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Brussels, 10th May 2004

Electronic money: Commission consults on how the E-Money Directive applies to mobile phone services

The European Commission has published a consultation paper on the definition of when mobile phone activity involves the issuance of "electronic money", how the E-Money Directive applies to mobile phone operators and whether changes to that Directive are needed to better reflect industry needs and cover risks. The consultation targets mobile phone operators, other businesses linked to the mobile phone sector and consumers. It focuses on, among other things, the extent to which the rules applying to electronic money should also apply to prepaid phone cards.

Internal Market Commissioner Frits Bolkestein said: "Mobile phones are now used to purchase a whole range of products and services going well beyond simple telephone calls. We have to make sure that EU rules are clear, proportionate and are applied consistently throughout the 25 Member States if we are to encourage investment in the electronic communication sector and the development of new and innovative services for consumers."

Electronic money is defined in the E-Money Directive (2000/46/EU) as monetary value stored on a chip card (pre-paid card or 'electronic purse') or on a computer memory (network or software money) and which is accepted as a means of payment by undertakings other than the issuer. Under the Directive, electronic money must be redeemable for cash at equal value and issuers of electronic money are required to implement safeguards against money laundering.

In implementing the Directive at national level, the authorities in some Member States decided that in certain circumstances, by supplying pre-paid phone cards, mobile operators in practice issue electronic money and that therefore they should comply with existing EU rules concerning its issuance.

Divergent interpretations of EU rules by national authorities can prevent the Internal Market from functioning properly. The Commission therefore carried out in 2003 a preliminary analysis in order to move towards a common interpretation of the Directive.

According to that analysis, when prepaid phone cards are used to obtain phone airtime provided by the company that supplied the card, they are not covered by the Directive. However, they are covered by the Directive when the electronic value stored on them is used to purchase products and services other than traditional communications, offered by third parties ("merchants") rather than directly by the phone companies. Those products and services include, for example: voice mail messaging, ring tones, news, weather forecasts, videos, games, CDs, books, drinks, ticketing services etc.

Given this conclusion, the consultation aims to help establish among other things whether it is necessary for the rules which apply to electronic money to be applied in full to prepaid phone cards.

The Commission is considering the impact of such rules on mobile phone operators and associated businesses, identifying precise criteria for defining the area of mobile phone activity covered by the E-Money Directive and assessing whether amendments to the Directive are needed. The consultation is part of that process.

The full text of the consultation paper is available at:

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