

1 prudential 
regime, 

Single 
reporting 
requirements 

1 prudential 
regime 

Single 
reporting 
requirements 

1 prudential 
regime is 
removed 

Comply with 1 
prudential 
regime: PI or 
CRD 

Single reporting 
requirements 

Single reporting 
requirements 

Member States 
with institutions 

EMIs 

Waived 
institutions 

Yearly 
administrative 
burden 

Initial investment 
and compliance 
cost 

9 

20 

9 

20 

127 

15–27 

15–27 

9–15 

125–300 

125–300 

127 

300–750 

300–750 

20 

127 

EUR 4–
5 million 

EUR 4–
5 million 

EUR 16 million  EUR 16 million 

0 

0 

EUR 11–
26 million 

EUR 3–
6 million 

EUR 46–
105 million 

EUR 3.1 million 

As  from  November  2009,  in  the  'Do  nothing'  and  'Guidance  note'  packages,  EMIs  will  be 
requested  to  become  payment  institutions  and  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. Therefore, 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. Under Package 3, where the prudential regime of 
the  PSD  is  applied  to  electronic  money  institutions,  EMIs.  As  under  the  PSD  no  reporting 
requirements are requested, the administrative burden would be reduced to a strict minimum. 
The disadvantage of this approach is that central banks would be hindered in monitoring the 
evolution of the electronic money market. Under the specific regime of Package 4, reporting 
requirements  would  be  maintained  for  electronic  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 

64 

   EN 

ongoing  capital,  improving  the  credibility  of  electronic  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 increasing number of Member States, 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  would  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  place,  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 

65 

   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 application 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 the 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  established,  with  participation  of  the  Secretariat-
General  and  Competition  DG,  Information  Society  and  Media  DG,  Economic  and 
Financial Affairs DG, to discuss 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 

31 

EN 

The  Payment  Systems  Government  Experts  Group  (PSGEG)  is  a  consultative  body  composed  of 
government experts, typically drawn from national finance ministries and national central banks as well 
as a representative from the European Central Bank as an observer, with expertise in the payments area 
with the objective of providing advice and guidance to the Commission. 
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  the  objective  of  providing 
advice and guidance to the Commission. 

66 

   EN 

 
                                                 
ANNEX 6 
Number of electronic money issuers in EU 

Table 1: Number of electronic money issuers as of end 2005 and end 2007  

f 

2005 

2007 

Country ELMIs Waivers 

EMIs 

Waivers 

EMIs 

Waivers 

Austria 

Belgium 

Bulgaria 

Cyprus 

Czech Republic 

Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Ireland 

Italy 

Latvia 

Lithuania 

Luxembourg 

Malta 

Netherlands 

Poland 

Portugal 

Romania 

Slovakia 

Slovenia 

EN 

0 

0 

0 

1 

0 

0 

0 

0 

– 

1 

0 

– 

0 

3 

– 

0 

0 

– 

1 

0 

0 

0 

0 

0 

0 

0 

N/A 

0 

0 

1* 

0 

0 

0 

1 

0 

0 

0 

2** 

0 

0 

0 

0 

1 

0 

0 

N/A 

0 

0 

N/A 

0 

N/A 

0 

24 

at least 3 

0 

0 

0 

4 

0 

0 

0 

0 

2 

N/A 

0 

0 

at least 5 

0 

N/A 

N/A 

N/A 

N/A 

67 

N/A 

5 

0 

0 

54 

7 

0 

0 

– 

7 

0 

– 

0 

0 

– 

0 

0 

– 

5 

0 

N/A 

0 

N/A 

N/A 

   EN 

f 

2005 

2007 

Country ELMIs Waivers 

EMIs 

Waivers 

EMIs 

Waivers 

Spain 

Sweden 

UK 

Total EU 

Norway 

0 

0 

4 

9 

3 

0 

1 

33 

72 

1 

0 

0 

14 

20 

3 

0 

3 

46 

127 

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 

68 

   EN 

 
 
 
ANNEX 7 
List of licensed EMI end 2007 

Table 1: List of licensed e-money institutions end 2007 

Company name 

CSC24Seven.com Limited 

NCS Mobile Payment Bank GmbH 

CARTALIS IMEL SPA 

IMEL.EU SPA 

MOBILMAT IMEL SPA 

Interpay elektronische geldinstelling B.V 

APS Financial Limited (21/06/07)  

Blackhawk Network (UK) Ltd (09/07/07)  

Citadel Commerce UK Ltd (30/11/06)  

ClickandBuy (Europe) Ltd (19/11/06)  

Costa Card ELMI Limited (12/10/07)  

FirePay UK Ltd (19/12/06)  

Google Payment Limited (19/03/07)  

G-T-P financial Services Ltd (11/09/07)  

Moneybookers Limited (05/02/03)  

Neteller (UK) Ltd (20/10/04)  

PrePay Technologies Limited (20/03/03)  

Smart Voucher Limited (24/07/06)  

Starbucks Card Europe Ltd (19/09/06)  

Vincento Payment Solutions Limited (07/03/08) 

Source: Data provided by Member States' public authorities, 2008 

Country 

Cyprus 

Germany 

Italy 

Italy 

Italy 

NL 

UK 

UK 

UK 

UK 

UK 

UK 

UK 

UK 

UK 

UK 

UK 

UK 

UK 

UK 

EN 

69 

   EN 

ANNEX 8 
Evolution of Electronic Commerce and Cards based electronic money in EU 

The  graph  shows  that  electronic  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 credit transfers to purchase via 
the internet, this gives a reference for the potential 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

4,0%

4,2%

2,7%

2,1%

t
e
n
r
e
t
n

i
a
i
v
e
c
r
e
m
m
o
c
-
e
m 
o
r
f
r
e
v
o
n
r
u
t
s
e
s
i
r
p
r
e
t
n
e
f
o
% 

4,5%

4,0%

3,5%

3,0%

2,5%

2,0%

1,5%

1,0%

0,5%

0,0%

2004

2005

2006

2007

Source: Eurostat 2008 

The graph below shows the  evolution  of card  based  e-money  in  circulation issued  by  credit 
institutions. The data show an annual increase 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 circulation in EU in August 2007. Beginning of 
2008, the total issued electronic money in circulation was EUR 717 million.  

Graph 2: E-money issued by credit institutions in circulation in the euro area 

EN 

70 

   EN 

 
 
 
 
 
 
T o t a l   i s su e d   c a r d s   b a s e d   e -m o n e y   i n   c i r c u l a ti o n   i n   th e   e u r o   a r e a
( €   M i l l i o n s ,   n o t   s e a so n a l l y   a d j u s te d ;   e n d   o f   p e r i o d )

9 0 0

8 0 0

7 0 0

6 0 0

5 0 0

4 0 0

3 0 0

2 0 0

1 0 0

0
e
S

7

9

9

1

9

1

a
8J
9

a

M

8

9

9

1

8

9

9

1

p

e

S

a
9J
9

9

1

9

9

1

a

M
9

e

S
9

a
0J
0

a

M
0

0

2

0

0

2

0

2

9

9

1

p

e

S
0

0

a
1J
0

M
1

0

a

e

S
1

0

0

2

0

2

0

2

a

J

a
M

2

0

0

2

2

0

0

2

2

0

0

2

p

e

S

a
3J
0

0

2

a

M

3

0

0

2

0

0

2

e

S
3

a

J

4

0

a

M
4

0

2

0

0

2

e

S

4

0

0

2

0

2

a
5J
0

a

e

S
5

0

M
5

0

a

J

6

0

a

M
6

0

2

0

2

0

2

0

0

2

p

e

S

a
7J
0

0

2

7

0

0

2

a

M

0

2

S
7

0

a
8J
0

p

e

0

2

6

0

0

2

Source: ECB Blue Book 2008 

EN 

71 

   EN 

 
 
ANNEX 9 
Method D for calculation of own funds for electronic money institutions 

Under the new method D, electronic money institution’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  money  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 electronic money and payment 
volume defined as following:  

Outstanding  electronic  money  means  the  monthly  average  of  the  preceding  12  months' 
financial liabilities related to outstanding electronic money 

Payment  volume  means  the  monthly  average  payment  volume  of  the  preceding  12  months; 

EN 

72 

   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 money as shown in the table below 

Table 1: Relation issued electronic money and payment volume 

Turnover of 
electronic 
money 

Low 

Medium 

High 

<1 

1 

>1 

Impact 

EM>PV 

EM=PV 

EM<PV 

Example 

Turnover of 
EM 

EM 
(million euro) 

PV 
(million euro) 

0.5 

1 

10 

1 

1 

1 

0.5 

1 

10 

If the monthly turnover of electronic money is low, the monthly outstanding electronic money 
is higher then payment volume. In this situation, 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  the  monthly  payment  volume.  In  this  situation, 
payment volume is the more relevant indicator for electronic money. Based on data provide 
from  the  EMI,  monthly  turnover  is  on  average  2,  which  means  that  on  average,  electronic 
money stays only 2 weeks at the EMI. 

EN 

73 

   EN