E MONEY LICENSE FOR GLOBAL PAYMENT PROCESSING AND PAYMENT CARDS ISSUE. ELECTRONIC MONEY INSTITUTION EMI LICENSING IN EUROPEAN UNION
Wide range of payment services. Payment cards issue. Equity capital – EUR 350 000. Licensing time from 3 months.
Licensed Electronic Money Institution (EMI) allows provide wider range of financial services comparing with Payment Institution and allows safeguard client funds for the unlimited period of time. 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, enjoying benefits of single European financial market within Single Euro Payments Area SEPA..
Single Euro Payments Area (SEPA) – almost 500 million consumers and over 20 million businesses making and receiving payments in Euro at a low cost, under the same basic conditions, rights and obligations, regardless of their location in Europe. Lithuanian licensed Payment and Electronic Money Institutions allowed join SEPA directly as banks.
Difference between Payment and Electronic Money Institution
Electronic Money (E-money) 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. Directive 2009/110/EC established legal basis for e-money issuing in the European Union (EU).
The practical difference between Electronic Money Institution (EMI) and Payment Institution (PI) is that E-money institutions in addition to the services provided by PI are entitled to issue Electronic Money and store clients’ funds for the unlimited period of time. Payment Institutions usually provide instant payment processing services. Possibility to safeguard client funds allows issue of payment cards, provide e-wallet services and issue other payment instruments.
Electronic Money Institution license is the right decision for the payment service providers planning wider range of services than just instant payment processing.
Electronic Money Institution registered in Lithuania provides a significant competitive advantage and opens up 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 incorporation costs make Lithuania attractive for large international finance institutions as well as FinTech start-ups. Regulatory “Sandbox” – the Bank of Lithuania is committed to support start-ups and not to issue punishment for minor infringements during the first year of operation.
Implemented EU Second Payment Services Directive (PSD2) allows Payment Initiation Service (PIS) – initiation of a payment order from the client bank account at the request of the client from the payment account held at another payment service provider (bank). PSD 2 also allows E-money Institution provide Account Information Service (AIS) accessing consolidated information from the client accounts held by at another payment service providers (banks) and have overall view of client financial information.
Services provided by EMI
Licensed Electronic Money Institution provides 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.
Issue of Electronic Money on Blockchain
Modern regulatory approach allowing licensed Electronic Money Institutions issue Electronic Money on Blockchain. Employment of Blockchain and other modern technologies in traditional finance give Lithuanian licensed Electronic Money Institutions possibility to provide wider range of services and create a competitive advantage comparing to the companies licensed in other EU jurisdictions practicing traditional finance institutions licensing methods.
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 for a license submitted without establishing a company and freezing up a capital. Incorporation of a company starts only after the license granted.
– Fast licensing process.
– Licensing documentation can be submitted in English.
– Possibility to provide individual client IBAN accounts. Lookup for the IBAN account according to the alternate identifier: mobile phone number (MSISDN) and Email (URI).
– Direct access to Single Euros Payment Area (SEPA) through the CENTROlink payment system managed by the Bank of Lithuania (Central Bank). Only the banks in other jurisdictions can access SEPA directly.
– Possibility to safeguard client funds in the accounts of the Bank of Lithuania (Central Bank of EU member state).
– PSD2 implementation allowing Payment Initiation Service (PIS) and Account Information Service (AIS).
– 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 area without any additional licensing.
– No sanctions for the first year. The Bank of Lithuania is committed to support start-ups and not to issue punishment for minor infringements during the first year of operation.
– 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 during all the process of becoming the Principal Member of Mastercard and VISA.
ECOVIS experience in finance institution licensing
Being part of ECOVIS International consulting network present in more than 80 counties around the world ECOVIS ProventusLaw currently considered as the most experienced financial adviser in Lithuania. ECOVIS licensed more that 30 payment and electronic money institutions including such big names as deVere, Instarem, Contis Group . ECOVIS ProventusLaw provides all the necessary licensing services, including preparation of licensing documentation, representation at the Bank of Lithuania during the licensing procedure, company incorporation, office registration, advice on IT, HR, compliance and other issues rising during the business incorporation. After the grant of the license ECOVIS offers accounting, regulatory reporting, audit, compliance and legal services for the operational business.
More about Fintech licensing – www.ecovis.lt/fintech
More about ECOVIS experience – https://ecovis.lt/fintech/why-lithuania/
Lawyer, attorney at law, partner of the law firm, CIPP/E.
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