Vouchers are a useful thing. You can get them in the supermarket around the corner, even there is another Lockdown. They are the ideal gift for persons who already have everything. The issuers get liquidity without having to pay interest. And the retailers who sell vouchers for others are happy about an additional margin without stock-keeping and with a small presentation area. Reason enough for us to take a closer look at what licenses are needed to issue and distribute electronic vouchers.
And since we have arrived in the 21st century quite a while ago, we will only deal with electronic vouchers in this article. Electronic vouchers are vouchers where the credit is stored electronically (e.g. on a server of the issuer). This is the case regardless of the material of the item used to redeem the voucher (e.g. a simple paper receipt, a plastic card or a metal gift box). When vouchers are referred to in the following, only electronic vouchers are meant.
License requirement for issuing electronic vouchers
If you want to issue vouchers, e.g. as a retailer or as a streaming provider, the question usually arises as to whether the voucher is e-money. The question is important for two reasons in particular: Firstly, issuers of e-money need a license. In Germany, BaFin is the competent authority for issuing such license. Secondly, when issuing e-money, one must fulfil so-called due diligence obligations under anti-money laundering law. For example, you are generally obliged to identify your customer. Both requirements would make vouchers rather unattractive. But when is a voucher e-money? Because the law is already complicated enough, let’s make it a little easier for ourselves with a rule of thumb. It reads:
“Vouchers are usually e-money if (a) they are issued on the receipt of funds, (b) they can also be redeemed with third parties and (c) they do not fall under an exception.”
But what does that mean exactly?
- A voucher is issued on the receipt of funds if the first purchaser of a voucher pays an equivalent value for it. In other words, a voucher that is given as a gift by the issuer is not issued on the receipt of funds and is therefore not e-money. For this reason, vouchers that you get from an online shop because you have not ordered anything for a long time are not e-money.
- A voucher can be redeemed with third parties if there is at least one merchant who accepts the voucher as a payment method and who is not the issuer itself (so-called third-party acceptance). The answer to this questions depends on the legal entities involved. It means that we have third-party acceptance even if a voucher is accepted at a subsidiary or a franchisee of the issuer. This even applies if they have the same designation in the company name (e.g. Superstore Headquarters GmbH and Superstore Shop Munich KG). Or the other way round: a voucher is not e-money if the issuer (e.g. Drogeriemarkt GmbH based in Baden-Baden) is the only retailer where you can redeem the voucher).
- A voucher is not e-money if there is a applicable provision in the law in which the legislator has ordered a corresponding exception. Well-known exceptions are the so-called “limited-network products” and the “limited-range products”. Limited-network products are, for example, vouchers that can only be redeemed in Germany and only at merchants doing business under the same brand. Limited-range products are, for example, vouchers that can only be redeemed for a very limited range of products (e.g. only for bus tickets). The principle is that exceptions must be interpreted narrowly. The Visa acceptance logo is therefore not a trademark that justifies the application of the limited network exception!
License requirement for the distribution of electronic vouchers
It is not only when issuing vouchers that the question of the license requirement arises. A retailer who distributes vouchers of a third party issuer must also deal with this question. Incidentally, the obligation to obtain a permit does not exist because of the distribution service (i.e. because the trader offers the vouchers for sale on nice shelves). But in most cases, the distributing retailer will accept the purchase price for a sold voucher from the purchaser of the voucher and transfer it to the issuer. This is basically a payment service for which license is required.
However, there are two constellations in which the collection of the payment price in voucher sales does not require a license:
- A license obligation does not exist if the retailer distributing a voucher acts in his own name and acts like a genuine seller. To understand what this means, let us form a simple comparative case: When a do-it-yourselfer buys a bucket of paint at the hardware store, the cashier of the hardware store will take the purchase price for the bucket of paint. The finance department of the hardware store will pay part of the purchase price to the wholesaler or the manufacturer of the paint. In this situation, however, hardly anyone would think that the hardware store needs a license to provide payment services. This is because the hardware store will enter into its own purchase contract for the paint bucket with the do-it-yourselfer and will provide advice and assistance to the do-it-yourselfer if something is wrong with the paint.
It’s much the same with vouchers. When a retailer enters into a direct sales contract with the purchaser over the voucher and assumes the warranty for the right associated with the voucher, he is not providing a payment service by settling the purchase price. Instead, he receives the purchase price for himself and pays part of it as a purchase price to the issuer of the voucher. In practice, the demarcation between such buy/sell transaction and a payment service is not always easy. This is also due to the fact that the requirements defined by BaFin for a buy/sell transaction are not very clear-cut.
- Even if a retailer does not sell a voucher in his own name, but brokers a purchase contract between the issuer and the purchaser, the settlement of the purchase price does not always lead to a duty to obtain a license. In many cases, the merchant will be able to make use of the so-called commercial agent exception. This exception states that a retailer who sells the issuer’s products as a commercial agent may, under certain conditions, also settle the purchase price without thereby providing a payment service. Unfortunately, these “certain conditions” are rather vague. This is because BaFin defines requirements that are not explicitly stated in the law. In addition, BaFin distinguishes between POS sales at the cash register and sales on the internet. Unfortunately, this makes it difficult to form a simple rule of thumbs…except, of course, for the phrase: “It depends”, which you often hear from lawyers.
Cover picture: Copyright © Adobe Stock / Andrey Popov
This is a very good piece. My team is currently doing a similar inquiry about potential license/authorization requirements for the issuance of vouchers in several jurisdictions and (a) and (b) seem to be ubiquitous criteria to answer that question. What is not very harmonised, in my view, is the interpretation and application of both the commercial agent and limited network exemptions (not even within the EU) as much as they exist elsewhere
This is excellent and very helpful in setting out the relevant legal issues, particularly for jurisdictions that have not yet addressed these issues with much detail and clarity. Thank you!