E-money reforms pave the way for new competitors in European payments market

E-money reforms pave the way for new competitors in European payments market

The European Commission has approved proposals for a fundamental reform of the rules governing electronic money institutions, paving the way for mobile operators and other 'hybrid' institutions to obtain e-money licenses.

The compromise text for a new Directive has been agreed by the Committee of Permanent Representatives (COREPER) under the aegis of the Czech Presidency. It has been drafted "to remove the high regulatory barriers preventing the development of an electronic money market in the European Union and to set reasonable conditions for the business operations of electronic money institutions", says the Commission.

A fundamental change in the draft Directive is a reduction in the regulatory burden placed on electronic money institutions and the convergence of their status with provisions on payment institutions under the Payment Services Directive. The capital requirements for e-money issuers have also been scaled back, from the current EUR1 million to EUR350,000.

A marked departure from the current legislation is the possibility of "hybrid electronic money institutions", that perform other activities in addition to the issuance of electronic money. This should make it easier for mobile operators to develop their services in a clearly defined regulatory environment, says the Commission.

The European Parliament should officially approve the proposal during its plenary session in the second half of April. The EU Council will formally confirm it in May.

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