The world is fast changing at alarming speeds, and you need to keep up or be left in the dark plenty. New ideas are popping each day; it almost feels like someone is popping corn. One of the fast-moving ideas in the digital world is electronic money – this is quite huge.
This is where you can send and receive money from almost anywhere across the globe. This is quite a popular service in the UK, and several businesses/people are authorized to issue electronic money. Before they can be authorized, there are a few steps they need to take.
Below is how you can get authorized to issue electronic money, in case you were wondering.
Getting an E-money license is what many choose to opt for these days. And if you are to ever get an E-money license in the UK, you will need to deal with the FCA as it is the only institution that can authorize you. You can then offer services such as prepaid cards or even electronic wallets.
There are three objectives that the institution seeks to achieve – and this is why you need to know about them.
- Protect customers
- Protect the financial markets and enhance the integrity of the financial system
- Promote effective competition and the best interest of the customers.
Payment directive 2 is an EU directive that sets the requirements for businesses that provide payment services. Some of the institutions covered are e-money institutions, building societies, payment institutions, and banks.
This isn’t an old directive as it came to force in 2018, and the objectives it aims to achieve include:
- Protect customers
- Make payment safer and secure
- Contribute to a more integrated and efficient Euro payment market
- Improve the playing field in the payments service sector
If you are to be authorized to issue electronic money, these institutions are the ones that regulate the field. Knowing a few things about them isn’t a bad idea. It can give you a better feel of the authorization.
The first idea you can get authorization for is to become a small electronic money institution. Certain documents are required for the authorization part. The documents include
- A business plan –needs to explain your business clearly.
- Any payment service you would like to offer on top of e-money.
- Governance protocols and internal procedures. These are more or fewer structures that are in place to ensure the business is run effectively.
- Proof that after you start trading, the e-money part of the business will bring in an average outstanding e-money of less than €5.
- You won’t provide account initiation services or payment initiation services.
The definition of electronic money is the monetary value that is stored electronically. It is issued in receipt of funds used to make payments and accepted by a different person than its user. Monetary value can be stored on a personal computer, prepaid card, or magnetic stripe plastic card.
Before you can get approval for being an authorized EMI, you need to provide certain information. The details you need to offer include:
- Compliance and governance arrangements
- How you will safeguard your user fund
- Business plan
- Payment service you wish to offer
- How you will meet the initial capital requirements
- Shareholder details – detail of your people
You will then have to wait at least seven days for your application to be acknowledged. A case office will, after seven days, be assigned your application. It will then take three months for the process to be complete, assuming you have provided the correct info.
If the application isn’t complete, it may take longer than three months.
You can also apply to be a small payment institution. There are at least nine conditions you will need to meet before you can get approved:
- Directors and managers need to have a good reputation with the appropriate skills for payment service.
- The average monthly payment transaction in the preceding year shouldn’t exceed €3M.
- If the applicant hasn’t been providing payment service for less than one year, the average monthly payment should not be more than €3M.
- Managers should not have been convicted of any monetary crimes.
- Head office must be registered in the UK.
- Must comply with money laundering, terrorist financing, and transfer of funds regulations.
- Qualifying holding must be fit and proper for the sound and adequate conduct for small PI.
- An applicant is a corporation with close links to another person- these links must not be ones that can prevent the FCA’s adequate supervision of the business.
- Applicants shouldn’t provide AIS.
Being an authorized e-money issuer has several hoops that need to be crossed. Once you have no illegal attachments, you are likely to jump through quite quickly. Here are some of the ways to get approval.