Limited Networks, Limitless PossibilitiesWednesday, 20 April 2011 2EMD & PrepaidThe Second e-Money Directive (2EMD), which aims to encourage the growth of the electronic money market, will be implemented in most countries by the 30th April 2011. 2EMD is a very positive development for the prepaid industry. What is electronic money?
Its a bit of a mouthful is what it is … “Electronic money (e-money) is electronically stored monetary value, represented by a claim on the issuer, which is issued on receipt of funds for the purpose of making payment transactions, and which is accepted by a person other than the electronic money issuer”. And that is just for openers, there are a couple of hundred more pages of legal speak to wade through!
But there is one small section that opens up a whole new world. It concerns limited networks. Limited networks fall outside the scope of 2EMD (no capital requirements, no reporting requirements). A limited network is where you have an e-money instrument (prepaid card) that can be used to acquire goods or services only in the premises used by the issuer or under commercial agreement with the issuer, either within a limited network of service providers or for a limited range of goods and services.
Who will this help?
• Merchants that have complex legal structures underpinning their retail footprint, such as franchises, concessions or any structure involving multiple legal entities under a common brand
• Merchants that wish to cooperate with other merchants for a common cause. If a bookshop and coffee shop wished to launch a common card they now do not need an eMoney license
The need for an e-Money license to rollout the above programmes has been a significant deterrent for merchants.
Needless to say, the legislation around what is and what is not a limited network is complex. To help you through the minefield the Global Prepaid Exchange and Salans has launched a very nice service, 2EMD Assure. If you are running a prepaid programme in the UK or Europe or intend to launch a prepaid programme in the UK or Europe you need to know whether your programme is subject to electronic money regulations, 2EMD, or whether your programme could be classified as a Limited Network and therefore exempt. The 2EMD Assure service from Global Prepaid Exchange and Salans delivers a written legal opinion of the status of your programme and commercial commentary.
Happy to facilitate an introduction, give me a shout on
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DH
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