The ever-growing world of technological advancements is improving all human activities, making people's lives better by connecting individuals worldwide, reducing the time and costs of economic activities exponentially, and giving new work opportunities through digital platforms. 

Regarding this matter, Hong Kong is one of the leading forces behind technology development in the economic field. Many improvements in this topic are due to the economic liberties entrepreneurs and businesses can enjoy in the territory.

Given that local businesses can now offer their products in worldwide markets, individuals could face problems regarding the payment of the services or products they are offering. With the ever-changing world of currencies and their value in international markets, customers and entrepreneurs' difficulties regarding the agreement of a method and currency to finish the transaction.

In Hong Kong's case, this field is becoming one of the most thriving and growing industries today, with entrepreneurs joining the trend of "electronic money" trying to exploit all of its potentials: from exchanging international currencies to creating alternatives for the payment of local services in the region such as public transportation and phone booths.

The digitalization of currencies around the world has become an opportunity to make a successful business in Hong Kong, known as one of the most competitive territories around the world, to start businesses today.

And there are many reasons why:

• Hong Kong is simply one of the best places to do business in the world. It led the Index of Economic Freedom for 25 years in a row.
• It has a simple, beneficial tax system: income under HK$2 million is taxed at 8.5%, and over that, it is taxed at 16.5%. Plus, the system is territorial, meaning you only pay taxes for your Hongkongese income.
• Hong Kong has one of the best IT structures in the world.
• The UK will probably lose its preeminent status as the best EMI jurisdiction in the world after Brexit. Hong Kong is in a good position to take a portion of that market.

What is E-money?

One of the most important advancements that the economy has seen with the creation and subsequent popularity of the internet is electronic money (e-money). E-money represents the digitalization of currencies that let people make economic transactions in the easiest and fastest way possible.

It involves creating a digital banking system that keeps the information regarding the savings, resources, and funds of individuals who operate in these systems to know how much money they have and transfer that capital to other people if necessary. This opens a whole new world of possibilities for the economy:

• People can know in real-time how much money they have left in their possession just by searching through their account in the bank system that they use from the comfort of their home. 
• Individuals can transfer their funds whenever and whomever they need to. This allows people a whole new way to make transactions, erasing the need for cash to buy and sell, and now they have to go to the internet to transfer or receive the quantity of money they agree to finish the deal.
• The information regarding the value of a currency is available in real-time to all internet users. Thus, people can make transactions outside of the country easier and with more information to make the right decisions that benefit them when buying or selling products.

It is important to note that there is a difference between e-money and cryptocurrencies, such as Bitcoin or Ethereum. The most important distinction between the two is that e-money has its value supported by fiat currency, which means a central authority like a government regulates its value. On the other hand, cryptocurrencies are decentralized digital currencies that do not have any real support determining its value. 

Currently, some platforms provide the service of saving and transferring money that is becoming increasingly popular thanks to their simplicity and availability worldwide. Services such as Paypal, for example, can save real currency (like American Dollars) without the need to have a bank account or a credit card, so people can create an account just by providing their personal data to log in to the website. This service also provides a fast way to transfer money to other accounts, in case individuals agree to make transactions through these platforms.

Hong Kong is also one of the current examples of success in this field, with some of the most creative and innovative alternatives created in the region. One example of this trend In Hong Kong is "Octopus," a prepaid card that individuals can transfer money whenever they want to pay for local services like convenience stores and transportation easily.

Octopus's importance has been considered amongst the 50 greatest inventions of this century so far by the British newspaper "The Independent," as the possibilities of this kind of economic development are unparalleled, trends and creations like this one will grow as the years pass by.

Nevertheless, as it is a field that is still developing, it has some flaws that need to be solved to provide a secure and comfortable service to the people who need it. As money is saved in bank systems that operate through digital platforms, there are some risk regarding the security of those systems, which may affect an individual's savings or can result in scams when making a transaction. 

Considering the importance of this task, governments worldwide create laws that allow them to prevent crimes such as money laundering, scams, and theft in the e-money world. Hong Kong's government has created special laws to prevent crimes related to this new trend, implement methods to verify the authenticity of the transactions being made through electronic means, and prevent organized crime to operate on these platforms. Also, the most important element this legislation has created is a special license for people who are interested in starting businesses that are linked to e-money in Hong Kong. Individuals must possess to operate legally in the region.

E-Money Regulations in Hong Kong

There is a special legislation in Hong Kong that has to do with people who want to do transactions through digital methods. It is called "Money Service Operators" (MSO). This is a needed license in Hong Kong by people and companies that want to operate a money service, this being a money-changing or remittance service.

This involves a list of requirements that need to be complied by those wishing to run a business related to these activities:

• Sending or arranging the sending of money outside of Hong Kong.
• Receiving or arranging the receiving of money to Hong Kong from a country outside.
• Businesses related to the exchange of currencies.

It must be noted that this license is not easy to obtain, but it is one of the most reputable in the world. They need a really solid business plan and AML flow before even thinking of applying. Our experts can help you polish your application in a way it is acceptable for the regulator. You can see more about this right here.

These businesses can operate legally in the territory if they fulfill some Anti‐Money Laundering and Counter‐Terrorist Financing requirements. Individuals and corporations that want to run this kind of financial venture have to apply for the MSO license. To do so, you must comply with these requirements:

• Submit the application form as a company or foreign branch that wants to conduct business in the region. 
• A place in which you will store books and records related to the business that you are creating.
• A local management office (LMO) in Hong Kong from which the company will conduct its operations.
• Complete the "Field and Proper Test" conducted by the Customs and Excise department (C&ED)
• Once the company or individual submits the application form, the C&ED will conduct a face-to-face interview responsible for directing the business.
• A corporate bank account in Hong Kong, at least before the renewal.

Knowing the requirements that you need to comply with to apply for the MSO license, you also need to know the process that you will go through to obtain this authorization for your business. Here is a summary of the procedure:

• First, you need to comply with the requirements listed above.
• You must conduct the business registration, providing the company address, the corporate bank account, and the local company secretary (this process can take up to one week).
• Then, you have to open a corporate bank account in which you must deposit the minimum paid capital required by the MSO licensing.
• You shall present the Businesses Plan and AML Policy to the Money Service Supervision Bureau, C&ED. This is to ensure that the newly-created company complies with the requirements needed by a business related to the MSO licensing
• Finally, you must submit the license application to the C&ED, having fulfilled all the requirements and steps listed up to this point.

What can we do for you?

Hong Kong has lots of advancements in this field, with a thriving industry in e-money that will grow in relevancy and possibilities from now on. This represents an opportunity for people who want to start their busissenes in the region, with tons of success possibilities being available in this venture.

Our partners can help you with the process of obtaining your MSO license. We will make sure that you fulfill all the requirements needed to get the license, guiding you through the process, and making it as easy and comfortable as conceivable.

Hong Kong is one of the best financial licensing jurisdictions on the planet. We work with a first-level expert team to provide the best services for you and help you with the licensing process's steps. Contact us immediately and start your EMI business in Hong Kong.