No, holding funds in a payment account without a predefined execution date is not automatically e-money. The “ABC Projektai” case established that as long as the funds are intended for payment services, the absence of an immediate payment order does not force an EMI reclassification.

While we have previously analyzed the general difference between EMI and PI licenses, this article focuses on the landmark 2024 CJEU ruling that fundamentally changed how regulatory authorities distinguish between payment services and e-money issuance.

What the 2024 ECJ Ruling Means for Your Business

A landmark ruling by the Court of Justice of the European Union has fundamentally redrawn the boundary between payment services and electronic money issuance – with significant practical consequences for electronic money and payment institutions operating across the EU.

For many years, funds held in fintech accounts without a defined repayment or execution timeframe were generally treated as electronic money, meaning that firms engaging in such activity were expected to operate under an EMI licence. Following the CJEU’s ruling in ABC Projektai UAB v Lietuvos bankas, this interpretation has been changed, marking a shift in practice and providing more concrete guidance on when holding client funds constitutes e-money issuance.

ABC Projektai UAB v Lietuvos bankas

The Core Ruling: Holding Funds Is Not E-Money Issuance

The CJEU ruled that a payment institution receiving funds not immediately accompanied by a payment order — where those funds remain available in a payment account — is providing a payment service, not issuing electronic money. Critically, a payment institution may hold client funds on a payment account for the purpose of providing payment services (…), and this alone does not convert those funds into e-money.

This was a significant shift for payment institutions across the EU. It confirmed that the classification of funds does not automatically change simply because they sit in a payment account for longer than anticipated.

What the EBA Added: Defining E-Money More Precisely

Following the CJEU’s ruling, the European Banking Authority issued a formal Q&A (ref. 2022_6336) that further sharpened the definition of electronic money.

The combined effect of the CJEU ruling and the EBA Q&A is that electronic money now has a significantly narrower legal meaning than previously assumed. Many products that were routinely classified as e-money – including standard prepaid Visa and Mastercard cards – may no longer meet the revised definition.

The Closed Cycle Requirement: The Practical Test

Under the post-2024 framework, account-based electronic money only exists where funds circulate within a closed account cycle – a system in which both the payer and the payee have a direct contractual relationship with the same issuer, and the monetary asset remains within the issuer’s ecosystem as a separate, stored instrument. A well-known example of such a system is Vinted Pay, where payments between Vinted users remain within a single closed ecosystem managed by the issuer.

Why This Matters for Payment Institutions

The practical implications of this ruling are substantial. Firms that had been operating as EMIs – and incurring the associated capital requirements (minimal capital 350 000 eur, in comparison with payment institutions – 125 000 eur) – may find that their product does not actually require an EMI licence at all.

The CJEU clarified that payment institutions are not permitted to hold client funds without limitation or present themselves as offering banking-type services. In line with Article 18(2) of Directive (EU) 2015/2366, funds received into a payment account must at all times be held solely for the purpose of executing payment transactions, irrespective of whether the corresponding payment orders have already been specified at the moment the funds are received (CJEU, Case C-661/22, paragraph 43)

The Capital Adequacy Consequence: From Method D to Methods A, B, C

Beyond the licensing question, the correct classification of your services has a direct and material impact on minimum capital requirements – for EMIs it is 350 000 eur, for PIs – 125 000 eur and on how your own funds requirement is calculated. The applicable method differs depending on whether a firm is regulated as an EMI or a PI:

What National Regulators Are Now Requiring

The ECJ ruling and the EBA’s Q&A have not remained academic. National competent authorities across the EU are now actively directing e-money institutions to take stock of their position. Regulators are instructing EMIs to review their business plans, reassess their Enterprice Wide Risk Assessments (EWRA), and formally evaluate whether their institution continues to qualify as an EMI under the updated legal framework – or whether their activities are more properly classified as payment services.

This is not optional. Every licensed EMI will need to work through this exercise and arrive at a documented, defensible conclusion: are the services provided genuinely e-money issuance within a closed cycle, or are they payment services that should be regulated as such under PSD2? The answer has consequences for licensing, capital adequacy methodology, safeguarding obligations, and regulatory reporting.

Expert Analysis by:

This article is intended for general informational purposes and does not constitute legal advice. The regulatory landscape continues to evolve, including under the proposed PSD3 and PSR framework. For specific legal advice regarding your business model and licensing obligations, please contact ECOVIS ProventusLaw.