Payment Institutions As Wallet Providers - CJEU Judgment

The ability to operate "wallets" and hold customer funds for extended periods of time has long been a distinguishing feature of electronic money institutions. A recent judgment from the CJEU, however, throws open this "walled garden" also to payment institutions.

Since they first became subject to bespoke regulation at the European level in the early 2000s, one of the core features of electronic money institutions ("EMIs") has been their ability, through the issuance of electronic money ("e-money"), to hold customer funds for an extended period of time pending a decision by the e-money holder to make a payment using the e-money issued.

Historically, this has been thought of by market participants as a key distinguishing feature towards licensed payment institutions ("PIs") and the basis for EMIs offering wallet-products whereas PIs - which can hold customer funds on payment accounts but only for the purpose of executing payment transactions - could not. It is