The development of the fintech sector over the last ten years has transformed payment systems with more individuals and businesses moving away from cash payments to using electronic money (“e-money”). In November 2022, Revolut announced it was processing more than 330 million transactions per month and had surpassed 25 million retail customers globally. The total amount of e-money transactions made in the EU reached 4.8 billion in 2019. The use of e-money accounts, rather than traditional bank accounts, in secured financing transactions poses novel legal issues. Without thorough analysis and understanding of these issues, security documents may not create valid or effective security over the e-money deposits and may fail to provide adequate protection to the lenders.
In this note, we explain the operation of e-money accounts and some practical steps for lenders to consider when taking security over e-money.
