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What is an electronic money institution?
Section 1:1 of the Financial Supervision Act (Wet op het financieel toezicht - Wft) defines an electronic money institution as an enterprise that issues electronic money on a commercial basis.
An e-money institution supplies the financial product electronic money. Electronic money can be used to conduct payment transactions at other enterprises than the electronic money institution. Only legal persons can apply to be authorised as an electronic money institution.
Electronic money represents a monetary value that is stored electronically or magnetically. An electronic money institution stores the monetary value in a central accounting system (the enterprise's server), or it may be stored on an electronic carrier like a chip. This monetary value can then be used to make payments at other parties than the one that issued the electronic money.
Examples of electronic money include plastic gift vouchers that can be used to pay in shops and webshops.
Three categories of electronic money institution
There are three categories of electronic money institution.
- Electronic money institutions: Enterprises holding authorisation issued by DNB specifically for issuing electronic money.
- Exempt electronic money institutions: enterprises exempt from the authorisation requirement under the Exemption Regulation of the Wft (Vrijstellingsregeling Wft). An exempted electronic money institution is not permitted to start issuing electronic money until DNB has entered the enterprise as exempted electronic money institution in the public register.
- Banks: enterprises that may act as electronic money institution based on their authorisation to set up business as a bank, to the extent permitted under the authorisation issued of course. They are excepted from the authorisation requirement for electronic money institutions.
Exempted electronic money institutions and excepted banks do not require authorisation from DNB; any other electronic money institutions do require authorisation.
Authorisation permits electronic money institutions to pursue their activities in all countries of the European Economic Area. This is known as the single licence or European passporting arrangement. If electronic money institutions plan to expand their activities to other member states, they are required to notify the supervisory authorities of the member state where they have their registered offices and the supervisory authorities of the member state where they want to launch their activities. Exempted electronic money institutions are not permitted to use the European passport and are not permitted to expand their activities outside the Netherlands.