Mobile Wallets and Virtual Alternative Currencies Under the EU Legal Framework on Electronic Payments

Abstract

In recent years, the number of mobile payments has risen rapidly. During that same timeframe, the methodology of mobile payments has shifted from being mere monetary transactions executed by means of an interconnected network environment – such as the Internet – toward highly diverse mobile wallet ecosystems that include different types of services aimed at improving the overall user experience and at fostering customer loyalty toward a specific ecosystem. While the basic idea underlying mobile payments still experiences certain hindrances – for instance concerning cross-border interoperability of payment transactions between the different EU Member States – the scope of new mobile wallet ecosystems raises new questions. Not merely allowing for the execution of a purchase transaction, many of these mobile wallets also include loyalty schemes, services for customer social interaction – e.g. bill splitter applications – or even virtual alternative currencies that can be used within a specific ecosystem – such as Amazon Coins. By extending the scope of their services beyond that of a simple intermediary, and especially when establishing a virtual economy based on a virtual currency, these service providers are bordering or potentially even entering the territory governed by more stringent financial regulations. This paper will analyze the extent to which enhanced mobile wallets can become subject to such regulation.