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the final word
Doing Payments in euroPe Today By Craig James, Neopay Ltd.
The European Union (EU) is the world’s largest single market, comprising 28 member countries operating together, establishing laws and regulations. Operating under EU Directives similar to U.S. federal law, these general laws blanket all member states. Although processes di er from country to country, the overall e ect is that an e-money or payments license obtained in one member state allows a company to operate throughout the EU and select European Economic Area (EEA) jurisdictions. This opens a huge potential market for U.S. pay- ments providers, and the U.K. is an excellent gateway for any U.S company into that marketplace.
There’s a misconception that there’s a right or wrong way to enter Europe when actually there are multiple routes to entry, each with its own inherent risks and bene ts, which should be analyzed in terms of the business needs.
Keep in mind that, as a collective of di erent countries, the cultural di erences between EU/EEA member states may be a lot more extensive than operating across di erent states in the U.S.
It’s always a good idea to weigh the potential impact these di er- ences may have on any expansion plans before launching into the European sphere. A good starting point is to identify your target markets, focusing on countries where the same license can be
utilized. For new entrants, a full license o ers the opportunity to transact without restriction and rapidly “passport” into other EU countries from an established base.
For companies that only wish to dip a toe in, testing the market,
a good compromise can be a small license. Although limited to one speci c EU country, this is quicker and less costly to acquire, but transaction levels are limited.
Alternatively, companies can partner with established rms
in the region to become program managers or agents of rms al- ready licensed to operate through- out the EU. The downside is that the licensing requirements remain the same and you must pay your partner ongoing license fees for the privilege.
If a full license is the best option, the question is whether to establish a new company or acquire an ex- isting one. Although the cost of ac- quiring a new business can be high, and a Change of Control noti cation must be made to the regulator, the acquired company’s reputation and client base may make the acquisi- tion entirely worthwhile.
Whatever route you choose, the value of the EU marketplace is clear and a good understanding of the complexities of the licensing pro- cess is an important rst step.
Craig James, CEO of Neopay Ltd., is a specialist in e-money/prepaid AML and nancial services compliance with over 20 years of experience. Craig also is chairman and non-executive director of the Prepaid International Forum. He can be reached at craigjames@neopay.co.uk.
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