E-money firms: the next shadow banks?

Author: Danielle Myles | Published: 21 Jul 2014
Hopes that alternative credit providers would gain greater access to small and medium-sized enterprises (SMEs) as a result of the UK small business bill have been dashed by recent developments concerning its implementation.

But if any non-banks are going to make the most of the changes, it is likely to be electronic payment services firms such as Amazon, Google and Paypal.

The government’s Small Business, Enterprise and Employment Bill, which passed its second reading on July 15, intends to make it easier for SMEs to seek loans from lenders other than their traditional banks. It presents new opportunities for alternative credit providers, who are included in the group of entities to which banks must refer unsuccessful SME credit applicants.

But rather than private equity or hedge funds, whose direct lending activities have already caught the attention of regulators and borrowers, e-money firms – which are active in one of...



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