17-05-11

eMoney is Reborn: Electronic Money Regulations 2011 On 1 May 2011, the Electronic Money Regulations 2011 came into force, creating a legal framework intended to push the UK and Europe more quickly into a new era of fluid e-commerce. UK consumers are already familiar with electronic money through the use of "online wallets" such as PayPal, Amazon Payments and Google Checkout, but this newly-liberalised eMoney regime is likely to see expansion of the normal consumer experience to include many more direct mobile payments in the street and in entertainment venues, as well as "contactless near field communication" payments by way of a smartcard "wave" in shops and countless other locations and uses. The new law establishes a new authorisation regime for eMoney issuers who are not banks or building societies. Any company that meets the new (liberalised) criteria can issue eMoney directly from their principal corporate entity - without having to set up a dedicated special purpose vehicle alongside the trading company. In this way it is now possible for e-commerce traders to seamlessly provide their own payment systems and to avoid many of the old complexities and costs. One key change that lowers the barrier to entry is the abolition of the old initial capital requirement for "small" eMoney issuers. Other changes include scrapping the old upper limit of €150 per card/electronic device and the practice of absorbing funds left after expiry, i.e. "breakage" (which is now prohibited as all eMoney issuers must return unused funds on request at any time - even after expiry). The most likely immediate effect will be to allow mobile and other telecom companies to create their own payment solutions, and to cooperate more naturally with the underlying voice or data service - thereby massively reducing a major "speed bump" that has contributed to the slow development of mobile-based content services in Europe. The Regulations are also likely to create a fertile breeding ground for a new generation of mobile payment services - aka "M-Money" - including mobile-borne payments for things such as music and video downloads, ringtones and games, content service subscriptions, transport fares, parking meters and tickets. The full text of the Regulations may be accessed via: http://www.legislation.gov.uk/uksi/2011/99/contents/made.
Article by Tom Frederikse