Malaysia e-Money Issuer Approval from Bank Negara for Wallet and Payment Services

By facilitating digital transactions through various electronic instruments, electronic money institutions (EMIs) play an important role in Malaysia’s modern financial landscape. These instruments pave the way for e-money, prepaid cards, and e-wallets. Having an e money license Malaysia allows an EMI to offer efficient electronic payment solutions.

Electronic money is a digital currency used for cashless payments. EMIs use these tools as convenient and secure options over conventional payment methods by offering e-money and prepaid cards. Wanting to further simplify digital payments in Malaysia, e-wallets are available through mobile apps or online platforms, which are essential to these tools.

Opportunities Provided by the EMI License Malaysia

Under a digital banking license Malaysia, EMIs are authorized to deliver diverse digital payment solutions, enhancing the dynamism and flexibility of the country’s digital finance scene. These services include:

• Issuing both physical and virtual prepaid cards, including proprietary and international options.
• Offering e-wallet functionalities via mobile applications or web portals.
• Supporting a variety of transaction types, such as in-store, online, and in-app purchases.
• Facilitating fund transfers, including peer-to-peer and to bank accounts.
• Providing multiple withdrawal methods, like cash, to bank accounts or other specified routes.
• Enabling cross-border remittance services.

Advantages of working with Prifinance:

Classification of EMIs in Malaysia

EMIs are differentiated into three critical categories under the fintech license Malaysia:

Standard EMI

Automatically classified upon receiving approval as per the Financial Services Act 2013 (FSA) or Islamic Financial Services Act 2013 (IFSA). This status is assigned if an EMI does not qualify as an eligible EMI.

Limited Purpose EMI

A designation for standard EMIs that fulfill the conditions for limited purpose e-money, exempting them from specific regulations until an Exemption Order is granted.

Eligible EMI

This category is for EMIs with a significant market footprint that meet detailed criteria set forth in the E-Money PD, subjecting them to more stringent regulatory standards due to their pivotal role.

EMI license in Malaysia and the Philippines

When applying for a Malaysia E Money License, you must demonstrate your active participation in the market based on such criteria as a significant base of active users and a minimum annual market share in transactions or liabilities. The process is governed by Bank Negara Malaysia (BNM), which includes provisions for exemptions, strict anti-money laundering (AML) measures, and fraud measures.

On the other hand, the requirements for obtaining an EMI license in the Philippines include legal incorporation, financial stability through liquid assets, and a certain capitalization for EMI banks. Emphasizing the structured approach to ensuring the integrity and security of e-money services, registration and reporting rules of the Anti-Money Laundering Council must also be followed.

E-Money License Requirements in Malaysia

For a Malaysia E Money Institution License, entities must align with specific benchmarks that showcase their significance and market footprint from 2017 onwards.

Eligibility Criteria

Entities are required to sustain a minimum of 500,000 active users over six consecutive months.

Market Share Requirements

1. A minimum of 5% market share in e-money transaction volume in Malaysia annually.
2. Alternatively, a 5% market share in the total e-money transaction value in Malaysia per annum.
3. Or, achieving at least a 5% share of total outstanding e-money liabilities in Malaysia each year.

Entities may seek an exemption, subject to the scrutiny and approval of Bank Negara Malaysia (BNM), which will issue a notice if the application does not meet the eligibility for a given year.

AML and Fraud Prevention Measures

1. Implementation of comprehensive customer due diligence processes.
2. Deployment of advanced fraud detection systems to identify and counteract suspicious activities promptly.
3. Continuous monitoring and analysis of fraud trends and methodologies.
4. Obligatory reporting of fraud incidents to senior management and the governing board.

EMI License Application Documentation in Malaysia

1. Full details on the company’s structure, ownership, and contact specifics.
2. A clear description of the company’s activities and offerings.
3. Certified copies of registration, memorandum, and articles of association.
4. Latest audited financial statements, with provisions for new entities.
5. A statutory declaration on the absence of regulatory or criminal issues.
6. An undertaking to keep Bank Negara Malaysia updated on significant changes.
7. A copy of the board resolution supporting the e-money issuance application.
8. Information on any regulatory approvals or licenses needed or obtained.
9. Evidence of meeting BNM’s minimum shareholder funds requirement for the initial three years.
10. Details on the source and amount of additional capital to meet BNM’s capital requirements.

Capital Requirements and Application Process

Starting from 30 December 2023, Malaysia Electronic Money license requirements for minimum capital funds for EMIs are set as follows:

• Standard EMI — RM1 million or 8% of its outstanding electronic money liabilities, whichever is higher.
• Eligible EMI — RM5 million or 8% of its outstanding electronic money liabilities, whichever is higher.

Evaluation and Approval Process

1. Initial discussions for applicants to grasp the requirements.
2. Formal application submission to Bank Negara Malaysia (BNM) starts the review.
3. BNM may request further details or clarifications within the given deadlines.
4. Notification of the application outcome follows successful review.

Application Fee

An RM500 fee must be paid to BNM no later than seven working days after application submission.

FAQ

What are Electronic Money Institutions (EMIs) in Malaysia?

By providing digital transaction services through e-money, prepaid cards, and e-wallets, they play a key role in Malaysia’s financial ecosystem. In addition to establishing e-money, they offer increased convenience and security for cashless transactions.

How do EMIs differ in their classification in Malaysia?

There are three main groups that demonstrate their operational scope and regulatory needs:

• Standard EMI is the initial category for new licenses, subject to standard regulations.
• Limited Purpose EMI — for EMIs focusing on specific niches, with some regulatory exemptions.
• Eligible EMI — for EMIs with significant market influence, facing more stringent regulations.

What capabilities are enabled by the e-money license for EMIs?

Licensed EMIs can issue prepaid cards, operate e-wallets, process various purchase transactions, facilitate fund transfers and withdrawals, and provide cross-border remittance services.

What prerequisites must be fulfilled for an EMI license application in Malaysia?

Applicants for the EMI license in Malaysia must have a reliable user base and a significant share in electronic money transactions or liabilities. In addition, they need to ensure compliance with anti-money laundering (AML) standards, as well as provide comprehensive documentation on business operations, financial standing, and regulatory compliance. After submitting a formal application, including the processing fee, to Bank Negara Malaysia (BNM), the review process begins.