The European Commission (EC) has set out proposals for a legal framework governing the issuance of electronic money which it hopes will accelerate take-up of the technology.
The E-Money Directive was conceived and adopted in 2000 at the height of the e-commerce boom and was intended to address the activities of non-banks involved in digital cash issuance.
But the EC began a review of the current rules in 2005 and now says they have hindered take-up of e-money, hampering technological innovation.
The proposed rules will help create a single market within the EU and enable new providers to enter and develop the market - which is expected to see volumes of up to EUR10 billion by 2012 - says the commission.
The EC is proposing a technologically neutral and simpler definition of e- money which covers e-money held on payment devices such as pre-paid cards and electronic purses, or stored remotely at a server.
The EC is also calling for greater consistency between prudential requirements of e-money institutions and payment outfits under the Payment Services Directive (PSD). The new requirements include an initial capital of EUR125,000, enabling smaller outfits to enter the market.
The commission says there will be a clarification of redemption requirements, with special reference to mobile phones. This would mean consumers have the right to claim back their e-money.
Anti money laundering rules will also be updated, ensuring consistency with the thresholds of the PSD.
Charlie McCreevy, internal market commissioner, EU, says: "The e-money industry has significant untapped growth potential. I believe that the new rules will accelerate the up-take of electronic money in Europe. These modern rules will foster competition and innovation, while ensuring market confidence and a high level of protection for consumers."
Read the proposals here:Download the document now 79.1 kb (PDF File)