The E-money Directive has undergone its first revision with the new Directive to be transposed into Member State national law by 30 April 2011.

It is widely accepted that the first Directive did not provide a regulatory framework that cultivated technological innovation, nor grow a market of payment service providers offering credible competition to the banking sector. The new Directive aims to overcome some of its previous challenges.

In particular, it:

  • Clarifies the definition of "e-money" -  server based account systems are now clearly covered
  • Significantly relaxes the prudential regime for e-money institutions,
  • Widens the scope of business activities that e-money institutions are entitled to engage.
The revised Directive also aims to provide consistency with the Payment Service Directive and in doing so, looks to usefully streamline certain exemptions to  mobile network and pre-paid cards businesses.

While the new provisions do provide increased compliance guidance when carrying out an e-money payment business, it also presents some challenges. These challenges stem from the  uncertainty over important terms / concepts and increased consumer protection. Examples include:

  • Lack of clarity over key concepts allowing exemption from regulation under the E-money Directive and the PSD,
  • Increased consumer protection over the provisions relating to issuance and redemption of e-money.