What is electronic money?

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • What is electronic money?
  • Electronically (including magnetically) stored monetary value as represented by a claim on the electronic money issuer
  • Issued on receipt of funds for the purposes of making payment transactions
  • Accepted as a means of payment by a person other than the electronic money issuer
  • Not excluded by regulation 3 of the EMRs
  • The limited network exclusion
  • The electronic communications exclusion

What is electronic money?

BREXIT: 11pm (GMT) on 31 December 2020 (‘IP completion day’) marked the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. Following IP completion day, key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see: Brexit and financial services: materials on the post-Brexit UK/EU regulatory regime.

A very simple definition of electronic money (e-money) is cash stored in an electronic form. A common example is PayPal, where you can open an account and receive and transmit money to numerous third parties and store money in your PayPal account.

The element of prepayment and the ability to store e-money is key. It also distinguishes e-money from other payment services.

For further information, see Practice Note: The regulated activity of issuing electronic money.

As technology continues to advance, there has been an increase in use of e-money and other forms of contactless and mobile payments. These may not all fall within the scope of the Electronic Money Regulations 2011, SI 2011/99 (EMRs), but will almost certainly be subject to the Payment Services Regulations 2017 (SI 2017/752) (PSRs 2017), which replace the Payment Services Regulations 2009 (PSRs) and implement the recast Payment Services Directive (see Directive 2015/2366/EU) (PSD2). E-money institutions are

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