What is electronic money?

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

  • What is electronic money?
  • Scope of this Practice Note
  • 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 Article 1 of 2EMD or regulation 3 of the EMRs 2011
  • EEA limited network exclusion
  • UK 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.

Scope of this Practice Note

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.

This Practice Note is part of a series of materials relating to e-money and linked to issues for mobile payments. It focuses on how electronic money is defined under the Electronic Money Regulations 2011, SI 2001/99 (EMRs 2011), which implemented the second EU Electronic Money Directive (2EMD) in the UK.

This Practice Note should be read in conjunction with:

  1. The regulated activity of issuing electronic money

  2. The regulation of electronic money institutions—essentials

  3. Issuing and redeeming e-money

  4. Authorisation, registration, variation and cancellation of electronic money institutions

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