What does a 'safeguarding' account mean?
A safeguarding account is a special type of account used by Electronic Money Institutions (EMIs), like NoFrixion, to protect customer funds.
Under European payments regulations (PSD2), EMIs must safeguard 100% of all customer funds at all times. This means that customer money is held in segregated safeguarding accounts with regulated EU credit institutions and kept separate from the EMI’s own operational funds.
How safeguarding protects your money
Safeguarding ensures that:
- Customer funds are fully segregated from NoFrixion’s business funds.
- Funds cannot be used for lending or business activities.
- Funds are legally protected from claims by creditors of NoFrixion.
NoFrixion performs real-time reconciliation between customer balances and safeguarding accounts to ensure the funds held always match customer ledger balances.
How safeguarding compares to bank deposit protection
Banks protect customer deposits through the Deposit Guarantee Scheme (DGS), which covers balances up to €100,000 per depositor per institution because banks lend customer deposits.
Under the EMI model, the protection works differently: instead of deposit insurance, all customer funds must be safeguarded and segregated at all times, meaning the funds are not exposed to lending risk.
In summary
A safeguarding account ensures that customer funds are fully segregated, protected from creditors, and cannot be used by the EMI, providing structural protection for all customer balances.