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 fulfils 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 

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.

The previous limits under the Estonian Payment Institutions and E-money Institutions Act on the amount of money that may be stored on an e-money device have been repealed as of January 2018. Therefore, the two limits of 2500 euros per calendar year for a rechargeable e-money device and 1000 euros for a non-recharging e-money device are no longer in force, and at present, there are no new limitations in force. 

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. 

E-money Activity License Application and Process

An application for the activity license for the provision of payment services or for issuing e-money must be sent to the Financial Supervision Authority. Under Article 18 (1) of the E-Money Institution Act, the Financial Supervision Authority shall issue its decision on the license within three months after the receipt of all the necessary documents and information, which may not be later than six months of the initial application for the license. 

For the Activity License the following documents and information are required: 

-A written application

-A copy of the articles of association (or for an operating company the resolution of the general meeting on amendment of the articles of association alongside the new amended text of the articles of association)

-Upon founding a company, a notarised transcript of the memorandum of association or foundation resolution

-Document certifying the payment of share capital or existence of initial capital

-An action plan regarding the e-money services

-A business plan

-Opening balance of the applicant or for an operating company the balance sheet and income statement

-A description of the application of the general requirements for safekeeping and protection of assets

-Internal rules and accounting policies and procedures or drafts thereof

-Information on IT and other resources and systems required for the provision of the planned services

-Description of the internal control system and measures to ensure performance of obligations regarding countering of money laundering

-A list of shareholders or members

-Information on persons who own qualified holdings in the applicant

-Information on the manager of the applicant

-Information on companies in which the holdings of the applicant or its manager exceeds 20%

-Information on the auditor and internal auditor of the applicant

-For an operating company, documents certifying the amount of own funds together with the sworn auditor’s report.

-Assessment of Eesti Pank on the technical, financial and legal principles of the functioning of the payment system and draft rules.

-Security Policy Description.