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Payment Matters: No. 23 - Europe and beyond

Payment Matters: No. 23 - Europe and beyond

  • United Kingdom
  • Financial institutions - Payment services

26-07-2016

In this month's edition:

EBA Clearing announces support for pan-European payment platform

EBA Clearing announced that around 40 institutions operating across the Single European Payments Area (SEPA) will support EBA’s development of a pan-European instant payment platform. Those providing funding to the development and eventual implementation of the platform, will influence how the system is designed. 

What this means for you

The EBA Clearing solution will enable payment service providers across Europe to use this real-time payment processing facility for any payment product that complies with the instant payment scheme being developed by the European Payments Council.  The service is scheduled to be launched in 2017. 

EPC consults on mobile payments

The European Payments Council (EPC) released its latest consultation on mobile payments on 1 June 2016. The white paper aims to assist in the evolution of an integrated market for payments by mobile phone across the Single Euro Payments Area (SEPA).

What this means for you

The EPC welcomes feedback on its consultation from interested stakeholders by 1 September 2016. The EPC then has further plans to engage with industry bodies to contribute to the development of open specifications for interoperability of mobile payments.

Chinese card market opening up to foreign firms

Foreign firms now have the opportunity to enter the lucrative payment card market in China.  The People's Bank of China advise that foreign firms can now apply for a licence as long as certain criteria are met, which include holding 1 billion yuan ($152 million) in registered capital in a local company.

What this means for you

This will be a welcome development for foreign businesses that process card payments between banks and merchants given that China is projected to become the biggest card market in the world by 2020. It was reported that 55 trillion yuan was spent in consumer card transactions last year.

O2 Germany to launch mobile banking service

Elsewhere in market news, O2 Germany plans to launch a mobile banking service in Germany later this summer.  Using cloud technology provided by Fidor Bank AG, mobile-only customers will be on-boarded using document checks via a video link. An O2 Mastercard will be provided to customers to enable them to withdraw cash and make purchases. 

Matthias Kröner, CEO of Fidor Bank AG commented: “This partnership is the first truly disruptive alliance in Germany between a successful digital telecoms company and an innovative digital bank.”

EPC issues the Single Euro Cash Area Framework

The European Payments Council (EPC) has published an updated Single Euro Cash Area Framework (SECA Framework).  The purpose of the SECA Framework is to continue the development of a common set of rules and best practices for the distribution and recirculation of wholesale and retail euro cash in the Eurozone.

The SECA Framework identifies that cash is the most popular, but most expensive payment instrument to operate.  However the cost of cash usage is not always passed on to the actual users of cash, therefore it contributes to the rising prices of other banking services.  The SECA Framework seeks to reduce the cost of using cash by 2020 by defining banking industry requirements for core cash services provided by Euro-system National Central Banks.

What this means for you

The extent of the regulation that is to be implemented following the updated SECA Framework remains to be seen.  If the SECA Framework achieves its objectives, this should result in a reduction in the cost of cash for the public and a Eurozone set of regulations, which can be applied consistently in each Eurozone country.

German competition authority finds that restrictions of online payment services breach antitrust rules

The German competition authority has ruled that certain clauses in the general contract conditions used by the country's banking industry, breach national and EU competition rules. The clauses restrict customers from using their PINs (personal identification numbers) and TANs (transaction authentication numbers) in non-bank payment systems. This effectively prevents customers from using lower priced alternatives to bank providers for on-line purchases, including payment initiation service providers. Such services will be regulated under the new Payment Services Directive (PSD2), the package of measures aimed at modernising the European payments framework, which came into force on 12 January 2016 and must be transposed into national law by January 2018.

The banks argued that the purpose of the conditions is to maintain the security of their on-line customers, however, the authority's president said that "the rules currently used cannot be considered as a necessary part of a consistent security concept of the banks and they impede non-bank competitors". Dismissing the banks' defence, the authority found that the conditions restricted competition between on-line payment providers and hindered innovation.

What this means for you

This decision is perhaps an indication of how competition authorities, including the FCA and UK economy-wide competition authority, the Competition and Markets Authority, will go on to enforce competition law in light of the changes introduced as a result of PSD2, which, are likely to stimulate competition between banks and the new types of payment service provider it seeks to regulate – namely those that provide Payment Initiation Services and Account Information services.

The German Competition Authority has released a press release on this matter.

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