🌟 Editor's note

Editor’s Note | Week of 17 March 2026

By Carter Hoffman

Eid Mubarak to all those in our community celebrating.

It’s been a busy, and slightly different, week for the TTP team as we took TTP Studios to Paris for the ICC Global Banking Commission Meeting.

As exclusive media partners, we were on the ground recording interviews with senior figures from across transaction banking and trade, with the aim of doing what TTP does best: asking difficult questions, getting closer to the substance, and giving our audience more direct and unfiltered access to the people and topics shaping the market.

The relevance of the ICC Banking Commission lies in the fact that it remains one of the industry’s key arenas for debating rules governing finance and commerce, whether participants are comfortable with the direction of travel or not. It is where arguments over trade finance rules, digitalisation, standards, legal frameworks and market practice are actively contested.

We’ll be sharing those conversations with you over the next few weeks.

On the editorial side, this week’s slow read takes a closer look at money. Specifically, e-money. This new electronic form of money is becoming widely used in payments and financing structures, but has some interesting traits from a legal perspective.  

Across the rest of the week, we’ve been covering developments ranging from trade finance in emerging markets and insights from ICISA Credit & Surety Week, to new payment infrastructure initiatives and the growing role of standards like ISO 20022 in shaping how financial data moves across systems. We also released a few new podcast episodes this week, one taking a look at the shadow fleet, and the other exploring agentic AI in treasury.

And there is no let-up from here. Next, Joy and Deepesh are off to Lisbon to co-moderate the Women’s Trade Network roundtable with IFC and to moderate at the Global Trade Partners Meeting. At the same time, we will also be covering Pay360 in London and EUF’s factoring conference in Paris.

As always, plenty to read and listen to.

Until next time — keep learning.

— The TTP Editorial Team

Slow Read

When money isn’t money: understanding e-money under English law

When, in 1898, a butler named Thomas Neale sold a unique gold coin he had stolen from his employer, Mr Hancock, to a curiosity dealer named Moss, he had no idea he would help shape a legal definition of money that would endure for more than a century.

Following Neale’s conviction, there was a question in the court as to whether the five-pound coin should be returned to Mr Hancock or if Mr Moss should be entitled to keep it. The legal answer to this question hinged on whether the coin was considered money (as a current coin of the realm and legal tender) or chattel (as the personal property of Mr Hancock). Moss v Hancock, as the ensuing case is known, thus needed to answer the seemingly simple yet intricate question of what money actually is.

Money, the court decided in a ruling that has been cited ever since, is something that “passes freely from hand to hand throughout the community in final discharge of debts… being accepted equally without reference to the character or credit of the person who offers it.” 

For more than a century, that definition has stood as a common law precedent. Money was physical, widely accepted, and understood through its function. Settling a debt was part of what made it money.

Fast-forward from the Victorian era to the internet era, and today, new forms of value have been created that again raise the definitional question of what money actually is. 

Among these new forms is something known as ‘electronic money’, or e-money. E-money looks similar to and behaves like money in day-to-day use. Today, it is widely embedded in many payment systems and increasingly present in cross-border financial transactions. To many users, e-money and money are one and the same. But to the law, they very much are not.

Misunderstanding the nature of e-money, particularly in structured transactions, can lead to confusion over ownership, control, and risk, in much the same way that misunderstanding the nature of that gold coin created uncertainty and risk for Moss and Hancock. As the use of e-money expands, understanding what exactly it is and how it is distinct from money as traditionally defined is becoming all the more important. 

A balance that is not a deposit

At first glance, an e-money account appears indistinguishable from a bank account, and it is difficult to give a clear, legalese-free explanation of exactly what it is, because the difference is so highly nuanced. Though it is quite likely that you are already acquainted with the concept, since many major providers – like Revolut and Wise – have traditionally operated in the UK under an e-money licence, making them e-money issuers (EMI), and your account with them an e-money account. 

Under English law, e-money is defined in the Electronic Money Regulations 2011 as “electronically (including magnetically) stored monetary value as represented by a claim on the electronic money issuer”. When a user holds e-money, therefore, they do not hold cash or a bank deposit. They hold a claim against the issuer. That claim gives them the right to redeem the value into fiat currency, but it is not the same as holding funds in a deposit account at a bank.

Isabella Lewis, a senior associate at law firm A&O Shearman, and leader of much of the firm’s recent work in the space of e-money as a security asset in financing transactions, explains that, “What e-money is really meant for is making payments. It’s supposed to be transactional. And you can compare that, say, to a deposit account at a bank. Yes, [a bank deposit can be used] for payments, but it’s also often used for saving and that sort of thing… e-money was intended originally, in that very transactional way.”

This seemingly minor difference actually has some rather significant implications when it comes to how e-money is regulated and protected. Unlike bank deposits, e-money deposits are subject to a statutory safeguarding regime that, while certainly still designed to protect users, operates differently from the way in which bank deposits are regulated and insured.

The result is that what looks like a balance in an account is not a deposit in the traditional sense. It is a legal claim (as are modern bank account deposits), supported by a specific regulatory structure.

The structure be hind the screen

To really understand e-money, it is necessary to take a peek behind the screen. It can help to think of the whole e-money system as operating across three distinct layers. 

First, there is the e-money account itself. This is the layer the customer sees and uses. It is the digital ledger maintained by the e-money institution that records how much electronic value the customer holds. When a payment is received, the balance increases. When a payment is made, it decreases. Since this is the visible layer, it is often the easiest to understand.

Second, there is the master account. This is an account that is held by the e-money institution (not by the customer) through which incoming and outgoing payments are processed. When a payment is made to a customer’s e-money account, the payment system routes funds to the master account. The institution then updates its internal ledger to credit the relevant e-money account. The important point is that the master account is legally owned by the e-money institution, and the customer has no direct rights over it. 

Third, there is the safeguarding account. This is where the underlying funds corresponding to customer balances must be protected. Under the Electronic Money Regulations 2011, e-money institutions must safeguard customer funds. This means placing the funds in a segregated account with an authorised credit institution, or protecting them through insurance, a comparable guarantee, or in secure, liquid, low-risk assets. The safeguarding account is also held at a third-party financial institution in the name of the e-money institution, but the funds in it are subject to statutory restrictions. They cannot be used for the institution’s own purposes in the way that bank deposits can (such as for lending to third parties). Their sole function is to ensure that customer funds can be returned if the institution fails.

The key traits that set e-money apart become clearer when this architecture is compared to traditional banking practices. Lewis said, “If you pay a pound to your bank account – I’m talking about a true bank account, not an e-money account here – you wouldn’t expect the bank to literally place a pound in a vault, right?” With e-money, however, the model is much closer to that idea since the funds have to be safeguarded rather than used by the institution.

Effectively, the balance in an e-money account is not the underlying asset itself, but a representation of value backed by safeguarded funds held elsewhere, under a different legal structure. 

This is where misunderstanding often begins, because, while the user-facing interface of these accounts seems familiar by mirroring the look and feel of a traditional bank deposit, the underlying system introduces layers, obligations, and constraints that are not immediately visible.

Looks like an account, behaves like a claim

If all of this so far sounds a little pedantic, it is because in some ways it is. Many users will never need to know the nuances of how these accounts work, or even that they are different from traditional bank deposits in the first place. There is no quiz when signing up for an e-money account.

But, like so many other things, these legal nuances have the potential to bear considerable implications in the case of a dispute, or when using the accounts in secured structured finance, so it is useful to understand some of the risks and common confusions involved.

One such area of confusion is in the use of account identifiers. In traditional banking, an IBAN (short for International Bank Account Number) can provide useful information about the account’s location and jurisdiction. For example, if the first 2 digits of an IBAN (known as the country code) are “DE”, one would traditionally be able to identify that this is a German bank account, and thus infer that any security over it is likely governed by German law.

The equivalent identifier for an e-money account is known as a virtual IBAN, or vIBAN. However, a vIBAN does not point to the customer’s account in the same way. Instead, within the payment system, it points to the e-money institution’s master account. “You think you would get information from [the vIBAN] about the location of the e-money account,” Lewis explained, “but in fact, you don’t. You get information about the location of the master account.”

Consider an example. A UK company might hold an e-money account with a UK-regulated provider but be assigned a vIBAN linked to a master account that is held in Germany, and contains a bit of additional information so that the EMI can then identify the specific e-money account. On its face, the virtual identifier suggests a German account (as it will start with “DE”). In reality, the company does not hold a bank account in Germany, but holds a contractual claim against a UK e-money institution, governed by the terms and conditions of that provider. 

If the “information” contained within the vIBAN is taken at face value, a transaction might be analysed as if it involved a foreign bank account, while in reality, the relevant asset is not the master account (which belongs to the e-money institution) but the e-money receivable owed to the customer.

Now, let’s further consider the implications when e-money is used in trade and receivables finance, a discipline where lenders need clarity on exactly what assets exist. The expectation often is that those assets can be secured, controlled, redirected, or enforced against if something goes wrong. With e-money, the asset is a receivable. That means the lender is taking security over the borrower’s right to be paid by the e-money institution.

This does not make e-money unusable in structured transactions. “It’s still a receivable, so the account charging clause is not vastly different,” Lewis says. “It’s just that there’s a little bit of different thinking to do”. Drafting of the security documentation must reflect the fact that the lender is attaching to a contractual right, and specifically a contractual right relating to an asset created by statute and subject to that statutory regime. 

One important point, however, is that the account being an e-money account does not mean lenders lose control of the account structure. In practice, as with bank accounts, e-money accounts can still be blocked or redirected as part of a secured transaction and account controls can be updated either at the outset of a transaction or following a default scenario. Once those controls are triggered, the borrower may no longer be permitted to give instructions in respect of the e-money account, with control instead passing to the secured party.

“There is commentary suggesting this may not be possible,” Lewis explained, “but the regulatory framework itself does not prohibit security, and the redemption of e-money can be subject to conditions. In our view, that means account control mechanisms can still operate in much the same way as they would in a traditional structure.”

The broader point is that e-money can be integrated into financing structures, but it cannot be treated as if it were a standard bank account. 

Regulation and the road ahead

For many years, e-money sat at the edge of financial operations. But as businesses adopt more digital tools, e-money accounts are becoming more integrated into mainstream systems. The result has been a gradual expansion of use cases as e-money is beginning to be used more deliberately, for example, as a collection account in receivables financing structures.

This does not mean e-money will replace traditional banking. Far from it. Banks will remain central to the financial system, not least because e-money safeguarding arrangements typically rely on accounts held with credit institutions. But e-money is becoming an additional tool, one that treasury teams and structuring professionals can use where appropriate.

As its role grows, so does the importance of understanding how it works. That includes not just how e-money is used in practice, but how it is treated in law.

As with many digital innovations, the legal and regulatory framework for e-money is still evolving. In the UK, the Financial Conduct Authority (FCA) has focused on strengthening the safeguarding regime since past failures by certain EMIs to properly reconcile safeguarded funds have led to delays and losses for customers in insolvency scenarios. To help with this, the FCA has introduced measures to improve how firms manage and track client funds, with new rules set to take effect in 2026.

A more fundamental question concerns the nature of the user’s interest in safeguarded funds. At present, under English law, e-money holders do not have a clear proprietary interest, which would allow them a direct claim to those safeguarded funds (or a tracing claim in the event those funds had been dissipated). This position was reinforced in the UK by the 2022 Court of Appeal decision in the case of Ipagoo LLP, a UK-authorised EMI, which confirmed that the safeguarding regime does not create a statutory trust over the relevant safeguarded funds in favour of the customers.

But this could still change. The FCA has consulted on introducing a trust-based model (similar to the existing client assets (CASS) rules in the FCA Sourcebook), which would give users a stronger legal claim over safeguarded funds and improve their outcomes in the event of an e-money institution’s insolvency. If implemented, such changes would not alter the fundamental nature of e-money as a claim, but they would add an additional right to those already held by the customer. For practitioners, this would have direct implications for how e-money is analysed and incorporated into transactions.

What money has become

The Victorian court in Moss v Hancock defined money by how it functions in society. It passes from hand to hand, settles debts, and is accepted without question. That definition still largely holds, even though the forms that money takes have expanded with the advent of new technology.

E-money accounts are not bank accounts in the traditional sense, but a representation of stored electronic value, a claim on an issuer that can be redeemed in cash. Nevertheless, they can be used to make payments and settle obligations, and, to the user, they feel an awful lot like regular old bank accounts. But, behind the screen, they are built on a different foundation.

As e-money becomes more integrated into financial systems, particularly in industries like trade that are built on precision and trust, those nuances will start to become more and more relevant. Treating e-money as if it were a traditional bank deposit risks misidentifying the asset and misunderstanding where the risk truly sits.

Understanding e-money, then, requires knowing what you are dealing with and ensuring that the legal reality matches the assumptions built into a transaction. Because, as in 1899, everything still turns on the same question. Not just what something might look like, but what, in law, it is.

Trade digest

Treasury, payment and global banking digest

🗓️ Upcoming events

Multimedia from Trade Treasury Payments

🚀 Our latest edition

Did You Know? 

One of the modern legal ideas about money can be traced back to a rather odd Victorian dispute involving a stolen gold coin. The case helped shape the definition of money as something that passes freely between people to settle debts, no questions asked. What is fascinating is that this centuries old idea is still being used today to make sense of digital finance, even as money itself has moved far beyond coins and cash.

Another surprising detail is that what looks like money in your account is not always money in the traditional sense. E money, used by many popular financial apps, is technically a claim on an issuer rather than a deposit you own outright. Behind the scenes, it sits within layered systems designed to safeguard funds, which means it behaves like cash day to day but operates very differently in law. It is a reminder that in finance, appearances can be deceiving, and even something as familiar as a balance on a screen has more going on beneath the surface than most people realise.

Trade Treasury Payments (TTP)