As the dust settles from last year's Silicon Valley Bank collapse, businesses stay rightfully concerned about appropriately protecting their funds. In these tumultuous economic times, it is difficult for companies to prepare for every scenario. Still, it is vital to take steps, including diversifying funding sources, and understanding safeguarding, in the event that more banks or institutions collapse.
By submitting this form, you agree to receive emails about our products and services per our Privacy Policy.
E-money safeguarding refers to the measures put in place by electronic money issuers to protect their customers' funds. E-money is the name for digital money stored electronically, which businesses and individuals use to make transactions. Safeguarding ensures that customers' funds are kept separate from the issuer's own funds and are protected in case the issuer goes insolvent.
The Electronic Money Regulations (EMRs) require e-money issuers to safeguard their customers' funds in a number of ways, one being by holding them in a separate account or trust arrangement. Safeguarding means that if the e-money issuer became insolvent, customers' funds would be safe from being lost or used to pay the issuer's debts.
E-money safeguarding is essential to protecting the interests of customers who use e-money services. It helps to build trust in the electronic money industry and promotes the growth of digital payments.
Overall, e-money safeguarding is essential to protecting the interests of customers who use e-money services, promoting confidence in the industry, and ensuring compliance with regulations.
The e-money safeguarding requirements in the European Union (EU) and the United Kingdom (UK) are quite similar, but there a few notable differences.
In the EU, the safeguarding e-money requirements are governed by the Electronic Money Directive (EMD) and the revised Payment Services Directive (PSD2). And, EU directives are transposed into national law - so each EU country has implemented laws that reflect PSD2 / EMD, broadly in the same way.
Overall, the e-money safeguarding requirements in the EU and the UK are similar, but there may be some differences due to the implementation of different regulations in the UK.
Safeguarding and deposit protection schemes like the Financial Services Compensation Scheme (FSCS) in the UK are different concepts, although they both relate to protecting customer funds.
Safeguarding is a requirement for e-money issuers to protect their customers' funds by holding them in a separate account or trust arrangement. This ensures that if the e-money issuer were to become insolvent, customers' funds would not be at risk of being lost or used to pay the issuer's debts. Safeguarding is required by law in the UK and the EU.
Deposit protection schemes, on the other hand, are designed to protect customers' funds in case a bank, building society or credit union becomes insolvent. The FSCS is the deposit protection scheme in the UK, and it protects customers' deposits up to a certain limit (currently £85,000) if the institution they deposited with fails.
The key difference between safeguarding and deposit protection schemes is that safeguarding applies specifically to e-money issuers and their customers. In contrast, deposit protection schemes apply to deposits held with banks, building societies, and credit unions.
In summary, safeguard is required for e-money issuers to protect their customers' funds. At the same time, deposit protection schemes like the FSCS are designed to protect customers' deposits if a bank, building society, or credit union becomes insolvent.
Want to learn more about Payhawk, our credit card offering, and spend management solution? Check out our corporate cards or book a demo to find out more.
Trish Toovey works across the UK and US markets to craft content at Payhawk. Covering anything from ad copy to video scripting, Trish leans on a super varied background in copy and content creation for the finance, fashion, and travel industries.
By submitting this form, you agree to receive emails about our products and services per our Privacy Policy.
Whether you have tens, hundreds, or thousands of employees, we’re making your business spend work for you, giving you control over spending at scale with a single solution. Say goodbye to tedious finance tasks, schedule a demo with us today.
By submitting this form, you agree to receive emails for our products and services per our Privacy Policy. You can unsubscribe anytime.
Payhawk Limited, All rights reserved. Payhawk Limited is registered under company registration number 11747263, Chancery House, 53-64 Chancery Lane, London WC2A 1QS. Payhawk Debit and Credit Cards are issued by Payhawk Financial Services UAB and Paynetics AD in the EEA, Payhawk Financial Services Limited and Payrnet Limited in the UK, and Cross River Bank, Member FDIC in the US.
The Payhawk product is not available for micro-enterprises or small charities based in the UK as defined in the UK Consumer Duty Regulations. See the FCA website for more information.
The Payhawk Visa Debit card and Payhawk Visa Credit cards are issued pursuant to a license from Visa.
English (EN-US)
Deutsch (DE)
Nederlands (NL)
Español (ES)
Français (FR)
English (Rest of Europe)