A license is required

The European Central Bank defines e-money as follows (a non-legal definition): “E-money can be defined as any amount of monetary value represented by a claim issued on a prepaid basis, stored in an electronic medium (for example, a card or computer) and accepted as a means of payment by undertakings other than the issuer, predominantly for small-value transactions (for example, the settlement of modest transactions over the Internet and of parking or telephone charges and payment for public transport services).” (Electronic Money Institutions. Current trends, regulatory issues and future prospects. Legal Working Paper Series, No. 7/2008).

Further clarification of the definition: “In common with banknotes and coins, e-money is ‘fiduciary money’, deriving its value not from its intrinsic worth but, instead, from the bearer’s expectation that it can be exchanged for its underlying value. However, unlike other forms of fiduciary money or existing single-purpose prepaid card schemes, e-money payment instruments are the result of an exchange of token into electronic (‘scriptural’) money, intended for use as multipurpose payment instruments. The use of generic terms such as ‘e-cash’ or ‘cyber-cash’ to describe contemporary e-money schemes is potentially misleading. Notwithstanding certain similarities with e-money such schemes are, in fact, diverse, and operate according to different formats.

According to Section 4 of the Aruba State Ordinance on the Supervision of the Credit System 1998 (“SOSC”), no enterprise or institution established in Aruba shall pursue the business of a credit institution or electronic money institution unless it has obtained a license to that end from the Central Bank of Aruba. No enterprise or institution established outside Aruba shall pursue the business of a credit institution or electronic money institution through a branch in Aruba, unless it has obtained a license from the Central Bank of Aruba to do so (Section 24(1) SOSC).

An “electronic money institution” under the SOSC means a party, not being a credit institution, whose business it is to obtain the disposal of funds in exchange for which electronic money is issued with which payments can be made to parties other than the party issuing the electronic money (Section 1 SOSC).

The prohibition mentioned does not apply to an electronic money institution which issues electronic money with a maximum monetary value of Afl. 350 per electronic storage device, if:

  • the joint value of the financial liabilities of the electronic money institution relating to the issuance of electronic money does at no time exceed Afl. 5,000,000 (approximately US$ 2,800,000);
  • the electronic money is accepted only by an enterprise forming part of the group to which the electronic money institution belongs;
  • the electronic money is accepted only by a limited number of clearly distinguishable enterprises that either share the same building, premises or other limited local area, or have close financial or business ties with the electronic money institution; or
  • in situations to be further described in a Decree (Section 1(3) SOSC).

Finally, the European Central Bank, in its aforementioned 2008 paper stated: “What is more, the likelihood of an immediate increase in the volume of e-money issuance appears small, not only because of the still limited consumer interest in e-payment instruments but, also, on account of the perceived failings of the current regulatory regime.”…

Karel Frielink
Attorney (Lawyer) / Partner

(24 October 2013)

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