E-MONEY LICENSE FOR GLOBAL PAYMENTS, PAYMENT CARDS, STABLECOINS. ELECTRONIC MONEY INSTITUTION (EMI) LICENSING IN THE EUROPEAN UNION

All payment services and payment cards. Equity capital – EUR 350,000.

Licensed Electronic Money Institution (EMI) allows provision of wider range of financial services compared with the Payment Institution and allows safeguarding of client funds for an unlimited period of time. The Electronic Money Institution licensed in one European Union (EU) member state opens up business opportunities to act and provide services in all other EU/EEA countries by enjoying the benefits of the single European financial market and Single Euro Payments Area (SEPA). Single Euro Payments Area has 450 million consumers and over 20 million businesses making and receiving payments in Euro fast and at a low cost regardless of their location in Europe. Payment and Electronic Money Institutions licensed in Lithuania are allowed to join SEPA directly through the Central Bank avoiding intermediary commercial banks.

Difference between Payment and Electronic Money Institution

The European Central Bank defined the Electronic Money (E-money) as an electronic store of monetary value on a technical device that may be widely used for making payments to entities other than the e-money issuer. The device acts as a prepaid bearer instrument, which does not necessarily involve bank accounts in transactions. The Directive 2009/110/EC established the legal basis for e-money issuing in the European Union (EU). The practical difference between the Electronic Money Institution (EMI) and the Payment Institution (PI) is that e-money institutions in addition to the all payment services provided by the PI are entitled to issue Electronic Money and store clients’ funds for the unlimited period of time. The Payment Institutions usually provide instant payment processing services. Possibility to safeguard client’s funds allows IBAN account opening, payment cards issuing, and e-wallet services.

Electronic Money Institution license is the right decision for the payment service providers planning wider range of services

ECOVIS network offers different European jurisdictions for EMI licensing as well as other jurisdictions for money service business licensing globally. Lithuania is one of  EU/EEA jurisdiction may be considered for EMI license.

The Electronic Money Institution registered in Lithuania provides a significant competitive advantage and opens up the European financial market at significantly lower incorporation and maintenance costs. Lithuania and primarily its capital Vilnius became a new hub for the FinTech companies focused on international financial markets. Business-oriented regulatory behavior and significantly lower finance institution’s incorporation costs make Lithuania attractive for large international financial institutions as well as FinTech start-ups. Regulatory “Sandbox” of the Bank of Lithuania. Implemented EU Second Payment Services Directive (PSD2) allows provision of the Payment Initiation Service (PIS) – initiation of a payment order from the client’s bank account at the request of the client from the payment account held at another payment service provider (bank). PSD2 also allows E-money Institution to provide Account Information Service (AIS) by accessing consolidated information from the client accounts held at other payment service providers (banks) and have overall view of the client’s financial information.

Services provided by EMI

Licensed Electronic Money Institution provides the following payment services:

• services enabling cash to be placed on a payment account.
• services enabling cash withdrawals from a payment account.
• execution of payment transactions, including transfers of funds on a payment account with the payment service provider of the payment service user or with another payment service provider: execution of direct debits, including one-off direct debits, execution of payment transactions through a payment card or a similar device and/or execution of credit transfers, including standing orders.
• execution of payment transactions where the funds are covered by a credit line for a payment service user: execution of direct debits, including one-off direct debits, execution of payment transactions through a payment card or a similar device and/or execution of credit transfers, including standing orders.
• issuing and/or acquiring of payment instruments.
• money transfers.
• Payment Initiation Service (PSD2 implementation).
• Account Information Service (PSD2 implementation).
• issuing of Electronic Money and safeguarding of client funds.

Crypto Stablecoin issuers need to obtain EMI licenses

New European Crypto Regulation MiCA requires Electronic Money Institution license for all stablecoin issuers. MiCA identifies two types of stablecoins asset-referenced tokens (ART) and e-money tokens (EMT). As stablecoins, both types maintain a stable 1:1 redemption value in reference to one of the FIAT currencies e.g. 1 ART/EMT = 1 EUR. The main difference between these two types of stablecoins is the underlying asset to maintain that stable value. More information can be found in our article.

Direct access to Single Euros Payment Area (SEPA) through CENTROlink payment gateway managed by the Bank of Lithuania (Central Bank)

Why CENTROlink:

– Availability 24/7/365

– Low cost. SEPA Credit Transfer (SCT) and SCT Inst fees – EUR 0.01 – 0.024. SEPA Direct Debit (SDD) fees – EUR 0.08

– Linked with the European payment systems STEP2, RT1 and TIPS without any additional expense or integration

– No limitation on payment values, number of transactions and number of issued IBAN accounts

– No credit risk. Own and client funds safeguarded, and payments made through the Central Bank. It eliminates the risk and costs usually associated with the funds safeguarding with commercial banks

– Individual client IBAN account generation. Individual client IBAN account generation and opening in the own system. No assistance from the commercial banks needed

– Proxy Lookup Service. Payment initiation using payee’s mobile phone number linked to IBAN account

Reasons why Lithuania is top jurisdiction for E-money institution licensing:

• No particular requirement for company directors and board members to reside in Lithuania/Europe.
• Application process starts without establishing a company and freezing up a capital.
• Fast licensing process.
• Licensing documentation can be submitted in English.
• Direct access to Single Euros Payment Area (SEPA) through the CENTROlink payment system managed by the Bank of Lithuania (Central Bank).
• Possibility to safeguard client’s funds in the accounts of the Bank of Lithuania (Central Bank of EU member state).
• Remote client verification. Innovative “know your customer” processes for remote client verification allows open the accounts without physical presence of the client.
• License allows provision of the financial services in all EU/EEA without any additional licensing.
• Start-up visa. Special visas for citizens of non-EU/EEA countries running innovative businesses in Lithuania.

Principal Membership in Mastercard and VISA

ECOVIS ProventusLaw assists Payment, E-money institutions and other FinTech companies in preparation of applications for both Mastercard and VISA Principal Participation and represents them during all the process of becoming the Principal Member of Mastercard and VISA.

ECOVIS experience in finance institution licensing

ECOVIS is the leading global consulting group with over 9000 professionals operating in more than 90 countries around the world. Deep local knowledge in every country where ECOVIS office is located and international expertise of the interdisciplinary network of ECOVIS International professionals allows selection of the right licensing jurisdiction for every EMI business. ECOVIS. ECOVIS licensed more than 30 payment and electronic money institutions including Nium and Contis Group. We provide all necessary licensing services, including preparation of licensing documentation, financial part of the application, representation during the licensing procedure, company incorporation, office registration, advice on AML, IT, HR, compliance and other issues arising during the business incorporation. When the license is issued, ECOVIS offers accounting, regulatory reporting, audit, compliance and legal services for the operational business.

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