Time to Guarantee E-Money Users’ Funds

The advances in technology and the increasing share of digital financial services around the world, have created the opportunity for other forms of deposit-like or value preservation products offered by non-bank financial institutions to develop, such as electronic money or payment accounts. Experience around the world demonstrates several ways of protecting or safeguarding these funds, but, although they are also owned by the general public funds, their protection does not have the same treatment as bank deposits, on the basis that both electronic money institutions (EMI) and payment institutions (PI) do not lend out their clients’ money. 

This paper aims to stimulate discussions on the possibility of including the funds of EMI and PI, placed with banks for safeguarding purposes, as part of the deposit guarantee schemes, as a means to increasing public confidence in digital payment services and financial inclusion as a result. This would also prevent the need of all these institutions, created to increase competition in the payment services market, to transform into banks to safeguard their clients’ money and increase public trust in their business. The paper addresses the topic in an Albanian perspective, in a country where increasing the public trust in alternative payment or e-money services is crucial to increasing financial inclusion of the population.