According to Section 1 para. 2 sentence 3 of the German Payment Services Supervision Act (ZAG), e-money is any electronically stored, including magnetically, monetary value in the form of a claim against the issuer which is issued against payment of a monetary amount in order to carry out payment transactions within the meaning of Section 675f para. 4 sentence 1 of the German Civil Code (BGB) and which is also accepted by natural or legal persons other than the issuer. E-money therefore has the following three key characteristics:

  • It needs to be stored electronically. It does not matter whether it is stored on an instrument used by the holder (e.g. a chip card) or on an issuer’s storage medium (e.g. the issuer’s server).
  • It must be issued against payment of a monetary amount. Therefore, vouchers that the issuer issues free of charge or that do not have any issuer (e.g. Bitcoin) do not constitute e-money.
  • The payment must be valid with someone who is not also the issuer. This means that e-money requires at least three parties (the user, the issuer, and the person accepting the e-money). If one of the above-listed criteria is missing, there is no e-money, but it might constitute another activity that is subject to a licence (e.g. deposit business).