E-money Directive and mobile phones: Commission consults

The Commission wants to establish whether changes to the E-Money Directive are needed to better reflect industry needs and deal with related risks.

The E-Money Directive imposes requirements in respect of electronic money (e.g. that the electronic money must be redeemable for cash at an equal value) and obliges electronic money issuers to implement safeguards against money laundering.

The Directive defines electronic money as monetary value stored on a chip card or on a computer's memory which is accepted as a means of payment by undertakings other than the issuer.

Some Member States have implemented the Directive into their national law in such a way that the supply of pre-paid mobile phone cards may be construed as issuing electronic money. Consequently, the mobile phone operators issuing such pre-paid phone cards may be subject to the applicable electronic money rules and requirements.

Internal Market Commissioner Frits Bolkestein said:

"Mobile phones are now used to purchase a whole range of products and services going well beyond simple telephone calls. We have to make sure that EU rules are clear, proportionate and are applied consistently throughout the 25 Member States if we are to encourage investment in the electronic communication sector and the development of new and innovative services for consumers."

The Commission carried out a preliminary analysis in 2003 to help establish a common interpretation of the E-Money Directive. According to that analysis, when prepaid phone cards are used to obtain phone airtime, they are not covered by the Directive.

However, if the electronic value stored on the card is used to purchase products and services, other than traditional communications, offered by third parties (merchants) then the Directive does apply. These merchants' products and services include, for example, ring tones, news and weather report services, videos and even vending machine activation services.

The current Commission consultation paper has been issued to examine the impact of the e-money rules on mobile operators and related businesses. The consultation also aims to identify more precisely the types of mobile phone activity which are covered by the E-Money Directive and determine whether the Directive needs to be amended to better regulate and protect the interests of businesses and consumers.