Hong Kong is known as the land of opportunities for the business community. There are plenty of reasons that make western brands enter Asia by establishing their business in Hong Kong.
Foremost reasons include friendly tax and business environment, an international city, and proximity with China. Moreover, with exponential e-commerce growth and recognition as the world's freest economy, Hong Kong is a definite place to start a business.
One of the most pinching or, you may say, thought-provoking aspect of any business is capital management. Hong Kong also facilitates business owners in this domain and has therefore authorized Electronic Money Institution (EMI) to facilitate the local economy.
As the name implies, EMI is a fully-licensed financial institution responsible for handling all e-payment services. There is a slight difference between an EMI and the conventional banking system.
EMIs can provide IBANs to their customers, store their money in their wallets digitally, and facilitates the transfer/receiving of funds.
However, EMIs cannot offer conventional banking services, such as issuing pay orders, cash provision over the counters, and establishing physical, financial service providers for their customers.
Although EMI is not restricted to any specific domain or time of usage, it is still essential to get it authorized from the Hong Kong Monetary Authority (HKMA). Let's get to know more about the EMI in detail, along with ways to-dos and don'ts and requirements to obtain an EMI license.
Open an EMI Account in Hong Kong
You might question that since all of the world's major economies authorize EMI licenses, what is so special about Hong Kong? Why should one authorize EMI in Hong Kong and not in the USA or UK?
The answer is quite simple yet comprehensive, i.e., it is the sheer abundance of the business-friendly environment of Hong Kong that not only opens up avenues of opportunities for the business owners but also enables them to manage their cash flows by having their financial activity center in close proximity to their businesses.
Furthermore, the innovative business culture of Hong Kong provides favorable grounds for the establishment of EMI. China is the cheap manufacturing hub of the world, and with HK enjoying proximity with China, EMI account opening seems quite a reasonable decision to make.
Moreover, free trade agreements, sound financial regulations, and business independence also make HK an attractive place to open an EMI account.
Allowed Activities with E-money License in Hong Kong
Following are the activities that are permitted in Hong Kong under the EMI license:
Licensing of Electronic Money Institution in Hong Kong: Requirements
As per the Hong Kong Monetary Authority (HKMA) regulations, there are certain requirements that a prospective EMI licenser holder must meet. According to the requirements of EMI, an account holder:
Documents for Licensing Electronic Money Services in Hong Kong
To obtain a license for the e-money services in Hong Kong, the following documents are required by the official authorities:
Process of Obtaining a License for Electronic Money in Hong Kong
Following is the brief but comprehensive summary of all the 3 phases that are put in place for the issuance of EMI license:
Phase I is called the pre-application stage and involves the following activities:
Phase II is called the documentation phase and involves the following processes:
Phase III is called the application phase and includes the below-mentioned steps:
Cost of Electronic Money Institution License in Hong Kong
Typically, it costs around $225,000 or €250,000 to obtain an Electronic Money Institution license in Hong Kong.
However, this cost may deviate depending on the type and duration for which license is being sought. Other factors, such as supplied services, also play a major role in deciding the HK EMI license cost.
Why Company Setup in Hong Kong; And E-Banking Solution in HK?
In addition to being the world's freest economy and proximity to the cheapest manufacturing hub (China), there are many reasons due to which the company set up and especially the establishment of e-banking solutions are beneficial in Hong Kong.
To summarize the list of perks, the following are the advantages that Hong Kong awards to anyone aspiring to set up a company or e-money services:
Pros and Cons of Opening EMI Account
While EMI account opening in Hong Kong bestows business owners with the bundle of opportunities and business prospects, these benefits aren't viable for everyone, as different business models have different financial priorities.
Therefore, to enable everyone to establish the relevance of EMI account opening in their situation, the following are some of the major pros and cons of establishing an EMI account in Hong Kong:
Following are the pros of possessing the EMI license in HK:
Following are the cons that are linked with owning an EMI license in HK:
The benefits associated with EMI license in HK easily surpass the minor cons associated with it. Hong Kong truly values investment of any kind, and that's the reason that the world's wealthy people recognize Hong Kong as a true companion for investment.