E-MONEY LICENSE FOR GLOBAL PAYMENT PROCESSING AND ISSUANCE OF PAYMENT CARDS. ELECTRONIC MONEY INSTITUTION (EMI) LICENSING IN THE EUROPEAN UNION

A wide range of payment services. Issuance of payment cards. Equity capital is EUR 350,000.

Licensed Electronic Money Institution (EMI) allows to provide a wider range of financial services as compared with the Payment Institution and allows to safeguard the client’s 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 within the Single Euro Payments Area (SEPA). Single Euro Payments Area has 450 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. Payment and Electronic Money Institutions licensed in Lithuania are allowed to join SEPA directly as 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 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 to issue 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.

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 behaviour 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.

Issue of Electronic Money on Blockchain

The modern regulatory approach allows licensed Electronic Money Institutions to issue Electronic Money on the Blockchain. Employment of the Blockchain and other modern technologies in traditional finance gives the Electronic Money Institutions licensed in Lithuania the possibility to provide a wider range of services and create a competitive advantage comparing to the companies licensed in other EU jurisdictions which practice traditional methods for licensing of financial institutions.

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.
  • 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).
  • Possibility to safeguard client’s 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 without any additional licensing.
  • Regulatory “Sandbox”.
  • 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

Being a part of ECOVIS International consulting network operating in more than 80 counties around the world, ECOVIS ProventusLaw currently is considered to be the most experienced financial adviser in Lithuania. ECOVIS licensed more than 30 payment and electronic money institutions including deVere, Niumm, Contis Group. ECOVIS ProventusLaw provides all necessary licensing services, including preparation of licensing documentation, financial part of the application, representation in the Bank of Lithuania 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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Inga Karulaitytė-Kvainauskienė

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