What is a Client Money Account (CMA)?

A Client Money Account, often referred to as a CMA or e-money account, is an account used by payment service providers (PSPs) to hold their customers' funds, whether individuals or companies. CMAs serve to separate and safeguard clients' funds from those of the PSP, ensuring that clients' money remains protected.

What are the primary use cases for CMAs?

CMAs are commonly used for two main purposes:

• Online Payments: When making online purchases, the money is sometimes held in a CMA until it's transferred to the seller's account. This protects the buyer's funds, especially in cases where the seller goes out of business, and helps prevent fraudulent transactions.
• Global Workforce Payments: CMAs simplify global payroll by allowing companies to hold funds in an employee's local currency until it's time for payment. This ensures compliance with local regulations, reduces delays, minimizes the risk of errors, and safeguards funds from potential financial issues faced by PSPs.

Can only regulated financial institutions offer CMAs?

No, not necessarily. While some countries require regulated financial institutions (FIs) to protect client funds using CMAs, others may allow non-regulated businesses to offer CMAs as a way to demonstrate reliability. However, non-regulated FIs may face additional challenges, such as fees and security breaches. Established conventional banks are often viewed as the most trustworthy option for CMAs, but certain regulated fintech competitors can provide equally secure CMAs with added efficiency and automation.