Wide range of pan-European payment services. Equity capital – EUR 350 000. Licensing time – up to 3 months.
Electronic money (E-money) is defined by European Central Bank 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. Issuing e-money is a regulated activity. Directive 2009/110/EC established legal basis for e-money issuing in the European Union (EU).
Licensed E-money institution can provide the following payment services:
– services enabling cash to be placed on a payment account (including all the operations required for operating a payment account).
– services enabling cash withdrawals from a payment account (including all the operations required for operating 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.
– execution of payment transactions where the consent of the payer to execute a payment transaction is given by means of any telecommunications terminal equipment, digital or IT device and the payment is made to the telecommunications network or IT system operator, acting only as an intermediary between the supplier of the goods or services and the payment service user.
– issue of electronic money.
The main difference between Electronic money (E-money) institutions and Payment institutions (PI) is that E-money institutions, in addition to the services provided by PI, are entitled to issue electronic money. In practice, it means that Electronic Money Institutions stores clients’ money for a longer period, issue payment cards and other payment instruments for the client. E-money institution license is the right decision for Fintech companies planning wider range of services than just payment processing.
The reasons why Lithuania is top jurisdiction in EU/EEA for E-money institution licensing:
– No particular requirement for company management to reside in Lithuania.
– Application for a license submitted without establishing a company. Incorporation of a company starts only after the license is granted.
– Fast licensing process. E-money institution licence is issued within a period of 3 months and even faster.
– Documents can be submitted in English and amended “on the go” instead of formal writing forth and back.
– Own sorting codes for individual client IBAN account generation for non-banks.
– Non-banks have a direct access to SEPA through the CENTROlink payment system managed by the Bank of Lithuania (Regulator). Instant payments of pan-European reach according to European Instant Payments Initiative.
– Remote client verification. Innovative “know your customer” processes for remote client verification allows to open the accounts without physical presence of the client.
– No sanctions for the first year. The Bank of Lithuania is committed to support start-ups and not to punish them for minor infringements during the first year of operation.
– Startup visa. Special visas for citizens of non-EU/EEA countries running innovative businesses in Lithuania.
Electronic money institution licensing in one member state within the EU opens up business opportunities to act and provide services in all other EU/EEA countries, enjoy the benefits of a Common Market without any restrictions and advantages of Single Euro Payments Area (SEPA).
SEPA – 500 million citizens, over 20 million businesses and European public authorities making and receiving payments in Euro at a low cost, under the same basic conditions, rights and obligations, regardless of their location in Europe. SEPA allows arranging electronic credit transfers and direct debits in Euro zone at a low cost just as easy as at home.
Electronic money institution or other Fintech company registered in Lithuania provides a significant competitive advantage and opens up European financial market at significantly lower incorporation and operational costs.
Lithuania and primarily its capital Vilnius became a new hub for the Fintech companies focused on international financial markets. Favourable regulatory and tax environment, excellent infrastructure, the fastest internet and quality talent pool makes Lithuania and primarily its capital Vilnius attractive for large international finance institutions as well as Fintech start-ups.
In October, 2016 UK based leading financial services provider REVOLUT and the Bank of Lithuania signed a memorandum of understanding. REVOLUT is planning to establish a financial institution in Lithuania and gain access to a payment system SEPA MMS managed by the Bank of Lithuania ensuring cross-border payments in Euro.
In March, 2017 the Bank of Lithuania issued a electronic money institution licence for global financial group deVere Group, present in 60 countries around the world. deVere e-money starts its global electronic money business from Vilnius office, using SEPA MMS system and issue of prepaid cards for their global costumers. ECOVIS provided legal advice to deVere Group throughout the Electronic money institution licensing process.
The Bank of Lithuania combines the functions of a central bank and the financial supervisory authority (regulator). Regulatory behaviour and significantly lower finance institution incorporation, licensing and maintenance costs is what makes Lithuania preferred jurisdiction for the finance business people from around the world.
More about Fintech licensing – www.ecovis.lt/fintech
More about ECOVIS experience – https://ecovis.lt/fintech/why-lithuania/