E-Money (Electronic Money)

E-money (electronic money) is a digital store of value issued against funds received from a customer, held by a regulated e-money institution (EMI) and used to make payments. Prepaid cards, digital wallets, and accounts offered by fintech firms like PayPal, Revolut, and Wise typically operate as e-money rather than fully licensed bank accounts.

E-money accounts offer many of the conveniences of a bank account but differ in one critical area: funds are typically not covered by traditional deposit insurance (such as FSCS in the UK or FDIC in the US). Instead, EMIs must 'safeguard' customer funds by holding them in segregated accounts at regulated banks.

Consumers should verify whether a firm is a licensed bank or an EMI before storing significant funds, and understand the specific safeguarding arrangements. Fraudsters sometimes set up fake fintech brands mimicking legitimate EMIs to collect deposits they never safeguard.