PERG 3A.2 General issues

Q2. Why does it matter whether or not we fall within the scope of the Electronic Money Regulations?

It matters because if you issue electronic money in the United Kingdom and do not fall within an exclusion or exemption you must be:

Otherwise you risk committing a criminal offence under regulation 63.

Q3. How much can we rely on these Q&As?

The answers given in these Q&As represent the FCA's views but the interpretation of financial services legislation is ultimately a matter for the courts. How the scope of Electronic Money Regulations affects the regulatory position of any particular person will depend on their individual circumstances. If you have doubts about your position after reading these Q&As, you may wish to seek legal advice. The Q&As do not purport to be exhaustive and are not a substitute for reading the relevant legislation. In addition to FCA guidance, some of the Electronic Money Directive provisions may be the subject of guidance or communications by the European Commission.

Q4. As an electronic money issuer am I carrying on the regulated activity of accepting deposits when I receive a sum in exchange for electronic money?

No, provided the sum paid over is exchanged immediately for electronic money; see article 9A of the Regulated Activities Order.

Some electronic money products may be charged up by means of scratch cards that can be purchased from shops. The price paid for the card is the monetary value of the electronic money. The card contains a number. The purchaser then enters the number on a web site to activate the electronic money account. There is thus a delay between the payment for the electronic money and its use by the holder. In our view, this delay does not make the payment for the electronic money a deposit. This is because the means of spending the electronic money is put into the hands of the purchaser when they purchase the card.

Q5. I intend to issue electronic money in the United Kingdom. How does the authorisation and registration process apply to me?

It depends on a number of factors:

Transitional arrangements may also be relevant, see PERG 3A.7.

Q6. We are a payment institution. How will the Electronic Money Regulations apply to us?

If you are a payment institution that does not intend to issue electronic money or act as agent for an electronic money institution the Electronic Money Regulations are unlikely to apply to you.

If you are a payment institution that wishes to also issue electronic money then, in our view, you should cancel your authorisation or registration as a payment institution and apply to be an electronic money institution. An electronic money institution does not need to be authorised or registered under the Payment Services Regulations to provide payment services.

Q7. As an electronic money institution how will the Payment Services Regulations apply to us?

The issuance of electronic money is not itself a payment service but it is likely to entail the provision of payment services. For example, issuing a payment instrument is a payment service and electronic money is likely to be issued on a payment instrument in order to make a payment transaction. See Q20 at PERG 15 for more detail on what amounts to issuing payment instruments.

As an electronic money institution you are permitted to engage in the provision of payment services as well as other activities, see regulation 32 and Q19 below, without needing to be separately authorised or registered under the Payment Services Regulations.

The conduct of business requirements in Parts 5 and 6 of the Payment Services Regulations apply to all payment service providers, including electronic money issuers.