Electronic Money Directive / Regulations
The Electronic Money Directive (EMD) and accompanying Electronic Money Regulations govern the issuance of electronic money within the EU and UK. These regulations enable licensed Electronic Money Institutions (EMIs) like Modulr to issue e-money, hold client funds and provide payment services. Post-Brexit, the UK and EU may diverge in their implementation of these rules.
Applications
Digital wallets:
Enable issuance of e-money for prepaid cards and mobile accounts.
Fintech infrastructure:
Powers business payment platforms and embedded finance providers.
Advantages
- Client fund protection: Mandates safeguarding through ringfenced accounts.
- Innovation enablement: Creates space for non-bank payment providers to scale.
Challenges
- Authorisation burden: Requires regulatory approval and capital compliance.
- Jurisdictional complexity: Implementation varies across EU and UK.
