We strive to provide as much transparency as possible with everything we do, and so we want to ensure that all our ringholders are aware of the terms under which McLEAR hold the cash balances that are placed with us.
Such balances are held with PayrNet Limited, an authorised Electronic Money Institution (EMI) regulated by the Financial Conduct Authority (FCA) in the UK under the Electronic Money Regulations 2011 for the issuance of electronic money and the provision of payment services with FCA reference number 900594 (“PayrNet”). PayrNet is a 100% subsidiary of Railsbank Technology Ltd.
What is e-money?
When you send us money, we load up the value of that remittance in your RingPay account / wallet. The sums that we credit you in this exercise is called “issued e-money”.
This may sound similar to what a bank will do with your money when they credit an account or card balance in your name, but PayrNet Limited is not a bank – it cannot use funds received in this way as deposits for use for its own purposes or to lend to other customers, nor do you benefit from the protections afforded by the Financial Services Compensation Scheme (“FSCS”)
How are e-money balances protected?
Your money is protected by a process known as ‘safeguarding’, which is a regulatory requirement for all EMIs such as PayrNet. Under this process all e-money balances must be segregated from all other cash balances, such as operating fund balances that we may hold with PayrNet. These segregated balances must be held with a bank and be routinely reconciled to ensure that the sum of all issued e-money balances is the same as the sum of cash held by the bank in the segregated account. PayrNet is required to get an independent check by an expert at least annually, in order to validate that the safeguarding process is operating properly.
What happens if McLEAR or PayrNet goes into insolvency?
If we or PayrNet goes into insolvency all, of your balance will be available to you subject to any charges that may be made by an insolvency practitioner/administrator.
How does FSCS compare with safeguarding?
If you hold money in a bank account which qualifies for FSCS protection, in the event that the bank goes into an insolvency procedure you will be entitled to a maximum payment from FSCS of £85,000, even if the value of your loss was bigger than this sum. If your money was held in a joint account, the maximum payment from FSCS is £170,000.
If you hold money in a safeguarded account, you will be able to get all of your funds returned, subject to whatever charges are levied by an insolvency practitioner for distributing the funds. Typically, an administration process of distributing safeguarded funds may take longer than a claim under the FSCS.
You can find out more about non-bank payment services on the FCA’s website.
The McLEAR Team