proposal for a Directive of the European Parliament and of the Council of on the taking up, pursuit and prudential supervision of the business of electronic money institutions, amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC (Text with EEA relevance) {SEC(2008) 2572} {SEC(2008) 2573}
Date: 2008-10-09
Institutions: European Commission
Subjects: banking, electronic money, financial institution, financial legislation, issuing of currency, management audit

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 9.10.2008 
COM(2008)627 final 

2008/0190 (COD) 

proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

of  

on the taking up, pursuit and prudential supervision of the business of electronic money 
institutions, amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 
2000/46/EC 

(Text with EEA relevance) 

(presented by the Commission) 
{SEC(2008) 2572} 
{SEC(2008) 2573} 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

1.1. 

Objectives of the proposal 

Customers  and  businesses  in  the  European  Union  are  making  increasing  use  of  electronic 
money, which is only now starting to be successful in replacing other means of payment in 
some  Member States  for  certain  types  of  payments.  However,  electronic  money  is  still  far 
from  delivering  the  full  potential  benefits  that were  expected  eight  years  ago  at  the  time  of 
adoption of Directive 2000/46/EC on the taking up, pursuit of and prudential supervision of 
the  business  of  electronic  money  institutions  (hereafter  referred  to  as  the  'Electronic  Money 
Directive')1. 

The  evaluation  of  the  application  of  this  Directive2  has  shown  that  some  of  its  provisions 
seem to have hindered the take-up of the electronic money market, hampering technological 
innovation.  Figures  on  the  limited  number of fully  licensed electronic  money  institutions or 
on the low volume of electronic money issued demonstrate that electronic money has not yet 
really taken off in most of the Member States. 

Now that a modern and coherent legal framework for payment services has been established 
at  Community  level  with  the  adoption  of  Directive  2007/64/EC  on  payment  services  in  the 
internal  market  (hereafter  referred  to  as  the  'Payment  Services  Directive')3,  further  action  is 
urgently  required  to  promote  the  emergence  of  a  true  single  market  for  electronic  money 
services in the European Union. 

This  Commission  proposal  focuses  on  modernising  the  provisions  of  the  Electronic  Money 
Directive,  with  special  reference  to  the  prudential  regime  of  electronic  money  institutions, 
ensuring consistency with that of payment institutions under the Payment Services Directive. 
It  aims  to  enable  new,  innovative  and  secure  electronic  money  services  to  be  designed, 
provide  market  access  to  new  players  and  foster  real  and  effective  competition  between  all 
market  participants.  Innovation  in  the  payments  market  will  create  tangible  benefits  for 
consumers,  businesses  and  the  wider  European  economy.  Creative  solutions  will  promote 
rapidity of payments, convenience of use and new functionalities for the e-society of the 21st 
century. 

1.2. 

General context 

The current volume of electronic money is unsatisfactorily low, mainly because the number of 
newcomers to the payment market after the adoption of the Electronic Money Directive has 
not been as significant as expected. Therefore, in most of the Member States, e-money has not 
yet been considered a credible alternative to cash. The full potential of the electronic money 
market  remains  unexploited  as  it  has  not  significantly  contributed  to  stimulating  consumer 
represented  only 
spending  and  economic  growth.  Outstanding  electronic  money 

1 
2 
3 

OJ L 275, 27.10.2000, p. 39. 
SEC(2006) 1049, http://ec.europa.eu/internal_market/bank/docs/e-money/working-document_en.pdf. 
OJ L 319, 5.12.2007, p. 1. 

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EUR 1 billion  in  comparison  with  637 billion  of  cash  in  circulation  as  of  August 2007.  20 
electronic money institutions and 127 entities under a waiver were reported at end-2007. 

The  current  Electronic  Money  Directive  was  adopted  in  response  to  the  emergence  of  new 
categories of pre-paid payment instruments, in the context of the rapid changes in the business 
environment linked to the information technology revolution. The Electronic Money Directive 
sought  to  open  the  market  for  the  issuance  of  electronic  money  through  the  creation  of 
'electronic money institutions' regulated under a specific prudential regime. The objective was 
to  create  a  clear  legal  framework  designed  to  strengthen  the  single  market  for  electronic 
payments  and  stimulate  competition  while  at  the  same  time  ensuring  an  adequate  level  of 
prudential supervision. However, some inherent weaknesses have prevented it from delivering 
the  expected  results.  These  weaknesses  have  been  identified  in  the  evaluation  of  the 
Electronic  Money  Directive.  They  are  linked  mainly  to  the  inadequacy  of  the  legal  and 
prudential framework for electronic money institutions under the current Directive. 

The first problem strand relates to the unclear definition of electronic money and the scope of 
the Directive, which generates legal uncertainty and hinders the development of the market. 
The  second  relates  to  an  inconsistent  legal  framework  with  a  disproportionate  prudential 
regime,  inconsistent  waivers  and  passporting  procedures  as  well  as  the  application  of  anti-
money  laundering  rules  to  electronic  money  services.  This  overall  legal  inconsistency  will 
increase  once  the  Payment  Services  Directive  provisions  have  been  implemented  (by 
November 2009),  since  some  of  the  requirements  for  the  prudential  regime  of  payment 
institutions  differ  widely  from  those  applicable  today  to  electronic  money  institutions  (e.g. 
electronic money institutions are currently subject to the principle of exclusivity of activities 
whereas payment institutions will not be). 

Traditionally,  payment  services  were  offered  by  banks  regulated  by  the  EU  banking 
directives. These were amended in 2006 and replaced by Directive 2006/48/EC relating to the 
taking up and pursuit of the business of credit institutions (recast of Directive 2000/12/EC)4 
and Directive 2006/49/EC on the capital adequacy of investment firms and credit institutions 
(recast of Directive 93/6/EEC)5, hereafter referred to as the 'Capital Requirements Directive'. 

Electronic  money  can  be  issued  by  electronic  money  institutions  (which,  for  the  purpose  of 
the  Capital  Requirements  Directive,  are  considered  as  'special  purpose'  credit  institutions), 
regulated  under  the  Electronic  Money  Directive.  Credit  institutions,  regulated  under  the 
Capital Requirements Directive, can also issue electronic money within the framework of the 
Electronic Money Directive. Providers wishing to issue electronic money therefore currently 
have two options: 

–  to  apply  for  a  licence  as  an  electronic  money  institution  under  the  Electronic  Money 

Directive, or 

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

The Payment Services Directive provides the legal foundation for the creation of an EU-wide 
single  market  for  payments.  It  aims  to  establish  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.  Under  Title II  of  the  Payment  Services 

4 
5 

OJ L 177, 30.6.2006, p. 1. 
OJ L 177, 30.6.2006, p. 201. 

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Directive,  a  new  category  of  payment  service  providers,  namely  'payment  institutions',  has 
been created. Payment institutions enjoy a specific prudential regime which is different from 
that of electronic money institutions and credit institutions. However, payment institutions are 
not allowed to issue electronic money. They are also prohibited from accepting deposits from 
payment  service  users  and  are  permitted  to  use  funds  received  from  payment  service  users 
only  for  providing  the  payment  services  listed  in  the  Annex  to  the  Payment  Services 
Directive. The activity of issuing electronic money is not listed in the Annex to the Payment 
Services Directive, but is implicit within one of the items of Annex I to Directive 2006/48/EC. 

1.3. 

Consistency with other policies and objectives of the Community 

The approach is consistent with the policies and objectives to create a true internal market for 
financial services, and contributes to the creation of a Single Euro Payments Area (SEPA). It 
is  consistent  with  the  Lisbon  agenda,  as  the  review  of  the  Electronic  Money  Directive  will 
promote technological innovation and contribute to growth and jobs. 

2. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

2.1. 

Consultation of interested parties 

Consultation methods, main sectors targeted and general profile of respondents 

On the basis  of the  Electronic  Money Directive review clause  (Article 11), the Commission 
launched an evaluation exercise beginning 2005. To conduct this evaluation, the Commission 
services launched a public consultation in July 2005. Based on the evaluation study and the 
public  consultation,  the  Commission  services  published  a  staff  working  document  on  the 
review of the Electronic Money Directive in July 20066.  

Member States  and  interested  stakeholders  have  been  regularly  consulted  on  the  objectives 
and content of the proposal. Two expert groups on retail payments, respectively the Payment 
System  Government  Expert  Group  and  the  Payment  System  Market  Group,  discussed  the 
review  of  the  Electronic  Money  Directive  between  December  2007  and  June  2008.  In 
addition,  regular  bilateral  discussions  with  Member States,  the  European  Central  Bank,  the 
payment  industry  (banks,  electronic  money  institutions  and  mobile  payment  providers), 
consumer organisations, etc. have been organised.  

Summary of responses and how they have been taken into account 

The main findings of the evaluation report and the public consultation are summarised in the 
Commission staff working document on the review of the Electronic Money Directive issued 
in  July 20067.  Most  of  the  respondents  saw  a  need  for  revising  the  Directive,  claiming  that 
some provisions seemed to have hindered the development of the e-money market. 

During  the  review  process,  stakeholders  expressed  concerns  that  the  current  Directive  lacks 
legal certainty due to the unclear definition of electronic money and the unclear scope of the 
Directive. 

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SEC(2006) 1049, 
document_en.pdf. 
Cf. footnote 5. 

19.7.2006, 

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

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In  addition,  the  Review  Report  showed  that  high  capital  requirements,  as  well  as  certain 
restrictions (e.g. on the scope of activities of electronic money institutions) and requirements 
imposed by the Electronic Money Directive, have hindered the development of the electronic 
money market.  

contributions 

The  main 
http://circa.europa.eu/Public/irc/markt/markt_consultations/library?l=/financial_services/e-
money_directive&vm=detailed&sb=Title. 

consultation 

public 

found 

can 

the 

be 

to 

at: 

2.2. 

Collection and use of expertise 

The Commission made wide use of external expertise during the preparation of this proposal. 
An evaluation study by external consultants, a public consultation and input from two expert 
groups  provided  valuable  expertise.  A  specific  meeting  was  organised  with  the  electronic 
money industry and the European Central Bank. 

2.3. 

Impact assessment 

A wide range of solutions have been considered to address the problems affecting electronic 
money  services  and  meet  the  objectives  that  have  been  set.  The  two  main  problems,  as 
mentioned in section three, are caused by issues related to: 

(1) 

(2) 

The definition of e-money and scope of the Electronic Money Directive; 

The  inadequacy  of  the  legal  framework  (prudential  regime,  waivers  and  anti-money 
laundering rules). 

Based on an initial screening of the different policy options against the policy objectives, five 
key  policy  options  were  evaluated:  1) do  nothing;  2) issue  a  simple  guidance  note;  3) apply 
the  prudential  regime  of  payment  institutions  to  electronic  money  institutions;  4) apply  a 
specific  prudential  regime  for  electronic  money  institutions;  and  5) repeal  the  Electronic 
Money Directive. 

Based on the evaluation of the policy options, it has been considered that alignment with the 
Payment Services Directive, as envisaged in both policy option 3 and policy option 4, would 
be the most appropriate way forward. Both options are expected to have a positive impact on 
the  uptake  of  the  electronic  money  market  in  terms  of  electronic  money  in  circulation  (a 
potential increase up to EUR 10 billion) and the number of institutions (up to 120 electronic 
money institutions). 

The  main  advantages  of  policy  option 4  are  the  availability  of  a  specific  prudential  regime 
commensurate with the risks posed by electronic money institutions and maintenance of the 
existing reporting requirements for electronic money institutions to ensure market monitoring. 
The  disadvantage  would  be  a  higher  administrative  burden,  which  remains  however 
proportionate to its objective.  

Policy option 3, applying the prudential requirements relating to 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 would complicate market monitoring. In addition, 
the  prudential  regime  in  question  is  indirectly  linked  to  the  risks  of  electronic  money 
institutions via payment volume as electronic money is used for executing payments. 

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Policy  option 1  (do  nothing)  or  policy  option 2  (issue  a  guidance  note)  would  maintain  the 
complexity of the legal framework after the transposition of the Payment Services Directive in 
2009  and  would  hinder  further  market  development.  Option 5  (repeal  the  Directive)  would 
create legal uncertainty and hinder the development of new electronic money services.  

The Commission's impact assessment is accessible at:  

http://europa.eu.int/comm/secretariat_general/impact/docs/SEC_2008_..._1_en.pdf. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

3.1. 

Summary of the proposed action 

The new proposal has a complete new structure. Given the desired alignment to the Payment 
Service Directive and the fact that all provisions have been amended, the existing Electronic 
Money Directive will be repealed and replaced by the new proposal. 

The major changes that will be introduced by the proposal are the following: 

Articles 1 and 2: Clarification of the scope of the Directive and of the definition of electronic 
money 

The current Directive raises legal uncertainty as to its applicability to certain business models 
and  hinders  the  development  of  new  and  innovative  services.  As  proposed  in  the  Review 
Report, clarification of the definitions of 'electronic money' and 'electronic money institution' 
is  necessary  to  address  concerns  as  to  which  business  models  fall  under  the  Directive  and 
which  services  are  regulated  by  Directive  2007/64/EC.  A  technically  neutral  and  simpler 
definition of 'electronic money' is proposed.  

Articles 3, 6, 7 and 9: Revision of the prudential requirements 

Currently,  the  prudential  regime  of  electronic  money  institutions  is  closely  linked  to  the 
prudential regime of credit institutions under Directive 2006/48/EC. Based on the qualitative 
risk  assessment  carried  out  in  its  impact  assessment,  the  Commission  considers  that  the 
current prudential requirements are excessive with regard to the risk of the activity. In order to 
facilitate  possible  future  integration  of  the  provisions  of  this  Directive  into  Directive 
2007/64/EC  and  given  the  close  interrelationship  between  electronic  money  and  electronic 
payments, it is important to ensure seamless consistency between the respective regimes for 
payment  institutions  and  electronic  money  institutions.  The  proposal  therefore  includes  the 
following adaptations:  

Application  of  the  qualitative  prudential  requirements  under  Title II  of  Directive 
2007/64/EC  to  electronic  money  institutions  (Article 3).  This  includes  the  authorisation 
procedure of Directive 2007/64/EC, following which e-money institutions have to submit an 
application to the competent authorities of the home Member State, including, inter alia, the 
programme  of  operations,  a  business  plan  and  evidence  of  initial  capital  and  governance 
arrangements. The competent authorities shall inform the institution within three months after 
receipt of the application whether the authorisation is granted or refused. 

Lowering of the initial capital requirement from EUR 1 million to EUR 125 000 (Article 6). 
The initial capital is considered to be excessive and disproportionate with regard to the risk of 

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the  service.  This  high  initial  capital  is  seen  as  a  major  obstacle  for  smaller  firms  (mainly 
waived institutions) to apply for an authorisation to become an electronic money institution.  

Replacing current ongoing capital requirements with new methods of calculation based on 
the nature and the risk profile of electronic money institutions (Article 7). 

Articles 8 and 9: Activities and safeguarding requirements 

Today, under Article 1(4) of the Directive, electronic money institutions are prohibited from 
doing any business other than the issuance of electronic money and closely related services. 
This  restriction  of  activities  is  not  in  line  with  the  non-exclusivity  approach  for  payment 
institutions  which,  under  Directive  2007/64/EC,  may  engage  in  non-payment  services 
business  (e.g.  retailing  or  telecom  activities).  A  more  coherent  approach  is  advisable. 
Electronic  money  institutions'  activities  should  not  necessarily  be  restricted  to  issuing 
electronic  money  and  therefore  safeguarding  requirements  such  as  those  in  Article 9  of 
Directive 2007/64/EC should apply in cases of hybrid electronic money institutions. 

Article 5: Redeemability 

Clarification is needed on the application of redeemability requirements (the possibility for a 
consumer  to  get  back  his  electronic  money  at  all  times  by  credit  transfer  or  in  cash),  with 
special reference to their application to mobile telecom. Consumers should have the right to 
redeem funds at all times, free of charge if redemption takes place in total. Where redemption 
is  partial,  before  termination  of  the  contract,  the  issuer  may  charge  the  holder  a  fee  which 
should be commensurate with the cost of the operation. 

Article 10: Waiver 

The  Review  Report  outlined  that  a  balance  should  be  struck  between  facilitating  market 
access,  ensuring  adequate  safeguards  and  avoiding  competitive  distortions.  There  is  also  a 
need to provide incentives to institutions that operate under a waiver but envisage becoming 
fully licensed institutions. It is suggested that the electronic money waiver regime be aligned 
with  the  regime  in  Article 26  of  Directive  2007/64/EC.  Such  a  change  must  be  seen  in  the 
context of the lighter entry requirements for electronic money institutions. 

Article 16: Money laundering rules 

In  view  of  the  low  average  amounts  involved  in  electronic  money  transactions,  full 
identification  and  record-keeping  requirements  could  be  considered 
application  of 
disproportionate, taking into account their high administrative costs for the payments industry, 
in a low-value online or mobile payments context. The current Directive contains no specific 
provisions  covering  anti-money  laundering.  However,  Directive  2005/60/EC  introduced  a 
simplified  customer  due  diligence  regime  which  applies  to  electronic  money,  and  a  similar 
regime  has  been  inserted  in  the  Regulation  on  information  on  the  payer  accompanying 
transfers of funds. It is proposed that these low amounts be aligned with those in Articles 34 
and  53  of  Directive  2007/64/EC  and,  therefore,  that  the  amounts  of  the  thresholds  in 
Article 11(5)(d)  of  Directive  2005/60/EC  be  increased.  This  measure  would  contribute  to 
avoiding  double  identification  in  account-based  situations.  In  addition,  accompanying 
measures adopted by the industry would contribute to the mitigation of the risk. This would 
be in line with the self-regulatory approach in the area of payments (e.g. SEPA). 

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Article 17: Amendments to Directive 2006/48/EC 

E-money institutions shall not accept deposits. The deposit-taking shall remain the monopoly 
of credit institutions. However, it is appropriate to consider e-money institutions as "financial 
institutions" for the purpose of the Capital Requirements Directive 2006/48/EC. Changes are 
inserted  in  Article  4(5)  and  in  Annex  I  of  the  Capital  Requirements  Directive  in  order  to 
reflect this and ensure that credit institutions may continue to issue e-money. 

3.2. 

Legal basis 

The legal basis for the proposal is Articles 47(2) and 95 of the EC Treaty. 

3.3. 

Subsidiarity principle 

The subsidiarity principle is respected. According to this principle, action at Community level 
should  be  taken  only  when  the  objectives  envisaged  cannot  be  achieved  sufficiently  by 
Member States alone. 

Directive 2000/46/EC has created a harmonised single market for the provision of electronic 
money in the European Union. However, some obstacles remain and need to be addressed at 
pan-European  level.  Electronic  commerce  is,  by  its  very  nature,  a  global  issue  and  national 
solutions  alone  would  hamper  the  development  of  electronic  money.  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. 

3.4. 

Proportionality principle 

The proposal respects the proportionality principle, since it aims to ensure full harmonisation 
only of the issues that are necessary to overcome the obstacles to the development of a single 
market for electronic money and that were identified during open stakeholder consultation.  

All the proposed rules have been subject to a proportionality test and intensive consultation to 
ensure appropriate and proportionate regulation. This is particularly reflected in the prudential 
rules for electronic money institutions, the waiver and the redeemability clauses. 

3.5. 

Choice of instrument 

Regulatory  action  continues  to  be  required  to  provide  the  necessary  legal  framework 
harmonising  the  prudential  supervision  of  electronic  money  institutions  to  the  extent 
necessary for ensuring, in particular, their sound and prudent operation and financial integrity. 
The Commission therefore proposes to keep the same instrument (a directive). 

The  Commission  proposes  a  directive  rather  than  a  regulation  as  this  former  instrument  is 
better  suited  to  harmonising  existing  legislations.  It  is  also  consistent  with  the  nature  of  the 
previous  instrument  chosen  to  harmonise  rules  in  this  field,  and  with  other  instruments 
adopted in related areas, such as the PSD. 

4. 

BUDGETARY IMPLICATION 

The proposal has no implication for the Community budget. 

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5. 

ADDITIONAL INFORMATION 

5.1. 

Simulation, pilot phase and transitional period 

There will be a transitional period for certain already established electronic money institutions 
with regard to compliance with the provisions in Title II of the Directive. 

5.2. 

Simplification 

The  proposal  provides  for  simplification  of  legislation,  simplification  of  administrative 
procedures  for  public  authorities  (EC  or  national),  and  simplification  of  administrative 
procedures for private parties. 

Supervision of electronic money institutions will follow a harmonised and coherent approach, 
aligned with that of payment institutions, with the same rules for all Member States. This will 
help to simplify administrative procedures. 

The full harmonisation approach of the proposal simplifies procedures for private parties.  

5.3. 

Repeal of existing legislation 

The adoption of the proposal will lead to the repeal of existing legislation. The Directive will 
replace Directive 2000/46/EC. 

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2008/0190 (COD) 

proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

of  

on the taking up, pursuit and prudential supervision of the business of electronic money 
institutions, amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 
2000/46/EC 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular the first 
and third sentences of Article 47(2) and Article 95 thereof, 

Having regard to the proposal from the Commission8, 

Having regard to the opinion of the European Economic and Social Committee9, 

Having regard to the opinion of the European Central Bank10, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty, 

Whereas: 

(1) 

(2) 

(3) 

8 
9 
10 
11 
12 
13 

Directive  2000/46/EC  on  the  taking  up,  pursuit  of  and  prudential  supervision  of  the 
business of electronic money institutions11 was adopted in response to the emergence 
of new pre-paid electronic payment products and was intended to create a clear legal 
framework designed to strengthen the single market while ensuring an adequate level 
of prudential supervision. 

The  Commission  presented  a  report12  which  highlighted  the  need  to  revise  Directive 
2000/46/EC  since  some  of  its  provisions  were  considered  to  have  hindered  the 
emergence of a true single market for electronic money services.  

Directive  2007/64/EC  of  the  European  Parliament  and  of  the  Council  on  payment 
services  in  the  internal  market13  has  established  a  modern  and  coherent  legal 
framework for payment services, including the coordination of national provisions on 

OJ C , p. . 
OJ C , p. . 
OJ C , p. . 
OJ L 275, 27.10.2000, p. 39. 
SEC(2006) 1049, 19.7.2006. 
OJ L 319, 5.12.2007, p. 1. 

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prudential  requirements  for  a  new  category  of  payment  service  providers,  namely 
payment institutions. 

(4)  With the objective of removing barriers to market entry and making it easier to take up 
and  pursue  the  business  of  electronic  money  institutions,  the  rules  to  which  these 
institutions are subject need to be reviewed so as to ensure a level playing field for all 
payment services providers. 

(5) 

(6) 

(7) 

(8) 

(9) 

It is appropriate to limit the application of this Directive to payment service providers 
that issue electronic money. It should not apply to pre-paid instruments that can only 
be  used  in  a  limited  way,  either  because  they  allow  the  holder  to  purchase  goods  or 
services  only  in  the  premises  of  the  issuer  or  within  a  limited  network  of  service 
providers  under  direct  commercial  agreement  with  a  professional  issuer,  or  because 
they can only be used to acquire a limited range of goods or services. An instrument 
should be considered to be used within a 'limited network' if it can be used only for the 
purchase  of  goods  and  services  in  a  specific  store,  a  chain  of  stores  or  for  a  limited 
range of goods or services, regardless of the geographical location of the point of sale. 
Examples  of  such  instruments  are  store  cards,  petrol  cards,  membership  cards  and 
public  transport  cards  and  meal  vouchers.  Instruments  which  can  be  used  for 
purchases in stores of listed merchants should not be exempted as such instruments are 
typically designed for a network of service providers which is continuously growing. 
Finally,  the  Directive  should  not  apply  to  payment  transactions  for  the  purchase  of 
digital  goods  or  services,  where,  by  virtue  of  the  nature  of  the  good  or  service,  the 
operator  adds  intrinsic  value  to  it,  e.g.  in  the  form  of  access,  search  or  distribution 
facilities,  provided  that  the  good  or  service  in  question  can  only  be  used  through  a 
digital device, such as a mobile phone or a computer.  

It is appropriate to introduce a clear definition of electronic money in order to make it 
technically  neutral.  This  definition  should  cover  all  situations  where  the  payment 
service provider issues a pre-paid stored value in exchange for funds. 

The definition should cover electronic money which is either held on a payment device 
in the holder's possession or is stored remotely at a server and managed by the holder 
through a payment account with the payment service provider. This definition should 
be wide enough to avoid hampering technological innovation and to cover not only all 
the electronic money schemes available today in the electronic market but also those 
which could be developed in the future. 

The  prudential  supervisory  regime  for  electronic  money  institutions  should  be 
reviewed  and  brought  more  into  line  with  the  risks  faced  by  these  institutions.  It 
should  also  be  made  coherent  with  the  prudential  supervisory  regime  applying  to 
payment institutions under Directive 2007/64/EC. 

The issuance of electronic money does not constitute in itself a deposit-taking activity 
pursuant  to  Directive  2006/48/EC,  in  view  of  its  specific  character  as  an  electronic 
surrogate  for  coins  and  banknotes  only  likely  to  be  used  for  making  payments  of 
limited  amounts  and  not  as  means  of  saving.  The  conditions  for  granting  and 
maintaining  authorisation  as  electronic  money  institutions  should  include  prudential 
requirements that are proportionate to the operational and financial risks faced by such 
bodies  in  the  course  of  their  business  related  to  the  issuance  of  electronic  money, 

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independently of any other commercial activities carried out by the electronic money 
institution.  

(10)  There is a need for a regime of initial capital combined with ongoing capital to ensure 
an  appropriate  level  of  consumer  protection  and  the  sound  and  prudent  operation  of 
electronic money institutions. Given the specificity of electronic money, an additional 
method  for  calculating  on-going  capital  should  be  allowed,  keeping,  however, 
supervisory discretion to ensure that the same risks are treated in the same way for all 
payment service providers. In addition, provision should be made for client funds to be 
kept  separate  from  the  electronic  money  institution's  funds  for  other  business 
activities. Electronic money institutions should also be made subject to effective anti-
money laundering and anti-terrorist financing rules. 

(11)  For  prudential  reasons,  Member States  should  ensure  that  only  electronic  money 
institutions  duly  authorised  in  accordance  with  this  Directive,  credit  institutions 
authorised  under  Directive  2006/48/EC  and,  under  certain  circumstances,  national 
central banks and other national authorities may issue electronic money. 

(12)  Electronic  money  needs 

to  be  redeemable 

to  preserve  bearer  confidence. 
Redeemability  does  not  imply,  in  itself,  that  the  funds  received  in  exchange  for 
electronic  money  should  be  regarded  as  deposits  or  other  repayable  funds  for  the 
purpose of Directive 2006/48/EC. Redemption should always be possible at any time, 
at par value. Redemption of the full amount should always be free of charge. Partial 
redemption  may  generate  some  costs  to  the  issuer.  It  may,  therefore,  be  subject  to  a 
proportionate  and  cost-based  fee.  This  is  without  prejudice  to  national  legislation  on 
tax  or  social  matters  as  well  as  any  obligations  on  the  issuer  under  other  relevant 
Community  or  national  legislation,  such  as  anti-money  laundering  and  anti-terrorist 
financing  rules,  any  action  targeting  the  freezing  of  funds  or  any  specific  measure 
linked to the prevention and investigation of crimes. 

(13) 

It is appropriate to allow Member States to waive the application of certain provisions 
of  this  Directive  to  institutions  providing  only  a  limited  amount  of  payment 
transactions. Institutions benefiting from such a waiver should not have the right under 
this  Directive  to  exercise  the  freedom  of  establishment  or  provide  services  cross-
border and they should not indirectly exercise those rights as members of a payment 
system. However, it is desirable to register the details of all entities providing e-money 
services,  including  those  institutions  benefiting  from  a  waiver.  For  this  purpose, 
Member States should enter such entities in the register of e-money institutions while 
not applying all or part of the conditions for authorisation.  

(14) 

In the interests of legal certainty, transitional arrangements should be made to ensure 
that  electronic  money  institutions  which  have  commenced  their  activities  in 
accordance with the national laws transposing Directive 2000/46/EC into domestic law 
may  continue  those  activities  within  the  Member State  concerned  for  a  specified 
period. This period should be longer for entities that have benefited from the waiver 
provision in Article 8 of Directive 2000/46/EC. 

(15)  This  Directive  introduces  a  new  definition  of  electronic  money  whose  issuance  can 
benefit from the derogations in Articles 34 and 53 of Directive 2007/64/EC, therefore, 
the simplified customer due diligence regime for electronic money institutions under 
the  Council  of 
Directive  2005/60/EC  of 

the  European  Parliament  and  of 

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26 October 2005 on the prevention of the use of the financial system for the purpose of 
money laundering and terrorist financing14 should be amended accordingly. 

(16)  Pursuant to Directive 2006/48/EC, electronic money institutions are considered to be 
credit institutions, although they can neither receive deposits from the public nor grant 
credit  from  the  funds  received  from  the  public.  Given  the  system  introduced  by  this 
Directive,  it  is  appropriate  to  amend  the  definition  of  credit  institution  in  Directive 
2006/48/EC in order to ensure that electronic money institutions are not considered as 
credit institutions. However, credit institutions should continue to be allowed to issue 
electronic  money  and  to  carry  on  such  activity  Community-wide,  subject  to  mutual 
recognition and to the comprehensive prudential supervisory regime applying to them 
in accordance with the Community legislation in the field of banking. 

(17)  The  provisions  of  this  Directive  replace  all  corresponding  provisions  of  Directive 

2000/46/EC, therefore, the latter Directive should be repealed. 

(18)  The objectives of this Directive cannot be sufficiently achieved by the Member States 
because  they  require  the  harmonisation  of  many  different  rules  currently  existing  in 
the legal systems of the various Member States and can therefore be better achieved at 
Community  level,  the  Community  may  adopt  measures,  in  accordance  with  the 
principle  of  subsidiarity  as  set  out  in  Article 5  of  the  Treaty.  In  accordance  with  the 
principle  of  proportionality,  as  set  out  in  that  Article,  this  Directive  does  not  go 
beyond what is necessary in order to achieve that objective. 

(19)  The  efficient  functioning  of  this  Directive  needs  to  be  reviewed.  Therefore,  the 
Commission should be required to produce a report three years after the deadline for 
transposition of this Directive. 

(20)  The measures necessary for the implementation of this Directive should be adopted in 
accordance  with  Council  Decision  1999/468/EC  of  28 June 1999  laying  down  the 
procedures for the exercise of implementing powers conferred on the Commission15. 

(21) 

In particular, the Commission should be empowered to adopt implementing provisions 
in  order  to  take  account  of  technological  and  market  developments.  Since  such 
measures  are  of  general  scope  and  are  designed  to  amend  non-essential  elements  of 
this  Directive,  by  supplementing  it  with  new  non-essential  elements,  they  must  be 
adopted  in  accordance  with  the  regulatory  procedure  with  scrutiny  provided  for  in 
Article 5a of Decision 1999/468/EC, 

HAVE ADOPTED THIS DIRECTIVE: 

TITLE I 
SCOPE AND DEFINITIONS 

14 
15 

OJ L 309, 25.11.2005, p. 15. 
OJ L 184, 17.7.1999, p. 23. 

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Article 1 
Subject matter and scope 

1. 

2. 

3. 

4. 

This Directive lays down rules for the taking up, pursuit and prudential supervision 
of  the  business  of  electronic  money  institutions  and  for  the  activity  of  issuing 
electronic money. 

With the exception of Article 5, this Directive shall not apply to credit institutions as 
defined in Article 4(1)(a) of Directive 2006/48/EC. 

This  Directive  shall  not  apply  to  services based  on  instruments  that  can  be  used  to 
acquire  goods  or  services  only  in  the  premises  used  by  the  issuer  or  under 
commercial  agreement  with  the  issuer,  either  within  a  limited  network  of  service 
providers or for a limited range of goods or services. 

This Directive shall not apply to services based on any telecommunication, digital or 
information  technology  (IT)  device,  where  the  goods  or  services  purchased  are 
delivered  to  and  are  to  be  used  through  a  telecommunication,  digital  or  IT  device, 
provided  that the telecommunication, digital  or  IT operator does not act only as an 
intermediary  between  the  payment  service  user  and  the  supplier  of  the  goods  and 
services.  

Article 2 
Definitions 

For the purposes of this Directive, the following definitions shall apply: 

1. 

2. 

3. 

4. 

'electronic  money  institution'  means  a  legal  person  that  has  been  granted 
authorisation under Title II of this Directive to issue electronic money; 

'electronic  money'  means  a  monetary  value  as  represented  by  a  claim  on  the  issuer 
which  is  stored  electronically  and  issued  on  receipt  of  funds,  for  the  purpose  of 
making payment transactions as defined in Article 4(5) of Directive 2007/64/EC, and 
is accepted by natural or legal persons other than the issuer; 

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

'payment  volume'  means  the  average  of  the  preceding  12  months'  total  amount  of 
monthly payment transactions executed. 

TITLE II 
REQUIREMENTS FOR ACCESS TO THE TAKING UP AND PURSUIT OF THE 
BUSINESS OF ELECTRONIC MONEY INSTITUTIONS 

Article 3 
General prudential rules 

Articles 5,  10  to  15  and  17  to  25  of  Directive  2007/64/EC  shall  apply  mutatis  mutandis  to 
electronic money institutions. 

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Article 4 
Prohibition to issue e-money 

Member States shall prohibit from issuing electronic money natural or legal persons who are 
not: 

(1) 

(2) 

(3) 

an electronic money institution as defined in Article 2(1); 

a credit institution as defined in Article 4(1)(a) of Directive 2006/48/EC; 

payment service providers as referred to in Article 1(1)(e) and (f) of Directive 
2007/64/EC. 

1. 

2. 

3. 

4. 

5. 

1. 

1. 

2. 

Article 5 
Redeemability 

Member States  shall  ensure  that,  upon  request  by  the  holder,  issuers  of  electronic 
money redeem, at any moment and at par value, the monetary value of the electronic 
money held. 

The  contract  between  the  issuer  and  the  holder  shall  clearly  state  the  conditions  of 
redemption. 

Where redemption takes place before the date of termination of the contract, it may 
cover either a part of or the totality of the money stored electronically. 

Where  redemption  takes  place  on  the  date  of  termination  of  the  contract,  the 
monetary value of the electronic money held shall be redeemed free of charge. 

The  issuer  may  charge  a  fee  only  in  the  case  of  partial  or  full  redemption  before 
termination of the contract. The level of this fee shall be mentioned in the contract. It 
shall be proportionate and commensurate with the actual costs incurred by the issuer.  

Article 6 
Initial capital 

Member States  shall  require  electronic  money  institutions  to  hold,  at  the  time  of 
authorisation, initial capital, comprised of the items defined in Article 57(a) and (b) 
of Directive 2006/48/EC, of not less than EUR 125 000. 

Article 7 
Own funds 

In addition to the initial capital requirements set out in Article 6, Member states shall 
require electronic money  institutions to  hold, at all times,  own funds,  as defined in 
Articles 57 to 61, 63, 64 and 66 of Directive 2006/48/EC 

The  own  funds  of  electronic  money  institutions  shall  be  calculated  either  in 
accordance with one of the three methods (A, B, C) set out in Article 8 of Directive 
2007/64/EC or in accordance with Method D set out in paragraph 3. The appropriate 

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15 

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method  shall  be  determined  by  the  competent  authorities  on  the  basis  of  national 
legislation.  

3. 

Method  D:  where  electronic  money  represents  the  highest  amount  between 
outstanding  electronic  money  and  payment  volume,  the  own  funds  of  electronic 
money institutions shall amount at least to the sum of the following elements: 

(a) 

(b) 

(c) 

(d) 

5% of the slice of electronic money up to EUR 5 million;  

2.5%  of  the  slice  of  electronic  money  above  EUR 5 million  up  to 
EUR 10 million;  

2%  of  the  slice  of  electronic  money  above  EUR 10 million  up  to 
EUR 100 million;  

1.5%  of  the  slice  of  electronic  money  above  EUR 100 million  up  to 
EUR 250 million;  

(e) 

1% of the slice of electronic money above EUR 250 million. 

4. 

5. 

6. 

On the basis of an evaluation of the risk-management processes, of the risk loss data 
bases  and  internal  control  mechanisms  of  the  electronic  money  institution,  the 
competent authorities may require the electronic money institution to hold an amount 
of own funds which is up to 20% higher than the amount which would result from 
the application of the method chosen in accordance with paragraph 2, or permit the 
electronic  money  institution  to  hold  an  amount  of  own  funds  which  is  up  to  20% 
lower than the amount which would result from the application of the method chosen 
in accordance with paragraph 2. 

The  own  funds  of  electronic  money  institutions  shall  not  fall  below  the  amount 
required under article 6. 

Member States  shall  take  the  necessary  measures  to  prevent  the  multiple  use  of 
elements eligible for own funds where the electronic money institution belongs to the 
same group as another e-money institution, credit institution, investment firm, asset 
management  company  or  insurance  undertaking.  This  paragraph  shall  also  apply 
where  an  electronic  money  institution  carries  out  activities  other  than  issuing 
electronic money. 

Article 8 
Activities 

1. 

Apart from issuing electronic money, electronic money institutions shall be entitled 
to engage in any of the following activities: 

(a) 

(b) 

the  provision  of  payment  services  listed  in  the  Annex  to  Directive 
2007/64/EC; 

granting credit related to payment services referred to in points 4, 5 or 
7  of  the  Annex  to  Directive  2007/64/EC,  where  the  conditions  laid 
down in Article 16(3) and (5) of that Directive are met; 

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2. 

3. 

1. 

2. 

1. 

(c) 

the  provision  of  operational  and  closely  related  ancillary  services 
closely related to the issuing of e-money; 

(d) 

the operation of payment systems;  

(e) 

business  activities  other  than  issuance  of  electronic  money,  having 
regard to applicable Community and national law. 

Any funds received by electronic money institutions from the payment service user 
in  exchange  for  electronic  money  shall  not  constitute  a  deposit  or  other  repayable 
funds within the meaning of Article 5 of Directive 2006/48/EC.  Funds  received  for 
any  other  payment  service  shall  not  constitute  either  a  deposit  or  other  repayable 
funds within the meaning of Article 5 of Directive 2006/48/EC, or electronic money 
within the meaning of this Directive. 

Electronic  money  institutions  shall  not  conduct  the  business  of  taking  deposits  or 
other repayable funds within the meaning of Article 5 of Directive 2006/48/EC. 

Article 9 
Safeguarding requirements 

Member States  or  their  competent  authorities  shall  require  an  electronic  money 
institution which carries on any  of the activities referred to in Article 8(1)(a) to (d) 
and,  at  the  same  time,  is  engaged  in  other  business  activities  referred  to  in 
Article 8(1)(e) to safeguard funds that have been received from the payment service 
users  or  through  another  payment  service  provider  for  the  execution  of  payment 
transactions,  in  accordance  with  the  provisions  of  Article 9(1),  (2)  and  (4)  of 
Directive 2007/64/EC. 

Member States  or  their  competent  authorities  may  require  that  electronic  money 
institutions  which  are  not  engaged  in  other  business  activities  referred  to  in 
Article 8(1)(a)  to  (d)  shall  also  comply  with  the  safeguarding  requirements  under 
paragraph 1 of this Article. 

Article 10 
Optional exemptions 

With  the  exception  of  Articles 20,  22,  23  and  24  of  Directive  2007/64/EC, 
Member States  may  waive  or  allow  their  competent  authorities  to  waive  the 
application of all or part of the procedures and conditions set out in Articles 3, 6, 7 
and  9  of  this  Directive,  and  allow  legal  persons  to  be  entered  in  the  register  for 
electronic money institutions if all of the following requirements are met: 

(a) 

the  average  of  the  preceding  12  months'  total  amount  of  payment 
transactions  executed  by  the  person  concerned,  including  any  agent 
for  which 
responsibility,  does  not  exceed 
it  assumes 
EUR 3 million per month. 

full 

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(b) 

none  of  the  natural  persons  responsible  for  the  management  or 
operation  of  the  business  has  been  convicted  of  offences  relating  to 
money laundering or terrorist financing or other financial crimes. 

The requirement set out in point (a) of the first subparagraph shall be assessed on the basis of 
the  projected  total  amount  of  payment  volume  in  its  business  plan,  unless  an  adjustment  to 
that plan is required by the competent authorities. 

2. 

3. 

4. 

5. 

Any legal person registered in accordance with paragraph 1 shall be required to have 
its head office in the Member State in which it actually carries on its business. 

Legal  persons  referred  to  in  paragraph  1  shall  be  treated  as  electronic  money 
institutions. However, Articles 10(9) and 25 of Directive 2007/64/EC shall not apply 
to them. 

Member States  may  provide  that  any  legal  person  registered  in  accordance  with 
paragraph 1 may engage only in certain activities listed in Article 8(1). 

Legal persons referred to in paragraph 1 shall notify the competent authorities of any 
change  in  their  situation  which  is  relevant  to  the  conditions  specified  in  that 
paragraph.  Member States  shall  take  the  necessary  steps  to  ensure  that  where  the 
conditions  set  out  in  paragraphs  1,  2  and  4  are  no  longer  fulfilled,  the  persons 
concerned  shall  seek  authorisation  within  30  calendar  days  in  accordance  with 
Article 3.  Any  such  persons  that  have  not  sought  authorisation  within  this  period 
shall be prohibited, in accordance with Article 4, from issuing electronic money. 

6. 

This Article shall not be applied in respect of the provisions of Directive 2005/60/EC 
or national anti-money-laundering provisions.  

TITLE III 
IMPLEMENTING MEASURES 

Article 11 
Implementing measures 

1. 

The Commission may adopt the following measures: 

(a) 

measures in order to update the amounts specified in Article 10 to take account 
of inflation; 

(b)  measures to ensure uniform application of this Directive; 

(c) 

measures to take account of technological and market developments. 

2. 

The measures referred to in paragraph 1, designed to amend non-essential elements 
of  this  directive,  by  supplementing  it,  shall  be  adopted  in  accordance  with  the 
regulatory procedure with scrutiny referred to in Article 12. 

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Article 12 
Committee 

1. 

2. 

The Commission shall be assisted by the Payments Committee set up in accordance 
with Article 85 of Directive 2007/64/EC. 

Where  reference  is  made  to  this  paragraph,  Article 5a(1)  to  (4)  and  Article 7  of 
Decision  1999/468/EC  shall  apply,  having  regard  to  the  provisions  of  Article 8 
thereof. 

TITLE IV 
FINAL PROVISIONS 

Article 13 
Full harmonisation 

Member States shall not maintain or introduce provisions other than those laid down in this 
Directive. 

Article 14 
Review 

No  later  than  [three  years  after  the  deadline  for  transposition  in  Article 18(1)],  the 
Commission shall present to the European Parliament, the Council, the European Economic 
and  Social  Committee  and  the  European  Central  Bank  a  report  on  the  implementation  and 
impact  of  this  Directive,  in  particular  on  the  application  of  prudential  requirements  for 
electronic money institutions, accompanied, where appropriate, by a proposal for its revision. 

Article 15 
Transitional provisions 

1. 

Member States shall allow electronic money institutions that have commenced their 
activity in accordance with the provisions implementing Directive 2000/46/EC in the 
Member State in which they have their head office, before the date of entry into force 
of this Directive, to continue their activities without the authorisation provided for in 
Article 3.  Member States  shall  require  such  electronic  money  institutions  to  submit 
all  relevant  information  to  the  competent  authorities  in  order  to  allow  the  latter  to 
assess,  within  six  months  from  the  date  of  entry  into  force  of  the  provisions  under 
Article  11,  whether  the  institutions  comply  with  the  requirements  pursuant  to  this 
Directive and, if not, which measures need to be taken in order to ensure compliance, 
or whether a withdrawal of authorisation is appropriate. Compliant electronic money 
institutions shall be granted authorisation and entered in the register. If compliance is 
not reached within six months from [deadline for implementation of the Directive], 
the  electronic  money  institutions  concerned  shall  be  prohibited  from  issuing 
electronic money. 

2. 

Member States  may  provide 
institution  shall  be 
automatically  granted  authorisation  and  entered  in  the  register  provided  for  in 
Article 3  if  the  competent  authorities  already  have  evidence  that  the  requirements 

that  an  electronic  money 

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laid down in Articles 3, 6 and 7 are complied with. The competent authorities shall 
inform  the  electronic  money  institutions  concerned  before  the  authorisation  is 
granted. 

3. 

Member States  shall  allow  legal  persons  that  have  commenced,  their  activities  as 
entities  under  national  law  implementing  Article 8  of  Directive  2000/46/EC  before 
[date of adoption of the Commission proposal], to continue those activities within the 
Member State  concerned  until  [12  months  after  deadline  for  transposition],  without 
seeking  authorisation  under  Article 3.  Electronic  money  institutions  which,  during 
that  period,  have  been  neither  authorised  nor  waived  within  the  meaning  of 
Article 10, shall be prohibited from issuing electronic money. 

Article 16 
Amendment to Directive 2005/60/EC 

1. 

Article 11(5)(d) of Directive 2005/60/EC is replaced by the following: 

'(d)  electronic  money,  as  defined  in  Article 1(3)(b)  of  Directive  2009/../EC  (*), 
where, if it is not possible to recharge, the maximum amount stored electronically in 
the device is no more than [EUR 500], or where, if it is possible to recharge, a limit 
of [EUR 3 000] 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 by 
the bearer as referred to in Article 5 of Directive 2009/…/EC'. 

(*) O.J.   

Article 17 
Amendments to Directive 2006/48/EC 

1. 

Article 4 is amended as following: 

(a) 

Point (1)(b) is replaced by the following: 

"(1) ‘credit institution’ means an undertaking whose business is to receive deposits or 
other repayable funds from the public and to grant credits for its own account;" 

(b) 

Point (5) is replaced by the following: 

(5)  'financial  institution'  means  an  undertaking  other  than  a  credit  institution,  the 
principal activity of which is to acquire holdings or to carry on one or more of the 
activities listed in points 2 to 12 and 15 of Annex I'. 

2. 

The following point 15 is added to Annex I: 

'15. Issuing electronic money'. 

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Article 18 
Repeal 

Directive  2000/46/EC  shall  be  repealed  with  effect  from  [deadline  for  transposition  in 
Article 19(1)].  

Any references to the repealed Directive shall be construed as references to this Directive. 

Article 19 
Transposition 

1. 

Member States  shall  adopt  and  publish,  by    at  the  latest,  the  laws,  regulations  and 
administrative  provisions  necessary  to  comply  with  this  Directive.  They  shall 
forthwith  communicate  to  the  Commission  the  text  of  those  provisions  and  a 
correlation table between those provisions and this Directive. 

They shall apply those provisions from . 

When  Member States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

2. 

Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered by this Directive. 

Article 20 
 Entry into force 

This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

Article 21 

This Directive is addressed to the Member States. 

Done at Brussels,  

For the Commission 

Member of the Commission 

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