ECJ rules on whether funds retained in a payment account constitute e-money

The European Court of Justice has ruled that for the purposes of the Payments Services Directives and the E-money Directive the activity of a payment institution which consists of the receiving of funds from a user of a payment service, where such funds are not immediately accompanied by a payment order and, therefore, remain available on a payment account operated by that institution, constitutes a payment service provided by that payment institution and not the issuance of electronic money.

The key consideration was whether the absence of a payment order accompanying the receipt and retention of funds in a payment account resulted in the reclassification of the activity from a payment service to the issuance of electronic money.

The request for interpretation was made in proceedings between ‘ABC Projektai’ UAB, formerly ‘Bruc Bond’ UAB, and the Lietuvos bankas (Bank of Lithuania) concerning the withdrawal of the payment institution licence previously granted to ABC Projektai.