On September 16, 2009, the Council of Europe and the European Parliament adopted Directive 2009/110/EC, which was implemented in Latvia. The financial market is replenished with a new participant that is the issuer of electronic money.

The issuer's activity consists in issuing own virtual (electronic) money, which is then exchanged for cash funds of customers. Electronic money can be used by customers to transfer payments to other customers, who in turn accept them for providing services or goods.

Issuance of electronic money obliges the issuer to purchase virtual money from any owner of these funds at any time.

There are only two forms of storage of electronic means of payment, namely: payment smart cards and virtually on the server of the payment system.

The issuer's activities are carried out according to the following scheme:

  • the client transfers funds to the issuer's account;
  • the issuer conducts the issuance of virtual money, and the client's account is replenished with electronic money for the transferred amount;
  • other clients make similar transfers and receive electronic money at their disposal;
  • when purchasing goods or receiving services, customers make payment using the electronic money system;
  • the seller of goods or services receives virtual money as payment;
  • the seller transfers virtual money to its vendors, which in turn are also the issuer's clients;
  • the issuer buys the virtual money from the vendor and sends it via bank transfer to the vendor's account.

Use of electronic money differs from payment services only in that the issuer's clients open their own electronic money accounts in the issuer's payment system. In this case, the client directs these funds for the following purposes:

  • receiving virtual money to pay for goods or services;
  • accumulation of funds from the receipt of a large number of small payments;
  • fragmentation of large payments into smaller ones and their application to different directions;
  • conducting the conversion of virtual money from one currency to another;
  • saving funds on accounts within unlimited time;
  • mutual settlements with vendors that participate in the system, as customers;
  • receiving funds to a bank account by selling electronic money.

Limitations for the activity of the issuer of electronic money

The Law on Payment Services and Electronic Money provides for not only the conditions for the activities of financial companies, but also restrictions on the amount of money issued, which should not exceed 2 million euros per year. In this case, the company can start working as the issuer after registration. License in this case is not needed.

It will be necessary to provide the following information to the Commission of the Market for Finance and Capital:

  • On company registration;
  • Owners and members of the management board;
  • Business plan for financial activities;
  • Means for ensuring the safety of customers' funds;
  • AML and other popular documents.

If the company's turnover is more significant, a license will be required. At the same time, the initial capital of the company must be at least 350 thousand euros.

The Republic of Latvia insists that companies should provide services exclusively on the territory of the country. However, territoriality is difficult to determine cooperating with the Internet resource. All contracts concluded and services provided to customers from the authorities' point of view are carried out in the territory of Latvia. Therefore, we can recommend registering a payment company in Latvia, since the amount of documents there is much smaller, which facilitates registration and allows you to immediately eliminate all claims of the FKTK to the members of the board and the company's commercial plan at the initial stage of the procedure. It will also be possible to get acquainted with the requirements of this body directly, which will subsequently facilitate the procedure for obtaining a license.

If you are interested in registering a payment company in Latvia, contact the lawyers of Law&Trust International. Our specialists will provide you with expert advice and legal support for the entire registration procedure. Applying for help to the specialists of Law&Trust International, you will get quality services at the best prices!