The European Union promoted the concept of e-money alongside massive strides in technology to bolster the status of e-commerce in Europe. Malta was one of the first EU Member States to allow standalone Electronic Money Institutions (EMIs) by removing the unnecessary rigidity surrounding this market. This has been done by means of various amendments which have substantially attracted the EMI market to Malta, in order to enable it to expand it further.

EMIs are defined as “a financial institution that has been licensed and authorized to issue electronic money or that holds an equivalent authorization in another country in terms of the Electronic Money Directive to issue electronic money” while Electronic money is defined by the Act as “electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions … and which is accepted by a natural or legal person other than the financial institutions that issued the electronic money”.

To set up an EMI in Malta, minimum registration requirements apply and upon application one must provide a series of details about the EMI which includes the initial capital, a detailed business plan and the identities and addresses of anybody involved in the business as set out in the Personal Questionnaires submitted to the MFSA.

The licensing process usually takes around 3 months from submission of the completed application form and supporting documentation. The applicant is subject to a minimum amount of fees however the EMI is also later eligible for various fiscal incentives in the form of refunds as offered by Malta’s regulatory regime.

There is a plethora of benefits which an EMI can reap from when setting up in Malta. More than 250 e-Gaming companies are set up in Malta which need the provision of payment services. Operational costs such as salaries and rent are much lower than that of competing countries. Malta offers an optimum atmosphere, which successfully weathered the financial crisis, for the starting of new ventures while offering access to both Europe and the Mediterranean region. The regulatory regime and traditional banking sector are also constantly updated to keep abreast with market changes and new products while keeping in mind the importance of investor protection. Malta also offers a stable political and strong industrial-related zone with an English-speaking workforce and an increasingly specialized service sector.

By Dr. Alexander Cachia Zammit & Dr. Yanica Borg