Navigating Poland's EMI Licensing Landscape
Are you contemplating entering the dynamic realm of electronic money (e-money) business in Poland? The choice between becoming an Electronic Money Institution (EMI) or a National Payment Institution involves understanding the nuances of each licensing option. In this article, we'll delve into the definitions, regulations, and advantages associated with obtaining an E-Money License in Poland.
1. Decoding E-Money in Poland
In Poland, e-money is defined under Article 2(21a) of the UUP as the monetary value stored electronically for facilitating payment transactions. This includes funds stored on electronic purses or servers accessible via the Internet. It's essential to note the strict treatment of e-money by the Polish regulator, the KNF, emphasizing distinctions from traditional 'bank money.'
1.2 E-Money in Poland and EU
Poland's definition of e-money slightly differs from the one in the EU directive. While the EU directive focuses on electronically stored monetary value accepted by entities other than the issuer, Poland's definition places specific emphasis on the closed system nature of e-money transactions.
1.3 Issuers of E-Money in Poland
Entities authorized to issue e-money in Poland include domestic banks, branches of foreign banks, credit institutions, and electronic money institutions (EMIs). A dedicated organizational form for an e-money issuer is an EMI.
1.4 E-Money Issued by National Payment Institution
While domestic payment institutions (KIP) can issue e-money in Poland, there are limitations. KIPs face restrictions on the average value of electronic money issued and are confined to the territory of Poland. To avoid these limitations, businesses can apply for authorization from the KNF to operate under a domestic Poland EMI license.
1.5 E-Money Institution (EMI) Definition
To navigate the regulatory landscape effectively and overcome potential constraints, a legal entity venturing into electronic money activities should seek authorization from the Polish Financial Supervision Authority (KNF). This authorization falls under Section VIIA of the Act on Payment Services (UUP), specifically addressing domestic electronic money institutions.
The prerequisite for obtaining EMI authorization is a substantial initial capital investment, amounting to a minimum equivalent of EUR 350,000 in Polish currency. This financial commitment is determined based on the average exchange rate announced by the National Bank of Poland (NBP) on the day the permit is issued (Article 132b(1) UUP). Notably, this capital requirement is nearly three times higher than that for a National Payment Institution (KIP), set at the Polish currency equivalent of up to EUR 125,000.
The procedural aspects and documentary requisites for obtaining a license for a National Payment Institution (KIP) largely apply to Electronic Money Institutions (EMI).
Crucially, an Electronic Money Institution license holds the advantage of providing payment services without limitations, enhancing its operational flexibility within the regulatory framework. All the licenses shall be obtained after the company setup in Poland.
2. EMI Services
2.1 E-Money Issuance and Redemption
The fundamental operation of an Electronic Money Licensed Institution centers around the issuance and redemption of electronic money. The EMI licensed entity, as the authorized issuer, holds the obligation to promptly issue electronic money at par value upon receipt of allocated funds. While the Polish statutory term "issuance" may differ from the EMD2 Directive's concept of "issue," it essentially involves the authorized issuer recording the monetary value constituting electronic money.
In practical terms, the issuer creates electronic money, previously nonexistent, in exchange for funds (payment means). This enables electronic money to be utilized in payment transactions, facilitating the redemption of liabilities on a regular FIAT money basis. Notably, the issuance of electronic money automatically imposes an obligation on the issuer to redeem it.
However, it's crucial to emphasize that, as per the Polish regulatory landscape influenced by the communications of the KNF, the creation of monetary value serves the sole purpose of facilitating payment transactions within a closed system. Electronic money is restricted to making payments to entities with a legally binding relationship to the issuer, enabling acceptance and future redemption. This is contingent upon entities possessing the technical capabilities to receive electronic money from the holder.
Redemption of e-money, upon the holder's request, is a mandatory provision that must be facilitated by the issuer at any time, offering face value for cash that is not e-money.
An EMI has the discretion to charge a fee for redeeming e-money, subject to the terms outlined in the issuance contract. The contract must clearly and comprehensibly regulate redemption matters, and information about redemption must be provided to the user when the proposal to conclude it is made. Parties are free to negotiate redemption terms differing from those stipulated in the UUP, provided the e-money user is not a consumer.
Crucially, the UUP provisions do not address the distribution of e-money without license. Consequently, the distribution of electronic money by a distributor under UUP is considered the outsourcing of operational activities to the EMI, regulated under Article 86 and subsequent sections of the UUP.
It's noteworthy that the issuance of e-money itself cannot be conducted through agents or other entities. The claim for the redemption of e-money is time-barred five years after the expiry of the contract for its issuance.
2.2 Payment Services of the Electronic Money Institution
Licensed EMIs can also act as payment service providers, offering various payment services listed in Article 3(1) of the UUP. These services include cash deposits and withdrawals, payment transactions execution, credit transfer services, issuing payment instruments, and more.
2.3 Non-Payment Services of the Electronic Money Institution
In addition to e-money issuance and payment services, licensed EMIs can provide additional services closely related to their core activities. This includes currency exchange, safe custody of funds, data storage and processing, running payment systems, and other business activities.
In Conclusion: Navigating the E-Money Licensing Landscape
Understanding the intricacies of Poland's e-money licensing regulations is crucial for businesses seeking to operate in this dynamic sector. The E-Money License, with its broader scope and authorization, offers a pathway for entities to navigate the evolving landscape of electronic financial services in Poland and beyond. Whether you're considering EMI or KIP, compliance with regulatory requirements is key to unlocking the full potential of the e-money business in Poland.
Are you ready to embark on this e-money licensing journey? Let's explore the myriad opportunities that an E-Money License in Poland can unlock for your business.