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EML Payments further information

EML are an authorised electronic money institution that is regulated by the Financial Conduct Authority (FCA) in the UK. 

What is an e-financial account? 

When you have an e-financial account with EML (or, similarly Modulr) and a third party sends you money to your account, you will see that value reflected on your account. 

This may sound similar to what a bank does when funds are paid into a bank account. EML are not a bank but are still required to make sure your funds are held securely.   

How does EML protect your money? 

To  ensure  your  money  is  safe  they  ‘safeguard’  your  funds.  EML are  required  by  law  to  do  this.  

Safeguarding  means that your money is held separate  from their  own money and placed in a 

safeguarding account with a bank. 

They  have an independent expert check that they are meeting safeguarding obligations every year, and the expert’s report confirming this is available to the FCA on request. 

If, in the unlikely event that EML went out of business, an insolvency practitioner would be appointed. Part of  their  job  is  to  return  the  funds EML  have  safeguarded  to  our  customers.  They  are  entitled  to  use some of the funds to cover their costs for returning the money to our customers and this cost will be spread across all of the customers for whom we are holding e-money.   

The law requires EML to operate in this way.  This is different to the way that the law requires banks to hold customer funds.  This is because the laws controlling how e-financial institutions and banks hold funds are different.  

Another important  difference  is that the Financial  Services  Compensation Scheme  (FSCS)  applies to certain customer bank accounts, but it does not cover the card accounts that we provide.   

What is FSCS and what does that mean for you? 

FSCS protects consumers, and certain small businesses, limited companies and charities when certain authorised financial services firms, such as a UK authorised bank goes out of business and they cannot return your money to you. FSCS is a service that is paid for by those financial service firms who are covered by it. 

FSCS provides compensation only up to £85,000 per eligible person, per bank, building society or credit union or up to £170,000 for joint accounts. If you hold money in more than one account with banks, building societies or credit unions that are part of the same group (and share a banking license) the FSCS  treats  them  as  one  bank.  This  means  that  the  FSCS  compensation  limit  applies  to  the  total amount held by a customer across all these accounts, not to each separate account. 

The difference in the law that applies to the way EML hold your money means that ALL the funds held in  your  account  is  safeguarded  and  the  full  value  (minus  administrative  costs  applied  by  the insolvency  practitioner)  will  be  returned  to you  if they  go out  of  business.  

Because  of the  insolvency procedure that we are required to follow, it may take longer (compared to making a claim to under FSCS) for your money to be returned to you. 

You can find more information about using a non-bank payment service provider on the FCA’s website:  https://www.fca.org.uk/consumers/using-payment-service-providers