Legal regulation of e-money in Switzerland

Licenses for electronic money (Electronic Money Issuer) in Switzerland

Is there a definition for e-money in Swiss legislation?

Is a license to work with electronic money in Switzerland needed?

What permission is needed to work, as a PayPal?

Let’s figure it out.

The definition of e-money in Switzerland

Though the concept of electronic money (or e-money) is not a legally binding term in Switzerland, it can be understood as a monetary value related to a national currency that is registered and stored electronically, for example, on a chip card, mobile application or in another part of the software.

This definition of electronic money is given by FINMA, the Swiss Finance Commission.

Although according to the Swiss regulator, electronic money is not a legal tender, this form of money must be taken into account and accepted, whether it is the withdrawal or/and maintenance of electronic balances in users’ accounts, and this activity relates to banking.

In the absence of responsibility and obligations to customers (users who open and replenish wallets), the activity with electronic money is most closely qualified as the acceptance of deposits from the population, the acceptance of which on a professional basis is a subject to the requirements of a banking license.

EMI license = Swiss banking license?

According to the decision of the Swiss Federal Supreme Court, balances of clients in the payment system do not have the same function as traditional bank deposits, since they are not intended for investment with a promise of return, but rather for use as a non-cash payment method for the purchase of goods or services.

However, based on systematic, practical and historical arguments, the regulator came to the conclusion that the obligations to pay to a third party without a promise of return are within the scope of the banking license, since the users of electronic money are at risk by default, and the protection similar to bank depositors should be provided.

Are there any exceptions?

There are some exceptions,where the work of payment systems associated with the issuance of electronic money will not be a subject to banking licensing.

For example:

• the balance of one user (one purse) should not exceed 3,000 CHF;
• user has a right to use his/her money only as payment for goods/services and cannot transfer money to another user (P2P).

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