Electronic money institutions

Business scope

Electronic money institutions (EMIs) are firms other than banks that issue electronic money (e-money).

In addition to issuing electronic money, EMIs are also allowed to:

• provide operational services closely linked to the issuance of electronic money, such as:
  • designing and implementing procedures, devices and support in connection with the issuance of electronic money;
  • providing services linked to the issuance of electronic money, on behalf of third-party electronic money issuers;
• providing the payment services listed under points 1 to 8 of Article 1(2), h-septies.1) of the Italian Consolidated Law on Banking (TUB), including those not linked to the issuance of electronic money, and the related ancillary activities;
• providing financing connected with payment services within the limits set out in the applicable supervisory arrangements;
• engaging in other business activities that do not involve the provision of payment services or the issuance of electronic money; the law provides that these services be delivered using a dedicated capital fund to be set up by the intermediary (which, in this case, would be classified as a hybrid EMI).

Only banks and e-money institutions are authorized to issue electronic money.

Requirements

The licensing requirements for EMIs are as follows:

1. EMIs must have the legal form of a joint-stock company (società per azioni), a limited joint-stock partnership (società in accomandita per azioni), a limited liability company (società a responsabilità limitata) or a cooperative company (società cooperativa);
2. the registered office and head office must be located in Italy, where at least some of the operations involving payment services must be carried out;
3. the initial capital must amount to no less than €350,000;
4. qualified shareholders must meet the relevant regulatory requirements;
5. the members of the management body must comply with the fit and proper requirements laid down by the legislation;
6. there must be no impediment to the effective exercise of the Bank of Italy's supervisory functions, with reference to its affiliation to groups and any close links between the EMI (or other entities in its group) and other entities;
7. EMIs providing payment initiation services (PISs, point 7) or account information services (AISs, point 8) must take out a professional indemnity insurance policy or comparable guarantee covering any damages they may cause while carrying out their business activities.

EMIs must also submit other specific documents, as indicated in the Supervisory Provisions for Payment and Electronic Money Institutions, such as their memorandum and articles of association, a business plan with an analysis of the financial viability of start-up operations and a description of the services offered, and a report on the organizational structure.

The Bank of Italy shall reject licensing applications when, after verifying the above requirements, the sound and prudent management or the proper functioning of the payment system is not ensured.

Post-licensing requirements

Newly-licensed EMIs are required to provide the Bank of Italy with a certificate showing the date on which they were entered into the Italian Business Register (for newly-established institutions) or the date when the amendments to their articles of association were recorded in the Register (for existing institutions). As of that date, licensed institutions are entered by the Bank of Italy into the EMI register referred to in Article 114-quater of the TUB and are notified of their identification number.

For each intermediary, the EMI register indicates the type of services they are authorized to provide and, for EMIs providing payment initiation services (PISs) or account information services (AISs), the identification details of the insurance policy or of any other comparable guarantee required.

Once registered, EMIs are required to:

• adhere to an Alternative Dispute Resolution (ADR) system, as provided for in Article 128-bis of the TUB;
• notify the Bank of Italy of the start of their operations within 12 months of registration.

Intermediaries are supervised by the Bank of Italy according to the organizational criteria published on its website and are subject to its supervisory powers, as set forth in the relevant regulations.

Payment service providers holding payment accounts that are accessible online and opting for a dedicated interface for third-party providers (TPPs) may submit an application to the Bank of Italy to be exempted from the obligation to set up a contingency (or fallback) mechanism, as described in Commission Delegated Regulation (EU) 2018/389. Applications that are not submitted during the licensing phase must be filed by following the instructions published on the Bank of Italy's website.