The Estonian Payment Institutions and E-money Institution Act defines e-money as monetary value that is stored on an e-money device (such as a chip card) which contains a monetary claim against the issuer, as well as fulfills all three of the following criteria:
- It is issued at face value in relation to the monetary payment received
- It functions as a payment instrument in the execution of payment transactions
- Another person besides the issuer accepts it as payment instrument
Under the Estonian Payment Institutions and E-money Institutions Act sets a limit on the amount of money that may be stored on an e-money device. Two distinct limits apply, 2500 euros per calendar year for a rechargeable e-money device and 1000 euros for a non-recharging e-money device.
E-money rules within Europe were thoroughly revised by an EU Directive (2009/110/EC) in all EU countries, by the 30th of April in 2011 as required by the aforementioned directive. Consequently, the Estonian Payment Institutions and E-money Institutions Act which entered into force on the 3rd of March in 2010 has been amended to meet the requirements of the new EU directive.
E-money institution regulation in Estonia
Under Estonian legislation, e-money institutions are primarily regulated by the Payment Institutions and e-money Institutions Act. An E-money Institution may be a private or public limited company in Estonia that has a permanent activity of issuing e-money in its name. Furthermore, e-money institutes have the exclusive right to use the word combination of electronic money institution (“e-raha asutus”) or an equivalent in a foreign language in their business names.
E-money institution control in Estonia
The Payment Institutions and e-money Institutions Act requires e-money institutions to have an activity license which is granted by the Financial Supervision Authority. In addition to e-money institutions, the Financial Supervision Authority conducts supervision in the state’s name over a multitude of institutions such as banks, investment firms and insurance intermediaries.
In the case of e-money institutions, the Financial Supervision Authority grants an activity license for an undetermined period of time, moreover, the activity license may not be transferred to another person. Furthermore, in the case of mergers, an e-money institutions may only merge with another e-money institute, and should a new e-money institute be founded by the merger of two e-money institutes, the newly founded e-money institute must apply for an activity license.