Welcome to The Future

By John Georgoulas, Chairman, Association of Cyprus Electronic Money and Payment Institutions (ACEMPI)


In the last few years, technology has progressed in leaps and bounds, giving ground to new revolutionary means of payment instruments. Electronic Money Institutions (EMIs), which are authorized by their jurisdictional regulators – in most cases the Eurosystem’s central banks – can now issue and manage e-money on behalf of their users.

In more detail, e-money is defined as a digital alternative to cash and more specifically, according to the European Central Bank, “Electronic money is broadly defined as an electronic store of monetary value on a technical device that may be widely used for making payments to entities other than the e-money issuer. The device acts as a prepaid bearer instrument which does not necessarily involve bank accounts in transactions.”

Licensing EMIs in Europe has seen a surge, since they are classified as a vital product for the economy and the mainstream markets. This market position is mostly due to EMIs making financial services more efficient and accessible, while they ensure the same, or even more stringent, safety and security measures with respect to the governing regulations. Furthermore, they are flexible by providing customers with different options and a wider spectrum of choices, as well as modern compliance procedures, while at the same time, they have less paperwork and their products are built for a demanding generation. While there are similarities with traditional banks, there are differences in the products offered and the immediate accessibility of various services, while the customer experience is taking the industry by storm.

There are always threats when it comes to digitalisation and automation, especially as regards cybersecurity. However, EMIs are better equipped to handle these threats than traditional financial institutions because they are faster at adopting and enforcing new technological solutions, and both personnel and management hold unyielding knowledge due to extensive business scope, tools and BI systems.

Following European trends, Cyprus has also seen substantial growth in licensed EMIs. Our country is a well-known financial services hub with excellent infrastructure and educated personnel. The Central Bank of Cyprus has helped the industry flourish, giving ground to a rich pool of knowledgeable and educated professionals. It is noteworthy that the Central Bank Governor and his management team encourage education and issue directives to the local licensed participants based on the latest information security and regulatory frameworks. I must mention that the presence of technology-based Cyprus Investment Firms, regulated by the Cyprus Securities and Exchange Commission (CySEC), further enhances and encourages market growth. These firms have indirectly helped the growth of the sector as they are collaborating with EMIs and their trained personnel understand how these institutions work.

Cyprus is one of the very few countries in Europe that is becoming a fintech hub and I would say that the next big step would be the licensing of a fintech bank. The European Central Bank is monitoring the development of financial technology very closely, and hence encouraging the fintech banking license framework, which is still anchored to the rails of the traditional credit institution licence, although more geared towards technology. Such a licence in Cyprus would further empower growth and regulatory stability in the EMIs and Payment Institutions sectors, giving more clarity to the nature of the e-money business, which means better procedures and better compliance in order to grow the sector hand-in-hand with regulation and economic trends.