Person-to-person payments firm PayPal has been granted a banking licence in Luxembourg and is relocating its European headquarters to the country from London, in a move that will see it escape FSA oversight and multiply the number of Web sites that can offer its service.
The UK's Financial Services Authority has overseen PayPal since the eBay-subsidiary became an electronic money issuer in 2004.
But with the new banking licence, issued by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg, PayPal is no longer authorised by the FSA and says it can now establish local sales teams across Europe.
Brent Bellm, head of Europe, PayPal, says establishing a new European headquarters in Luxembourg is a "significant step in the next phase of PayPal's European growth".
PayPal has 35 million customers in Europe, including 15 million in the UK.
In March the company reported that it processed $8.4 billion of total payment volume in Europe in 2006 and said its growth in the region is due to high penetration rates among online shoppers in the major European markets, including the UK, Germany, France and Italy.
The payments service is already accepted at more than 100,000 Web sites in Europe, but most of these are small firms and only a few of the larger retailers have signed up to the service.
But Bellm says the firm wants to see PayPal "accepted on virtually every retail Web site in Europe".