II-6.5 : Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009, on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC.

http://docs.google.com/viewer?a=v&q=cache:J8S2R_nADUcJ:eur-lex.europa.eu/LexUriServ/LexUriServ.do%3Furi%3DOJ:L:2009:267:0007:0017:FR:PDF+directive+europ%C3%A9enne+du+16+septembre+2009/110/CE&hl=fr&gl=fr&pid=bl&srcid=ADGEEShz6qTLaRd2dgPKxv-XDXuokemr5NrjE1p

Context and Summary

In September 2009 was adopted a new directive (Dir. 2009/110/CE of the European Parliament and Council) aiming for the removal of barriers to market entry and facilitating the taking up and pursuit of the business of electronic money issuance. The Rules to which electronic money institutions were subject needed indeed to be reviewed so as to ensure a level playing field for all payment services providers. The 2009 Directive repeals the 2000/46/CE directive of September 18th 2000 on the taking up, pursuit of and prudential supervision of the business of electronic money institutions. The 2000 Directive had been adopted in response to the emergence of new pre-paid electronic payment products, and was intended to create a clear legal framework designed to strengthen the internal market while ensuring an adequate level of prudential supervision. However, in its review of Directive 2000/46/EC, the Commission highlighted the need to revise that Directive, since some of its provisions were considered to have hindered the emergence of a true single market for electronic money services and the development of such user-friendly services. The new 2009 Directive introduces a clear definition of electronic money in order make it technically neutral. That definition covers all situations where the payment service provider issues a pre-paid stored value in exchange for funds, which can be used for payment purposes because it is accepted by third persons as a payment. Article 2 states that e-money means “electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions (…) and which is accepted by a natural or legal person other than the electronic money issuer Regarding the prudential supervisory regime for electronic money institutions, it is reviewed and aligned more closely with risks faced by those institutions. That regime is thought to implement more coherence between the many requirements that payment institutions are subject to. Indeed, it aims at being coherent with the prudential supervisory regime applying to payment institutions implemented by Directive 2007/64/EC. In this respect, the relevant provisions of Directive 2007/64/EC (regarding in particular member states’ competent regulatory authorities and conditions for granting and maintaining authorization as electronic money institutions) should apply mutatis mutandis to electronic money institutions. E-money institutions may have, in addition to issuing electronic money, other activities, such as the granting of consumer credit, or operation of payment systems. These business activities other than issuance of e-money are subject to new requirements in terms of capital guarantees, in accordance with article 9 of Directive 2007/64/EC (on payment services in the internal market). These provisions include requirements on low-risk assets, and on the capital adequacy of investment firms and credit institutions for which specific risk capital charge is no higher than 1.6%. Moreover, member states shall prevent the same equity capital from being used multiple times when the electronic money institution belongs to the same group as another electronic money institution, a credit institution, a payment institution, an investment firm, an asset management firm, or an insurance or reinsurance firm. The new Directive also implements a regime for initial capital, combined with one for ongoing capital, to ensure an appropriate level of consumer protection and the sound and prudent operation of electronic money institutions. Member States shall require electronic money institutions to possess, at the time of authorization, an initial capital of not less than 350 000€ (it used to be €1 million). Finally, new obligations on redeemability are put on e-money issuers. Indeed, Member States shall ensure that electronic money be redeemable for cash money, upon request by the bearer of electronic money, at any moment and at face value. When redemption is requested before the termination of the contract, the electronic money holder may request redemption of the e-money in whole or in part. Member States shall adopt and publish, no later than 30 April 2011, the laws, regulations and administrative provisions necessary to comply with the Directive.

Brief commentary

This directive established at the Community Level establishes a coherent legal framework for payment services, in order to maintain consumer freedom. This legal framework ensures the coordination of national provisions on prudential requirements, the access of new payment service providers to the market, information requirements, and the respective rights and obligations of payment services users and providers.