What Electronic Money Means under the Law
Under the Georgian law on payment systems and payment services, electronic money is the nominal value of monetary funds received by the e-money provider from a consumer for the purpose of carrying out payment operations, which is stored electronically, including on a magnetic medium, and which third parties, other than its issuer, accept as a means of payment. An e-money provider is a payment service provider that issues electronic money, and it is exactly the provider that becomes obliged to the consumer for the amount of the issued e-money.
Electronic Money within the System of Payment Services
The law treats as payment services, among others, the execution of a payment operation through a payment instrument,, the issuance or acquiring of payment instruments, including e-money instruments, money remittances, the issuance of electronic money and payment operations carried out by means of electronic money,. At the same time, the law does not extend to certain services: payments made in cash between payer and payee without an intermediary, cash-to-cash exchange not carried out through payment accounts,. A separate exception concerns an electronic communications operator: it may carry out payment operations for its subscriber in addition to the communications service, where the amount of an individual operation does not exceed 50 lari and the total of the operations performed by each subscriber per month does not exceed 300 lari. Beyond these thresholds the operator falls within the scope of payment services regulation.
The Right to Issue Electronic Money and Registration
It is impermissible for payment services to be carried out by a person that is not a payment service provider registered by the National Bank of Georgia, a commercial bank, a microbank or a microfinance organisation, or a person acting under another exception provided by the law. Registration, and its cancellation, are carried out by the National Bank under its own procedure, and upon registration the provider is granted the right to carry out a specific payment service or services. The National Bank publishes the list of providers with the permitted services, and significant providers are indicated separately. The capital of a provider must at no stage of its activity be less than the supervisory capital determined by the National Bank. In addition, a person planning to acquire a significant share — 10 percent or more of the declared or paid-up capital — must apply to the National Bank; the bank takes its decision within 1 month from the submission, and the absence of a reply within that period automatically means consent to the transaction.
Additional Requirements for Significant Providers
If the volume of electronic money issued by a provider or a person connected with it, or the turnover of its other payment services, exceeds the thresholds set by the National Bank, the bank is entitled to impose additional requirements on that provider; the same applies to a provider the bank considers significant for the financial sector. A significant provider must maintain the minimum amount of capital at every stage of its activity,. The requirements continue to apply after the volume falls back below the thresholds, and the bank may release the provider from them only if the volume or turnover has not exceeded the thresholds for 3 consecutive months, or where the requirements were imposed on the basis of the provider's significance. A significant provider must keep its accounting and financial reporting in accordance with IFRS and publish on its own website the audited annual financial reporting for the previous year by 15 May of the following year.
Protection of Consumer Funds
One of the central guarantees of e-money regulation is the protection of the consumer's monetary funds. The consumer's funds held with a provider must be placed separately from the provider's own funds, on a nominal possession account or accounts, and it is impermissible to use them to secure the provider's obligations or to grant credit or an overdraft. The consumer's funds are not a deposit, and the accrual of interest on them in favour of the e-money consumer is prohibited. Electronic money constitutes the provider's liability toward the consumer, and at the consumer's request the provider is obliged to exchange the e-money for monetary funds. Legal entities, individual entrepreneurs and other organisational entities without legal personality may, as a rule, participate in the e-money scheme only as payees, and the provider must ensure the transfer of the equivalent monetary funds to their bank accounts no later than 15 banking days from their receipt of the electronic money. The list of such providers is published on the website of the National Bank, and they must discharge the obligations established by Georgian legislation and notify the bank within 2 working days.
Frequently Asked Questions on Electronic Money
Who may issue electronic money?
Only a payment service provider registered by the National Bank of Georgia, as well as a commercial bank, a microbank or a microfinance organisation.
How well protected are my funds in an e-money system?
The consumer's funds must be held separately from the provider's own funds, on a nominal possession account, and their use for the provider's own needs, including the granting of credits, is prohibited. These funds are not a deposit, and at the consumer's request the e-money must be exchanged for monetary funds.
When does a provider become significant?
When the volume of e-money issued by it or a connected person, or the turnover of its other services, exceeds the thresholds set by the National Bank, or when the bank considers the provider significant for the financial sector. Such a provider must permanently maintain the minimum capital and publish its audited annual reporting by 15 May of the following year.
How We Help on Legal.ge
The specialists of Legal.ge will assist you with the regulation of electronic money: we will assess the classification of your activity, support the registration process, explain the consumer fund protection requirements and prepare the compliance documentation.