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Commission assesses E-Money Directive impact

Commission assesses E-Money Directive impact

On 25 January 2018, the European Commission published a report (PDF 251 KB) on the implementation and impact of the Electronic Money Directive (EMD) in particular on the application of prudential requirements for electronic money institutions.

Key points

Topics covered by the Commission's recent report include:

  • the transposition of EMD2 provisions into national law by Member States
  • the application and impact of EMD2 on the European electronic market to date
  • the impact of PSD2 on EMD2
  • the interaction between the EMD2 and the Fourth Anti-Money Laundering Directive (AMLD4)
  • a general review of the EMD2, with an identification of key emerging challenges

The report's overall assessment of the EMD2 is positive. It is deemed to have largely fulfilled its objectives of removing barriers to market entry, facilitating the take-up and pursuit of electronic money issuance business, and creating a level playing field for all market participants.

It concludes that further improvements should target an enhancement of the current regulatory framework, with short-term gains achievable by providing guidance in three areas:

  • the classification of products as e-money
  • the application of the limited network provision 
  • the distinction between the concept of an agent and a distributor in the context of e-money

Also, there should be further consideration of the operational scope and regulatory inter-relationship between EMD2 and PSD2. A future revision of the Directive and its merger with PSD2 would require further analysis and sufficient implementation experience of PSD2.

Client considerations

The growth of electronic money services has been increasing, with new interest in e-money licenses and cross-border activity. SMEs in particular might be able to take advantage of new market access conditions. Rapid technological disruption in payment services and the evolving regulatory approach to digitalisation are expected to expand market competition.