This content is from: Local Insights

Finland

A committee report initiated by the Ministry of Finance proposes new regulatory requirements for issuers of electronic payment systems (e-cash), the operating of businesses engaged in e-cash systems and the control of such businesses. The committee report covers a wide range of electronic payment systems from single-use pre-paid cards to all-purpose pre-paid cards as well as so-called electronic wallets with electronic value tokens created by user software.

According to the report, electronic payment systems would be divided into two categories according to the applicability of the proposed legislation. The category not subject to regulation would include, first, 'closed systems' in which the issuer of the means of payment would be the only payee of the medium or in which the number of payers and payees would be limited. Second, electronic payment systems provided by municipalities and the state for services rendered by them, would be excluded from the scope of e-cash regulation.

The category subject to regulation would include 'open systems' in which the number of users and payees of e-cash is unlimited. The force of the applicable regulations would depend on the total value of the means of payment in circulation. According to the report, payment systems with a total value not exceeding a threshold limit yet to be defined could be operated after notification to the Ministry of Finance. The issuers of such means of payment would be obliged to report the amount of electronic cash in circulation regularly to the Financial Supervision.

E-cash in systems without restrictions regarding the total value of e-cash in circulation could in future be issued only by credit institutions or entities exclusively engaged in issuing e-cash. Such large-scale issuers of e-cash would have to meet certain requirements on liquidity, solidity and both the technical and organizational security of the system. If realized, the proposal would extend the scope of application of the Act on Credit Institutions to the unlimited issuing of e-cash. Existing credit institutions could issue e-cash by virtue of their credit institution licence while other entities exclusively engaged in issuing e-cash would have to seek authorization from the Ministry of Finance.

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