E-Money EU Jurisdictions

Goals

To identify priority jurisdictions in the EU to market an e-money product. Priority will be based on competition, size of the market, culture (attitude toward tech startups, accelerators, etc.), and available KPIs.

Early Findings

Preliminary research indicates that there are numerous jurisdictions in the EU that would be excellent choices for an e-money startup to market a new product. Early findings indicate that Lithuania, Luxembourg, and Ireland are priority jurisdictions.

LITHUANIA

  • In 2018, Google was granted an electronic money institution license in Lithuania, which will allow Google to "issue and redeem electronic money and provide payment services."
  • Lithuania has a regulatory environment that is conducive to FinTech startups. As Marius Jurgilas, board member of the Bank of Lithuania states, "Our regulatory environment and the benefits it offers have been acknowledged by both startups and world-class FinTech companies."
  • The Lithuanian FinTech Initiative "now covers more than 100 licensed companies, with most of them involved in payments, electronic money and peer-to-peer lending and crowdfunding."
  • Lithuania appears to be a strong test market for e-money companies, as Revolut, a digital bank in the U.K. was also granted a banking license by the European Central Bank, but is going to "start by testing the new license in Lithuania next year." If that plan goes smoothly, the company will "look to expand into other European markets later in the year."
  • Lithuania is one of the fastest-licensing jurisdictions in the EU, granting them in as little as three months.
  • Lithuania has granted 39 e-money licenses, which is second only to the UK, which has issued 128.

LUXEMBOURG

  • Alipay, a Chinese mobile and online payment platform, has been operating in Europe since 2015, but did not have its own e-money license, which meant that to operate, the company had to form partnerships with local card acquiring services to allow Chinese tourists to use their Alipay accounts.
  • In 2019, Alipay obtained an e-money license in Luxembourg that will now allow the company to "offer its services across Europe to the domestic mobile payments market."
  • Amazon Payments Europe also received its e-money license from Luxembourg.
  • Luxembourg has a "dedicated national FinTech platform: the Luxembourg House of Financial Technology (The LHoFT)" that is responsible for building and fostering the country's FinTech ecosystem.
  • According to Luxembourg's Fintech Innovation Hub, the country is "an ideal environment for fintech with an engaged and accessible ecosystem."
  • Luxembourg benefits from a strategic EU location, as it provides "easy access to Paris, London, Zürich, Amsterdam, Frankfurt and Brussels amongst many key EU locations."

IRELAND

  • Ireland is another jurisdiction that is home to a "thriving financial services and growing FinTech sector."
  • One of its advantages is its favorable tax regime due to a "combination of a 12.5% corporate tax rate and an exceptionally extensive and comprehensive set of double tax agreements."
  • London-based Soldo, a fintech company that offers "payment and spend management services to businesses," obtained an e-money license from Ireland in March 2019.
  • While this is only the third company to receive an e-money license from Ireland, with Facebook and PayPal the first two, the "complex legislation and high standards demanded by the Central Bank of Ireland ensure that only well run businesses with high standards apply for an E-Money license in Ireland."
  • A fourth company, Navan, received an e-money license from Ireland in April 2019.
  • Ireland has many of the same benefits as Lithuania and Luxembourg, but may have less competition due to its 18-month license-granting process.

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