The FSA must give a small e-money issuer certificate to a person eligible to apply (see ELM 8.4.1 G and ELM 8.4.2 G) if it appears to it that any one or more of three paragraphs, set out in article 9C of the Regulated Activities Order (Persons certified as small issuers etc.), apply. This section gives guidance on those paragraphs but refers to them as 'conditions'. Similarly, where the Regulated Activities Order refers to a person to which a small e-money issuer certificate is given as a 'certified person', ELM refers to 'small e-money issuer'.
The three conditions in article 9C of the Regulated Activities Order (Persons certified as small issuers etc.) are designed to restrict the certificate to small or local schemes. The first and second conditions follow, almost exactly, the corresponding provisions of the E-Money Directive. The third condition follows the E-Money Directive, but also adds some guidelines.
The first condition applies if:
the applicant does not issue e-money except on terms that the electronic device on which the monetary value is stored is subject to a maximum storage amount of not more than 150 euro; and
the applicant's total liabilities with respect to issuing e-money do not (or will not) usually exceed 5 million euro and do not (or will not) ever exceed 6 million euro.
As 'usually' is not defined, the application of this condition will depend on the exact facts of each case. In the FSA's view, the total liabilities should be measured over several different periods. Thus, where the total liabilities exceed 5 million euro on several occasions over a short period, the scheme is more likely to fail to meet this condition than where those occasions are spread evenly over a longer period.
While rigid guidelines on what 'usually' means are not possible, in the FSA's view, a scheme that exceeds the limit no more than 5 days a month and 20 days a year will not necessarily breach this condition. But if the scheme exceeds either or both of those frequencies, that would call into question whether the scheme meets this condition. For this reason, the FSA will require a 'change report' if the total liabilities with respect to issuing e-money exceed 5 million euro (see ELM 8.7.3 R).
The second condition applies if:
the condition in ELM 8.4.6 G (1) is met;
the applicant's total liabilities with respect to the issuing of e-money do not (or will not) exceed 10 million euro; and
e-money issued by the applicant is accepted as a means of payment only by:
The third condition applies if:
For the purposes of ELM 8.4.10 G (2)(a), locations are situated within the same premises or limited local area if they are situated within:
If the e-money issued under a scheme is only accepted by businesses within the same four square kilometre area, the third condition will be met. However, if the scheme operates in two areas, each of one square kilometre, but the two areas are 100 kilometres apart, the scheme will not come within the illustrative provision referred to in ELM 8.4.11 G (2).
If a scheme operates in an area that exceeds four square kilometres, the scheme can still meet ELM 8.4.10 G (2)(a). However, it will only do so if the area can be described as a limited local area for some reason in addition to the size of the area.
The fact that a scheme is confined within the boundaries of a local authority is not, in the FSA's view, enough to bring it within ELM 8.4.10 G (2)(a) by itself. However, if the area covered by the scheme is defined by a local authority's boundaries, and the area's size is close to, but exceeds, four square kilometres, the combination of the size of the area and the fact that it only covers a particular local authority area may still be enough to meet ELM 8.4.10 G (2)(a).