ZDNet UK

CNET NETWORKS UK BUSINESS SITES:
atlarge.com
BNET UK
silicon.com
SmartPlanet.com
ZDNet.co.uk

ZDNet.co.uk - Winner of Best Business Website 2007

You are here: ZDNet.co.uk > News > Communications

Mobile working Toolkit

EC examines e-money regulation

Olswang Olswang

Published: 28 May 2004 11:00 BST

Short term solutions
The consultation document stresses the need to apply the rules in a proportionate way, taking into account the fact that any issuance of e-money is an ancillary activity for a mobile operator and that not all (or indeed, any) of the pre-paid balance will be used as e-money (if it is used exclusively to make calls, for example). It goes on to suggest that businesses involved in activities that do indeed constitute the issue of e-money should consider various short term measures to achieve compliance, including:

segregating e-money activities into a subsidiary company

;

seek any applicable waivers or exemptions (available only where the e-money in issue is below a certain threshold); or

outsourcing the issue of e-money to third parties.

The consultation seeks views on the commercial viability of these options.

What information is the Commission seeking?
The consultation document sets out 23 questions, directed not only at mobile operators but also others in the m-commerce supply chain. Specific information sought includes:

examples of the detailed mechanics of pre-paid mobile "cards" (the terminology used by the Commission to describe pre-paid balances) and the kinds of transactions involved;

details of the flow of value between mobile operators and third party suppliers in such transactions;

aggregated figures of the value of pre-paid balances in issue, to enable the Commission to assess the prudential risk involved;

the detailed mechanics of PRS transactions

Other consultation questions concern:

the practical consequences of requiring redeemability of pre-paid balances, and views on the alternative solutions put forward by the Commission;

the practical impact for mobile operators of compliance with the money laundering regime; and

the overall impact on competitiveness and growth of m-payment models.

Long term proposals
The in addition to formulating short term guidance on application of the Directives, Commission is considering reviewing the Directives in the light of market developments, to ensure proportionate application of the rules and to avoid hampering innovation. The results of this consultation will therefore contribute to the review which is due to take place in 2005. Readers may recall that separate and more wide-ranging proposals concerning payments in the Internal Market, including e-money were also released recently by another part of the Commission.

What steps should my business take?

The Commission is clearly alive to the potentially damaging impact of the e-money regime on the mobile sector. It acknowledges the risk of over-burdening the sector with regulation which may be disproportionate to the sums of money and the risks involved. It is therefore essential for businesses involved in mobile transactions to respond to the consultation in order to influence the Commission's thinking on this issue. The deadline for submitting comments is 16 July. Affected businesses should also seek advice from the FSA on a case-by-case basis.