Is e-money covered by deposit guarantee schemes?

Short answer: usually not deposit protection

No, e-money is not usually protected by a deposit guarantee scheme. What you get with most e-money and transfer apps is safeguarding. This keeps your money separate from the company’s own funds rather than offering deposit insurance.

This difference can affect you. When you hold a bank deposit, the money is something the bank owes you, and if the bank gets into serious trouble, a guarantee scheme can repay eligible amounts up to a set threshold. E-money, by contrast, is money owed to you by the e-money issuer. The issuer must keep matching funds in a special account apart from its own business. While both methods aim to protect your funds, they follow different legal routes.

Safeguarding versus deposit insurance

These are two different forms of protection:

Deposit insurance pays out to qualifying depositors when a bank fails, up to the relevant limit, from a fund banks pay into.
Safeguarding means customer funds at payment or e-money firms are kept separate without a fixed upper cap, as long as the provider has handled the separation or insurance of those funds as it should.

Public or industry bodies administer deposit insurance, with clear payout rules. Safeguarding depends on the insolvency process for the firm. This can mean longer or more complex payout periods. For the details on how this works, see how safeguarding works.

When a partner bank changes the picture

Some providers place client money in an account held at a partner bank. Whether you, as the end customer, get deposit guarantee protection depends how that account is set up. In a pooled or omnibus account (the provider’s name on the account for its users), deposit insurance might not cover your individual balance directly. However, some services do offer a bank account in your own name. In those cases, the bank’s regular deposit protection limit applies just as if you’d opened the account yourself.

Let’s say you keep 3,000 euros in an app, and it holds these funds at an EU bank. Whether the state deposit protection applies depends on whose name is on the underlying account, not which app you used. To be certain, ask the provider who holds the money, which scheme (if any) covers it, and confirm the answer against the source register. More details are in our deposit guarantee schemes explainer.

Frequently asked questions

Does a bank partnership mean my app balance is insured?

No, not in all cases. If there’s a bank partnership, your funds may be placed at that institution, but that alone doesn’t guarantee your balance is treated as a deposit in your own name. The specific legal arrangements matter here. You need to check with the provider about ownership of the funds and whether any deposit guarantee applies for your balance. More on these firm types is in bank vs EMI.

What should I do if I want full deposit protection?

You should only keep the money you actively need for daily payments in your app. Any larger amount meant as savings should go into a bank account covered by a deposit guarantee scheme. Always check the bank is fully licensed, and ensure it’s an account in your own name, the guarantee limit will depend on the country and account type. If you need to protect more money, you might consider using additional banks so that each balance stays under the national limit. This is information to help you think about options, not advice for your individual case.