E-Commerce Directive in Malta & Great Britain

2020 saw the MFSA issue a circular outlining the impact of Brexit on Maltese license holders operating in Great Britain via the Internet. The circular primarily refers to the E-Commerce Directive, which covers a wide range of commercial activities carried out online. 

Applicability of the E-Commerce Directive: Obtaining a Financial License in the EU

The E-Commerce Directive applies to services provided without the joint presence of the parties. Its main goal is to create a legal framework ensuring free provision of e-commerce services between European states. This involves the sale of services & the subsequent conclusion of contracts online.

What Changes Have Occurred Since Brexit: Obtaining a Payment Service Provider License in the EU

Article IV of the E-Commerce Directive allows licensed entities to engage in the provision of  electronic financial services throughout the EU without having to obtain prior authorization in other member states.

However, following Great Britain’s withdrawal from the EU, the provisions of the E-Commerce Directive can no longer be applicable in Great Britain.

As a result, as of January 1, 2021, licensees offering online services in Great Britain can no longer operate under the E-Commerce Directive. Therefore, obtaining a payment service provider license in Great Britain will require compliance with a whole new set of rules.

In addition, companies wishing to continue to provide their services in the local market must immediately apply to the FCA in order to obtain permission to conduct financial activities in Great Britain.

Conclusion

Businessmen seeking to obtain a permit in Great Britain should take into account timing & other conditions for applying for a financial license in Great Britain. They should also keep in mind any changes in the relevant financial incentive rules that will have come into effect by the time they submit their application.