European Economic Area (EEA)
The European Economic Area is the EU's 27 member states plus Iceland, Liechtenstein and Norway. It is the area across which a payment or e-money authorisation can be passported — which is why it, rather than the EU, is usually the right boundary in a licensing conversation.
Also called: EEA states
The EEA Agreement extends most of the EU single market — the free movement of goods, services, capital and people, and the financial services legislation that goes with it — to three of the four EFTA states. Iceland, Liechtenstein and Norway are in; Switzerland, the fourth EFTA state, is not, having declined EEA membership in a 1992 referendum and operated on bilateral agreements ever since.
For payments that boundary is the one that matters. An EMI or payment institution authorised in one EEA state can passport its authorisation into the others, by establishment or by services, without a second authorisation. PSD2, the E-Money Directive, MiCA and the AML directives are all EEA-relevant, which is why a Norwegian or Liechtenstein authorisation behaves like an EU one for these purposes.
The United Kingdom left both the EU and the EEA, and with them the passport. A UK-authorised firm wanting to serve EEA customers needs an EEA authorisation, and an EEA firm wanting to serve the UK needs a UK one. Whatever arrangements exist between individual jurisdictions, there is no mutual passport between them.
In practice
Switzerland is not in the EEA, and a Swiss structure — including an SRO-affiliated financial intermediary — carries no EEA passport whatever. That is the single most common error in comparing a Swiss set-up with an EU or UK one, and it changes which customers a firm may lawfully serve.
Example
A payment institution authorised in Lithuania passports into Norway and Iceland without a further licence, because both are EEA states. It cannot passport into Switzerland or the United Kingdom, because neither is.
Commonly confused with
| Term | How it differs |
|---|---|
| European Union | The EU is 27 member states. The EEA is those 27 plus Iceland, Liechtenstein and Norway, and it is the EEA that defines the passporting area for payments. |
| SEPA | SEPA is a payments scheme area for euro credit transfers and direct debits, and it is wider than the EEA — Switzerland and the UK are SEPA participants. SEPA membership confers no licensing rights. |
| Eurozone | The subset of EU states using the euro. Denmark, Sweden and Poland are in the EU and the EEA but not the eurozone. |
See also
- PassportingPassporting is the mechanism by which a firm authorized in one EEA state may provide its services in the other EEA states without seeking separate authorization in each one. The home state regulator continues to supervise the firm throughout.
- Electronic Money InstitutionA firm authorized in the United Kingdom or in an EU member state to issue electronic money and to provide payment services. The e-money it issues is a claim its holders have against the institution, redeemable at par and expressly not a deposit, which is why the funds behind it must be safeguarded.
- Payment InstitutionA payment institution is a firm authorized in the United Kingdom or a European Union member state to provide payment services — transfers, acquiring, remittance, payment initiation — but not to issue electronic money. It may hold customer funds in payment accounts used only for payment transactions; those funds are neither deposits nor e-money.
- SEPASEPA, the Single Euro Payments Area, is the set of schemes that makes a euro transfer between participating European countries work like a domestic one. It comes in credit transfer, instant credit transfer and direct debit variants.
- PSD2PSD2, the Second Payment Services Directive, is the EU law governing payment services. It sets the authorization categories for payment firms, opened bank account access to licensed third parties, and required strong customer authentication for electronic payments.
- MiCAMiCA, the Markets in Crypto-Assets Regulation, is the EU law governing the offer of crypto-assets, their admission to trading, and the provision of crypto-asset services, with one set of rules applying directly across every member state. Service providers are authorized once and can then passport through the bloc.