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Everything you need to know about e-money

The European E-Money Directive

The adventure began in earnest on January 28, 2013, when France transposed the European directive DME2, better known as the “second Electronic Money Directive”. The aim of this directive is to define the legal framework and then regulate its issuance and management, by creating a new type of player in the banking sector: the Electronic Money Institution.

What is electronic money?

The Monetary and Financial Code defines it as “a monetary value stored in electronic form, including magnetic form…”. It is therefore a prepaid monetary value that constitutes a receivable for the issuer.

It follows a cycle (emission / use / destruction) involving 3 players:

  • The holder: The person who purchased or received the electronic money medium.
  • Acceptor (merchant): The person who accepts payment using the electronic money medium.
  • The issuer: L’Établissement de Monnaie Électronique (EME)

The Banque de France’s Autorité de Contrôle Prudentiel et de Résolution (ACPR) has entrusted the provision and management of these services to approved Electronic Money Establishments (EMEs): securing value, KYC, KYB, ACPR declarations, fraud management…

How is electronic money stored?

EMD2 applies most of the rules governing payment services to e-money. This electronic substitute for cash is stored on an electronic wallet or e-wallet, which has become a payment method in its own right.

The use of this currency is based on the very concept of prepayment: when e-money is issued (or the associated media purchased), the currency equivalent is immediately collected and held by the e-money institution.

There are several types of e-wallets:

  • Prepaid credit card: Visa, Mastercard…
  • Prepaid gift cards: credit cards, multi-brand cards, single-brand cards…
  • E-wallet: sports betting reception accounts, money exchange applications between individuals, C2C sales marketplaces…)

Why use electronic money?

In 2019, more than 62 million transactions were carried out in electronic value. This new way of paying has a number of advantages, both for the retailer and the end customer.

For customers, paying in e-money with an e-wallet is an alternative to traditional forms of payment, bringing greater simplicity, convenience and speed to transactions.

For merchants, it enables value exchanges to be carried out without delays or bank charges, reducing the risk of non-payment to zero and limiting the risk of fraud. What’s more, the EME is responsible for maintaining a high level of compliance on accounts and securing transactions.

With CentralPay’s Easy Wallet solution, simplify the exchange of digital values between your users by orchestrating instantaneous e-wallet-to-e-wallet movements.