Electronic Money Directive (EMD) or Payment Services Directive (PSD) Agent is a party that acts on behalf of an authorized electronic money institution (EMI) or regulated payment service provider (PSP) to conduct related payment services and e-money activities. It has a sublicence riding on the authorization of the licensed company that takes full responsibility for the actions of such an agent. The registration of the EMD agent takes place when the principal company applies for it with the FCA.
Difference between an agent and a directly authorized firm
The Agent is appointed directly by each PSP and e-money institution according to their risk appetite. The institution assumes all precautions and responsibilities when applying to the FCA for agent registration. Accordingly, when choosing an agent, one should rely primarily on the reputation of the principal of the institution. There is such a concept as vicarious liability when the principal remains responsible for all the actions of his agent since, in case of serious violations, he can also be held liable.
As part of its activities, an EMD/PSD agent cannot provide or claim to provide payment service rules or issue electronic money on its own. In addition, the agent does not have the right to mislead the client but rather is obliged to inform that he is acting as an agent of his principal. Since the principal firm is a legal entity authorized to carry out regulated activities, clients accept its terms and conditions. Thus, it should be clear to clients that the agent is acting on behalf of the institution and that the payment service agreement must be entered into by the principal and the client.
What is the benefit of/of being an EMD/PSD Agent?
Customers benefit from a broader service offering and its timely delivery, full information transparency, improved customer support, and shorten execution time of payments.
Markets benefit from the creation of a uniform legal framework across the EU/EEA area and a level playing field, development of new products and services, expansion into new markets without having to establish a physical presence.
Agents benefit from having a sublicense to make a quick start and faster route to market, offering their product as soon as possible in FCA evaluations; from a chance to demonstrate the viability and effectiveness of its business model thereby attracting higher levels of business investment and facilitating partnerships with key third parties.
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