What is an Electronic Money Institution?
The structuring and regulation of entities offering electronic financial services are essential to ensure the performance, security, and transparency of transactions. It is within this framework that the Electronic Money Institution status was created, allowing authorized entities to issue and distribute electronic money services.
The Electronic Money Institution status
The status of payment institution was created in 2010 following the introduction of the PSD1 (Payment Services Directive). Under the supervision of the ACPR (the Prudential Supervision and Resolution Authority – Banque de France), this status is mandatory whenever an organization wishes, for professional purposes, to:
- Open payment accounts for itself or third parties
- Collect funds on these payment accounts
- Process and secure payment-related data
The Electronic Money Institution status was created three years later, in 2013. A payment institution can thus extend its accreditation by becoming an EMI. In addition to providing traditional payment services, this new status grants it the right to issue and manage electronic money services.
Difference between an EMI and a bank
A traditional bank is a credit institution. Under the authority of the ACPR, this status allows it to offer financial services such as the issuance of payment methods (e.g., bank cards, checkbooks), savings accounts, and credit solutions.
While Electronic Money Institutions (EMIs) are able to collect customer funds, they cannot use them for their own account or invest them in savings or investment products, unlike traditional banks. Thus, these two players do not compete directly. EMIs develop innovative solutions designed to meet the specific needs of electronic money distributors, which banks do not address.
Distributing Electronic Money
A company that wants to become an electronic money distributor to its third parties or customers has two options:
- It can obtain Electronic Money Institution status from the ACPR, a long, complex, and costly process requiring compliance with strict rules regarding compliance, technical structure, and security processes.
- It can also become a Payment Service Provider Agent with an authorized Electronic Money Institution, such as CentralPay. It integrates and distributes regulated services to its users, drawing on the expertise of an accredited institution and without the burden of compliance.
Why use an Electronic Money Institution?
Using an Electronic Money Institution is the preferred option for most companies wishing to provide electronic money. This strategy offers significant advantages in terms of competitiveness, cost, and support.
Flexibility, innovation, and competitiveness
EMIs are at the forefront of financial innovation. Their agile structure allows them to quickly develop and deploy methods adapted to market needs. As an electronic money distributor, you offer cutting-edge services that strengthen your market competitiveness. The flexibility of an Electronic Money Institution allows you to adapt quickly to regulatory and technological developments, guaranteeing solutions that are always up-to-date and compliant.
Cost reduction
By using an Electronic Money Institution (EMI), you avoid many of the costs associated with obtaining the necessary approvals, regulatory compliance, and developing technical infrastructure. EMIs share these costs among multiple clients, enabling economies of scale and competitive rates.
Enhanced security
Electronic money distributors are subject to several strict security standards and regular audits by regulatory authorities. By using an EMI, you benefit from highly secure solutions for processing electronic money transactions, managing sensitive data, and protecting against fraud.
Technical, commercial, and legal support
In addition to providing electronic money services, EMIs also support their customers on a daily basis, covering technical aspects with dedicated integration and support teams, as well as commercial advice to optimize the use of the services offered. In addition, Electronic Money Institutions provide valuable legal expertise to navigate the complex regulatory landscape.
