Wednesday, February 11, 2004

Paypal UK Ltd is an e-money institution as of February 12

Ben Putter informs us that Paypal has notified its European users that as of February 12 Paypal Europe Ltd will officially be an electronic money institution, supervised by the Financial Services Authority in the UK. More information can be found on their website.

This is a very remarkable moment, demonstrating that of all EU supervisors, the British FSA operates best. They did not hesitate to give licenses to Internet-based new entrants companies such as Moneybookers, Prepay Technologies and now Paypal. They've made Vodafone realize that a substantial part of its pre-paid business effectively is e-money, as a result of which Vodafone has a small issuer license. And as such they best contribute to creating a level playing field for electronic money.

Given the position of the FSA and Paypal, a lot of regulatory discussions on e-money may soon be untimely and out of date. All of a sudden EU-banks face a serious licensed competitor with a techological and market headstart. And while these main players battle for the digital e-money market, mobile telco's are left to find out how to solve their billing and regulatory issues. And unless they move quickly they will see their revenue from data-income from pre-paid users disappear completely.