What is an E-Money License? - Hydrogen
What is an E-Money License?

What is an E-Money License?

Technological advancements have led to the development and popularity of electronic money (e-money), which is a cashless payment method. Companies that want to offer their clients this service in Europe must obtain an e-money license. If you want to provide a wider range of services to your clients, an e-money license may be an ideal solution. 

One popular e-money product is prepaid debit cards, which consumers use as an alternative method for storing money. Europe has recently established new rules to make prepaid debit cards more secure and advantageous for users. 

How exactly does e-money work, and what are the European rule changes for prepaid debit cards? Read on to learn about e-money essentials and the positive changes for prepaid debit card users in Europe.

What Is an Electronic Money Institution?

Electronic Money Institutions (EMIs) are financial institutions that are authorized to issue electronic money. They can perform the same functions as a bank or Payment Institution (PI), as well as provide payment cards, e-wallets, and IBAN accounts.

The main difference between an EMI and a PI is that an e-money license gives your clients greater flexibility to use their money as they wish, while PIs require predefined and concrete payment transactions.

What Is Electronic Money?

E-money is a digital alternative to cash. It is a monetary value that is electronically stored on a device that can be used to make payments to other entities. E-money allows users to make cashless payments stored on a phone or card or over the internet. 

Electronic money products may be software-based or hardware-based. Software-based products can be used on personal devices such as computers and tablets. Monetary transfers require an online connection to access a remote server that controls the purchasing power. An example of a software-based e-money product is PayPal.

The purchasing power of hardware-based products typically comes from a device like a chip card, and monetary values are transferred by device readers that do not require an online connection to a remote server. An example of a hardware-based e-money product is Square. 

What Are Prepaid Cards?

E-money is widely used throughout the EU, and prepaid debit cards are a popular form of storing and using e-money. They are a viable alternative for consumers who do not use banks to access and store their money. 

To ensure greater transparency and fairness, regulations have been placed on EMIs for the benefit of prepaid debit card users. These new rules include:

  • No time limits on the e-money holder’s right to redeem the monetary value on the card. 
  • EMIs must protect funds received from customers so that if they become insolvent, the e-money issued can be repaid to customers.

These new regulations are designed to protect prepaid debit card users and further legitimize prepaid debit cards beyond your average gift card. 

Hydrogen’s API Platform for Prepaid Debit Cards

At Hydrogen, we offer a configurable API platform and no-code apps with all the analytics, data storage, UI, and business logic you need to offer a physical or virtual prepaid debit card issuance app in Europe. Our platform integrates with technology middleware companies that offer e-money licensing to our customers, alleviating the need for you to obtain it yourself! This saves you months of time and money.

To find out more, start building with Hydrogen Lab today!


Hydrogen is the Global Fintech Enablement Platform
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