GO

Future of payments: in your view, which of the following factors is most likely to trigger the next wave of innovation in the European payments market? This poll is closed; view results here:

 

EPC Newsletter
Issue 27 - July 2015

The latest developments expected to shape the future of payments in 2015 and beyond

In June 2015, the Euro Retail Payments Board (ERPB), chaired by the European Central Bank (ECB), held its third meeting with regard to the following topics: instant payments in euro, person-to-person (P2P) mobile payments, technical standards related to payment cards and e-invoicing payment issues. The ERPB members also took note of the status of past ERPB recommendations and agreed next steps.

The European Payments Council (EPC) stands ready to continue its active contribution to the objectives and work of the ERPB as well as to the implementation of the agreed upon ERPB recommendations, with the full involvement of all other stakeholders. In his article, Javier Santamaría, Chair of the EPC, discusses the above topics as well as giving a brief overview of the next steps at EPC level.

This EPC Newsletter also covers the following topics, among others:

  • The final compromise text of the new Payment Services Directive (PSD2) was released on 2 June 2015 and so Maria Troullinou of Clifford Chance LLP looks at the key changes that it will introduce and how the text has evolved since the initial European Commission (the Commission) proposal was published in the summer of 2013.

  • The EU Digital Single Market Strategy outlines a new regulatory landscape for technology and telecoms firms and contains a complex framework of legislative and non-legislative proposals that the Commission intends to present in 2015 and 2016. Guest contributor, Liz Oakes, from KPMG, examines the details of the strategy and offers analysis around its potential impact.

  • EMVCo reports on its key priorities for the coming year and explains how its technical standardisation efforts reflect the needs of today’s and tomorrow’s global payments community.

  • We stress the important role that standards play in Single Euro Payments Area (SEPA) payment schemes by outlining the various groups and bodies which take part in developing and maintaining standards used, as well as outlining what their roles in payments are.

Also in this edition, various contributors provide commentary around the issue of instant payments:

  • Pierre-Antoine Vacheron, Executive Vice-President and CFO of Ingenico Group, outlines his observations and conclusions on the future of instant payments in Europe.

  • Paul Alfing, Chair of the e-Payments Committee of Ecommerce Europe, describes the steps required to realise the dream of a truly interoperable payments landscape in Europe that provides a seamless payments experience for both customers and merchants.

  • Massimo Battistella, Deputy Chairman of the Italian Association of Corporate Treasurers and Board Member of the European Association of Corporate Treasurers (EACT), outlines the corporate view on the rise of instant payments.

  • Anthony Richter, Chair of the EPC ad hoc task force on instant payments, gives an overview of the highlights of the EPC Report to the ERPB.


Last but not least: The new EPC governance model became operational in February 2015 with the publication of the revised EPC Charter, and was followed by the publication of the amended Scheme Management Internal Rules in April. The Scheme Management Board (SMB) then became responsible for performing the functions of the EPC SEPA Scheme Management. We examine the highlights emerging from the first meetings of the SMB in April and June during which decisions were made on various topics, including the composition of the Scheme End-User Forum and the EPC Scheme Technical Forum. Some of the topics relate to recommendations provided by the ERPB to the EPC with respect to SEPA Credit Transfer and SEPA Direct Debit post-migration issues and pan-European electronic mandates for SDD.

Please recommend the EPC Newsletter to your colleagues – a free subscription can be obtained by clicking here. The next issue will be published in October 2015.

EPC Latest News

Euro Retail Payments Board Meets for a Third TimeTopics discussed include instant payments, person-to-person mobile payments, technical standards related to payment cards and e-invoicing payment issues

28.07.15 By Javier Santamaría

The Euro Retail Payments Board (ERPB), chaired by the European Central Bank (ECB), held its third meeting on 29 June 2015 during which agreement was reached on next steps relating to instant payments in euro, person-to-person (P2P) mobile payments, technical standards relating to payment cards and e-invoicing payment issues. At the meeting, the ERPB members also took note of the status of past ERPB recommendations and agreed next steps. In this article, Javier Santamaría, Chair of the European Payments Council and an ERPB member, outlines the agreements reached at the ERPB meeting and provides an update on the resulting actions which will be taken in the months to come.

Key Information in this Article

  • The Euro Retail Payments Board (ERPB) — a high-level entity chaired by the European Central Bank (ECB) and bringing together the supply and the demand side of the industry — met on 29 June 2015 for the third time.
  • During the meeting, members of the ERPB discussed instant payments in euro, person-to-person (P2P) mobile payments, technical standards relating to payment cards and e-invoicing payment issues. In addition, ERPB members took note of the status of past ERPB recommendations and agreed next steps.
  • At the meeting, the European Payments Council (EPC) presented its report to the ERPB outlining its recommendations on instant payments, as well as three conditions which must be met in its opinion before any further steps can be taken. As a result, the EPC will prepare an agreed proposal for the design of a SEPA Credit Transfer instant scheme in euro, which could be adhered to by EU payment service providers on a voluntary basis.
  • In addition, and in response to recommendations from a report provided by the ERPB working group on P2P mobile payments, the members of the ERPB subsequently agreed to “endorse the vision of allowing any person to initiate a pan-European P2P mobile payment safely and securely, using a simple method with information the counterparty is prepared to share in order to make a payment.”
  • The ERPB also agreed with a detailed report on the market initiatives to develop technical standards delivered by the Cards Stakeholders Group (CSG), inviting the CSG to move forward with the proposals.
  • Finally, on the basis of a note prepared by the ERPB Secretariat, the ERPB endorsed the objective of a harmonised electronic invoice/bill presentment & payment (EIPP/EBPP) service for payers and payees and an electronic invoicing/billing network for payees.

Read more

EPC Latest News

EPC Scheme Management Board: Highlights from the First Semester of 2015 A summary of the decisions taken at the first two meetings following the Scheme Management Board´s assumption of responsibility of the functions of the EPC SEPA Scheme Management

28.07.15 By Gilles Leflambe

The new European Payments Council (EPC) governance model became operational with the publication of the revised EPC Charter in February 2015, and was followed by the publication of the amended Scheme Management Internal Rules (SMIRs) on 3 April 2015. As of this publication date, the Scheme Management Board (SMB) became responsible for performing the functions of the EPC SEPA Scheme Management. The SMB convened in April and June 2015 and took decisions on various topics, including the composition of the Scheme End-User Forum (SEUF) and the EPC Scheme Technical Forum (ESTF). Some of the topics relate to recommendations provided by the Euro Retail Payments Board (ERPB) to the EPC with respect to SEPA Credit Transfer (SCT) - SEPA Direct Debit (SDD) post-migration issues and pan-European electronic mandates for SDD. Gilles Leflambe, chair of the SMB provides an update on highlights emerging from the first semester of 2015.  

Key Information in this Article In meetings held in April and June, the European Payments Council’s (EPC’s) Scheme Management Board (SMB) reached decisions on several matters, some in response to recommendations made by the Euro Retail Payments Board (ERPB). These include:
  • The establishment of two stakeholder forums: the Scheme End-User Forum (SEUF) and the EPC Scheme Technical Forum (ESTF).
  • The possibility of mandatory Implementation Guidelines (IGs) for the Customer-to-Bank (C2B) and Bank-to-Customer (B2C) spaces, including harmonisation of the Extensible Markup Language (XML) message formats in SEPA Credit Transfer (SCT) and/or SEPA Direct Debit (SDD) transactions.
  • The potential added value of the use of the Legal Entity Identifier (LEI) in the three EPC SEPA Scheme Rulebooks.
  • The Use of Electronic Mandate Solutions and the reachability of the SDD Business-to-Business (B2B) Scheme.
  • Approval of the publication of an updated version of the SDD R-transaction reason code guide.
  • Starting to formalise changes to the Scheme Management Internal Rules (SMIRs) which will enable stakeholders to become more involved in the rulebook change management cycle.
The SMB will keep payment service providers (PSPs) which are participating to the SCT scheme, the SDD Core scheme and/or the SDD B2B scheme fully informed on all relevant developments through a regularly published bulletin.

Read more

Focus: On Integration and Innovation

A Corporate View of Instant PaymentsHarmonised payment, communication and reconciliation are needed for corporates to join the 'instant payments' revolution

28.07.15 By Massimo Battistella

Across Europe, the progressive rise of ‘instant payments’ has meant individuals are starting to have their payments confirmed and reconciled instantly after initiation. For larger businesses, which may be simultaneously dealing with both collecting money based on receipts and issuing payments based on invoices, and communicating with banks, suppliers and customers, the situation is far more complex. However, this does not make the dream of instant, or at least more rapid payment, any less appealing for corporates. Ultimately, for Europe’s businesses to reap the benefits of the technology and innovation driven rise in instant payments, communication and reconciliation standards must also be brought into a unified, workable standard. In this article, Massimo Battistella, Deputy Chairman of the Italian Association of Corporate Treasurers and Board Member of the European Association of Corporate Treasurers (EACT), outlines the corporate view on the rise of instant payments. The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.

Key Information in this Article Time wasted on non-added value activities is one of the most pressing challenges in the financial supply chain, since the rate at which you close payment increases the rate at which you can restart business cycles or reduce counterparty commercial risk. Achieving instant payments in systems this complex is a daunting challenge, but improvements are definitely possible. There are still several issues with regard to improving the efficiency of the financial supply chain. Corporate systems, at present, require confirmation of payment (via banks) with the associated information communicated by payer. A lack of unified standards in these communications processes requires a large human oversight to coordinate, slowing the process down significantly. An approach in which banks apply the same standards of communication to all transfers with associated information for reconciliation, including those with immediate settlement, could be more easily interpreted and processed by technology, benefiting corporates. Any implementation of instant payments standards should be designed along the standards of Single Euro Payments Area (SEPA) Credit Transfer (SCT) scheme, which emphasises cross-border interoperability, speed, ease of use and security.

Read more

Focus: On Integration and Innovation

Highlights of EPC Report to the Euro Retail Payments Board on Instant PaymentsThe EPC recommends the establishing of an instant payments multi-stakeholder working group

28.07.15 By Anthony Richter

On 30 June 2015, the European Payments Council (EPC) published the ‘EPC Report to the Euro Retail Payments Board (ERPB) on Instant Payments’ (see ‘related files’ below) in response to an invitation by the ERPB to the supply side of the industry to make an assessment of the issues related to pan-European instant payment solutions in euro to be presented at the ERPB meeting in June 2015. With this document, the EPC contributed to the debate on instant payments at the ERPB meeting on 29 June 2015. In this article, Anthony Richter, chair of the EPC ad hoc task force on instant payments, gives an overview of the highlights of the EPC report. The report outlines the opportunities that instant payments may bring but also draws attention to specific issues. With the current ERPB definition in mind and subject to the position and expectations of the other stakeholders from the supply and demand side, a majority within the EPC considered that the credit transfer could be a suitable payment instrument, as a first step, for instant payments in SEPA. In view of the need and benefits of broadening the discussion in an ERPB multi-stakeholder environment, the EPC has recommended the establishing of an ERPB instant payments working group with the mission of analysing what the end-to-end requirements for pan-European instant payment scenarios would be. For more information on details of the outcome of the ERPB meeting of 29 June, see article entitled ‘Euro Retail Payments Board Meets for a Third Time’ in this issue of the newsletter (see ‘related articles in this issue’ below).  

Key Information in this Article The European Payments Council (EPC) report stresses that the expectation of both payers and payees must be the starting point to build the future landscape for instant payments and thus should drive the debate within the Euro Retail Payments Board (ERPB).
  • The first action undertaken should be to understand what payers and payees actually expect from instant payments. The defined needs of the payer and the payee will determine the concrete features of any instant payments solution. 
  • One issue the EPC highlights to the ERPB is which “go to market” scenario would be the most appropriate to reach the full potential of instant payments in SEPA. 
  • Another issue will be to ensure 24/7/365 availability for an instant payment solution.
Based on the EPC’s assessment of the market and the customer perspective, as well as the opportunities and the issues that instant payments may bring, the EPC is of the opinion that there may be a need for an instant payment scheme based on credit transfer at SEPA-level. The EPC has not entered into any formal discussions with representatives from the demand side or from other payment supply players at European or at national level on the topic of ‘instant’ payments in the production of this report. The report must therefore be seen as a preliminary contribution from only one SEPA stakeholder. This report further limits itself to instant payments made from, and to, payment accounts.

Read more

Legal and Regulatory Issues

An Update on Changes to the New Payment Services Directive (PSD2) Agreement is reached at EU level to broaden the scope of the existing directive, capture a wider range of payment transactions and address questions of liability

28.07.15 By Maria Troullinou

The arrival of the new Payment Services Directive (PSD2) in the internal market repealing the current Payment Services Directive 2007/64/EC (PSD1) has been a closely monitored development since the publication of the European Commission's (the Commission) Green Paper on Card, Internet and Mobile Payments (COM (2011) 941) in January 2012. On 2 June 2015 the final compromise text of PSD2 was released. The updated PSD2 broadens the scope of PSD1, captures a wider range of payment transactions, and also addresses some of the concerns raised during the legislative process regarding questions of liability. Payment service providers (PSPs) will have to ensure that they comply with its provisions by the transposition date around end-2017. In this article, Maria Troullinou of Clifford Chance LLP looks at the key changes that PSD2 will introduce and at how the text has evolved since the initial Commission proposal was published in the summer of 2013. The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.

Key Information in this Article The arrival of the new Payment Services Directive (PSD2) means that payment service providers (PSPs) have to ensure that they comply with its provisions by the transposition date around end-2017.  
  • Despite retaining the same basic structure, the reach of PSD2 is broader than its predecessor. This is because of the expansion of the territorial scope provisions and the simultaneous narrowing down of the negative scope exemptions.
  • In the context of online payments, PSD2 creates two new types of PSP: payment initiation service providers (PISPs) and account information service providers (AISPs) and brings the provision of payment initiation services and account information services within the regulated sphere.
  • PSD2 places great emphasis on the security of internet payments and introduces and defines the concept of "strong customer authentication". PSPs have to apply strong customer authentication where a payment service user (PSU) accesses its online account or initiates an electronic payment transaction.
  • The amended liability regime (aimed at re-allocating the liability burden to cater for the introduction of these two new actors) and the emphasis placed on the security of internet payments in the form of upcoming guidelines, will have to be assessed by PSPs.
An impact analysis should be carried out to determine what changes to legal documentation and operational processes will be required as a result of the new provisions.

Read more

Opinion and Editorial

The Year Ahead in Payments Standardisation The adoption of EMV® technology promotes a unified international payments framework, which supports an advancing range of secure payment methods, technologies and acceptance environments

28.07.15 By Jack Pan

A profound evolution is currently reshaping the global payments landscape. Emerging technologies are enabling new payment products and services to be brought to market, influencing traditional consumer behaviours and bringing an influx of new stakeholders into the payments ecosystem. As the global technical body that facilitates the worldwide interoperability and acceptance of secure payment transactions, by managing and evolving the EMV® Specifications and related testing processes, EMVCo has a central role in this evolution. Standardisation is the foundation of this increasingly complex payment environment. The adoption of EMV technology promotes a unified international payments framework, which supports an advancing range of secure payment methods, technologies and acceptance environments. In this article, Jack Pan, Chair of the EMVCo Board of Managers, outlines what EMVCo’s key priorities are in the coming year and explains how its technical standardisation efforts reflect the needs of today’s (and tomorrow’s) global payments community. The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.

Key Information in this Article
  • In 2011, EMVCo began the process of identifying business requirements for the next generation of EMV® Chip Specifications. EMVCo is working with other stakeholders to identify business requirements, define the migration methodology, design the solution and lead specification development. Work continues today to establish a common, robust technology platform that will support contact, contactless and mobile interfaces for both online and offline payments.
  • EMVCo is working to future-proof its EMV Chip Specifications, by incorporating next generation public key infrastructure while employing a layered and modular approach that is flexible to support multiple communications protocols. Additionally, it will simplify device design and integrate a type approval process for contact and contactless. A draft specification is expected this year, with a final specification in 2016.
  • In March 2014, the body published the EMV Payment Tokenisation Specification - Technical Framework v1.0 (see ‘related links’ below). This specification provides the payments community with a consistent, secure and interoperable environment to make digital payments when using a mobile handset, tablet, personal computer or other smart device.
  • EMVCo subsequently became responsible for further developing the EMV 3-D Secure 2.0 Specification and associated certification programme, to support new and emerging technologies in the remote payment environment. The enhanced specification will support additional data available during the transaction that will enable more intelligent risk-based decision-making.
  • EMVCo is working to streamline secure mobile handset certification requirements to ensure smooth and efficient testing, which will reduce product time to market. EMVCo has begun the process for Contactless Level 1 Type Approval for Mobile Handsets (see ‘related links’ below).
  • EMVCo is working with a number of industry bodies in the mobile payments area to ensure the creation of a workable, efficient and trusted transaction infrastructure.
  • EMV Specifications are used by the payments industry as a whole; as such, EMVCo aims to ensure the development of a progressive, interoperable and secure transaction framework that meets market needs. EMVCo actively welcomes engagement from payments stakeholders and has created many opportunities for the payment community to become involved in shaping future specifications.

Read more

Focus: On Integration and Innovation

Instant Payments at Point of Sale – Overcoming Customer and Merchant BarriersWill instant payments ever replace card payments?

28.07.15 By Pierre-Antoine Vacheron

Over the past several years, instant payments have become an increasingly important part of the payments landscape. The Euro Retail Payments Board (ERPB), European Central Bank (ECB), European Payments Council (EPC) and several national organisations have recently made announcements addressing the implications and regulation of this new payment option, as well as the impact of its rise on the operations of banks, businesses, merchants and consumers. However, though popular among businesses, there remain major hurdles which must be overcome for instant payments to gain market share at point of sale. These include consumer comfort and trust with the transaction initiation process and a current lack of widespread acceptance of the option. Secondary issues of transaction cost and time will be dealt with as the procedure becomes more widely adopted and understood. In this article, Pierre-Antoine Vacheron, Executive Vice-President and CFO of Ingenico Group, outlines the observations and conclusions on the future of instant payments in Europe. This article is based on a presentation delivered at the EPC’s General Assembly on 18 June 2015. The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.

Key Information in this Article
  • In some use cases, instant payments offer some obvious and natural advantages over current payment methods. Apart from peer-to-peer (P2P), business-to-business (B2B) and business-to-employee (B2E) transactions, in which they have already become very popular, instant payments will be advantageous when paying for goods on delivery rather than upfront. Merchants will also be able to offer prompt refunds to their customers and ensure that those customers receive an immediate guarantee that the refund has been completed.
  • Thanks to new payment vehicles, such as SEPA Credit Transfer (SCT), new initiation channels (e.g. QR Codes, online bill payments), and new technologies (instant payments), the various payment means are aligning on several key value propositions: easy reconciliation, payment guarantee, and instant authorisation.
  • However, the adoption of instant payments at point of sale must overcome a number of challenges for both merchants and customers. Whichever means of payment is used, payment guarantee is a key requirement for merchants, but this is offered equally well by cash and cards. Accelerating checkout times is also a key goal for many merchants, yet at the initiation stage, instant payments remain a complex prospect. Instant availability of funds is a plus, but is unlikely to be considered worth the current cost.
  • The customer at point of sale will generally choose the most convenient channel (e.g. mobile, NFC, QR code, home banking) and payment brand to initiate and complete the transaction, taking into consideration ease of use, security and cost. The actual payment means (card, credit transfer, direct debit) behind the scenes is less likely to be the key decision factor.
  • All merchants will accept cash and almost all merchants will accept cards, but until all merchants accept instant payments, customers will, rather inconveniently, still need to always have cash or cards to hand.

Read more

EPC Latest News

Realising the European 'Payments Dream'Ecommerce Europe's perspective of creating a truly pan-European 'one-click' payment environment

28.07.15 By Paul Alfing

The potential for both consumers and businesses in the world of e-commerce is great, but to fully realise this value, it is vital to bring about an efficient and functional payment landscape which creates a cross-border level playing field. It requires the creation of a seamless shopping experience for consumers, allowing them to complete online purchases whenever and wherever they want – ideally using the simplest possible ‘one-click’ purchasing option. There remain significant regulatory, regional and technological hurdles to overcome, so this ‘payments dream’ will only happen in an environment which makes technological innovation worthwhile for all parties operating in e-payments. In this article, Paul Alfing, Chair of the e-Payments Committee of Ecommerce Europe, outlines a presentation delivered to the European Payments Council’s General Assembly on 18 June 2015 at a session on instant payments, and describes the steps required to realise the dream of a truly interoperable payments landscape in Europe that provides a seamless payments experience for both customers and merchants.

The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.  

Key Information in this Article The e-commerce industry has proven to be keen on innovating, with the awareness that successful and interoperable e-payment must pay attention to three fundamental principles: reach, conversion and fair cost.
  • Reach: For any payment method to become accepted, it needs to have achieved a wide reach among consumers. Merchants will need to be able to seamlessly offer a wide mix of payment options.
  • Conversion: Merchants will adopt new payments standards when they believe having that option available can help convert a potential buyer into a real buyer. In addition to availability of payment options, this is also influenced by the usability of the payment method.
  • Fair cost: The cost of payments, including the cost incurred from coping with fraudulent payments and exception handling, is a prominent concern for merchants. To help support uptake of new payment methods, the costs of payments need to be kept low and fair.
While there have been promising regulatory developments thanks to the Single Euro Payments Area (SEPA), the revision of the Payment Services Directive (PSD2) and caps on interchange fees, regulation remains a challenge to address. Facilitating interoperability should be a priority for governments and regulators, in particular, the creation of a uniform e-identification system that can facilitate easier transfer of information. For merchants, a real-time confirmation and guarantee of payment can be more important than the real-time transfer of funds. If confirmation can be received and guaranteed, even to transactions made at night, at weekends and during public holidays, merchants will see a reduction in the internal administrative burden of the reconciliation process. Instant crediting of payment should be the ultimate goal.

Read more

Opinion and Editorial

Progress Towards a Single Digital Market in the EU The EU Digital Single Market Strategy has now been formally adopted (in May 2015) by the European Commission

28.07.15 By Liz Oakes

The new EU Digital Single Market Strategy outlines a new regulatory landscape for technology and telecoms firms and contains 16 legislative and non-legislative proposals that the European Commission (the Commission), led by Directorate-General CONNECT, intends to present in 2015 and 2016. Set in three pillars, these proposals address issues that matter most to consumers such as access to digital content regardless of location within the EU and common consumer rights for purchases. For businesses seeking to trade across the EU, some key measures such as harmonisation of VAT and copyright law will bring simplification of the landscape and interaction with other businesses and consumers.  The Commission also intends to address issues in content distribution, the role and power (anti-trust) of online platforms, how to tackle illegal content and the challenges of data privacy while assessing the need for increased vigilance and a focus on cybersecurity. An e-government ‘only-once’ initiative will seek to improve consumer experiences in government handling of personal data. The roll-out of e-procurement and interoperable e-signatures will also be accelerated.

In this article, Liz Oakes examines the details of the EU Digital Single Market Strategy and offers analysis around its potential impact.

The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.

Key Information in this Article The EU Digital Single Market Strategy is a complex framework of 16 legislative and non-legislative proposals to advance the concept of a digital single market. These 16 proposals are grouped into three pillars:
  • Pillar I: Better access for consumers and businesses to digital goods and services across Europe.
  • Pillar II: Creating the right conditions and a level playing field for digital networks and innovative services to flourish.
  • Pillar III: Maximising the growth potential of the digital economy.
These pillars address many of the practical issues recognised by consumers and businesses when travelling or working and buying or selling outside of their home location. Many of the changes outlined are complex, multi-faceted and detailed, and apply to organisations beyond the telecoms and technology sectors. They will require complex interpretation to ensure compliance with the spirit of the proposals, rather than a line by line interpretation of the requirements, to ensure success.  Many small businesses will not have access to advice on the impact of these changes, both opportunities and potential threats to their business models. While the proposals create a more welcome level playing field for EU businesses, this also creates opportunities for others to enter and compete more efficiently and effectively across the EU.

Read more

SEPA Credit Transfer (SCT) & SEPA Direct Debit (SDD)

MyBank: Update on e-authorisation SolutionsSociety needs new secure payment methods and trusted identity tools for the digital single market. MyBank provides an example.

28.07.15 By John Broxis and Giorgio Ferrero

At a time of significant change in the payments market, many market commentators are suggesting that there is an unprecedented opportunity for new and existing players in the financial services industry to provide new and valuable services to society. In this article, Giorgio Ferrero, Chairman of PRETA, and John Broxis, Managing Director of PRETA, describe the development and uptake of e-authorisation solutions, in the context of today’s regulatory and market evolutions, such as the revised Payment Services Directive (PSD2), Access to Account (XS2A) and application programming interfaces (APIs). This article focuses on the practical usage and growing popularity of account-based payments for online transactions, and highlights some of the unexpected upsides, such as business-to-business (B2B) usage, that can emerge as a result of the introduction of new e-authorisation tools in this context. It also covers the additional value that account-servicing institutions can leverage for their customers by offering electronic mandate creation and identity verification services, focusing on simple and practical implementation possibilities that are being developed today.  The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.

Key Information in this Article
  • An implementation-orientated way forward is needed for the benefit of the market stakeholders if they are to meet the expectations set for the digital single market.
  • There is a clear and burning need for account-based identity verification services, leveraging strong authentication and the network of the financial services industry, and there are simple ways to deliver these services based on an Application Programing Interface (API) model.
  • In 2011, EBA CLEARING created MyBank, an e-authorisation solution that enables safe digital payments and identity verification, and contract agreements through a consumer or business’s own online banking portal or mobile application, to answer the need for a new range of transaction-related services offered by payment service providers (PSPs) and other players, where a rapid growth is already registered.
  • MyBank is being used to make consumer-to-business (C2B) payments to e-commerce companies, utilities, insurance companies and public authorities. The solution is also being used for larger value business-to-business (B2B) transactions.

Read more

Opinion and Editorial

Who Does What In Payment Standards?Understanding the players who develop and maintain the standards used by payment service providers to exchange information

28.07.15 By Christophe Godefroi

It is no secret that standards play an important role in Single Euro Payments Area (SEPA) payments schemes. These are selected by the European Payments Council (EPC) in close dialogue with the stakeholder community and are defined in the SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) Rulebooks. The schemes are based on technical standards defined by standards bodies such as the International Organization for Standardization (ISO). More specifically, the SEPA data formats specified in the EPC Implementation Guidelines which accompany the SCT and SDD Rulebooks are based on the global ISO 20022 message standards. Although the EPC is actively applying standards in its schemes, it does not develop standards itself. Standards are, in fact, developed by global standardisation organisations such as ISO or European Standards Organisations (ESOs). In this article, Christophe Godefroi outlines the various groups and bodies which take part in developing and maintaining standards used for payments, as well as outlining what their roles in payments are.   

Key Information in this Article A Single Euro Payments Area (SEPA) Scheme is a set of rules, practices and (crucially) standards to achieve interoperability for the provision and operation of a SEPA payment instrument agreed at interbank level. SEPA data formats are based on the global ISO 20022 message standards developed by the International Organization for Standardisation (ISO). Standards are developed by global standardisation organisations such as ISO or European Standards Organisations (ESOs). ISO 20022 is the international standard that defines the ISO platform for the development of financial message standards. Furthermore, ISO 20022 is not only a suite of message standards, but a recipe proposed by ISO to develop message standards for all domains of the financial industry. The European Committee for Standardisation (CEN) “supports standardization activities in relation to a wide range of fields and sectors including: air and space, chemicals, construction, consumer products, defence and security, energy, the environment, food and feed, health and safety, healthcare, ICT, machinery, materials, pressure equipment, services, smart living, transport and packaging.” The European Committee for Electrotechnical Standardization (CENELEC) “is responsible for standardization in the electrotechnical engineering field, reflecting the economic and social interests of 33 CENELEC Member countries channelled through their National Electrotechnical Committees (NCs).” The European Telecommunications Standards Institute (ETSI) “produces globally-applicable standards for Information and Communications Technologies (ICT), including fixed, mobile, radio, converged, broadcast and Internet technologies.” The European Payments Council (EPC) is a category ‘A’ liaison organisation to ISO Technical Committee 68 – Financial Services (TC68) which focuses on standardisation in the field of banking, securities and other financial services. It is also an active member (‘A’ liaison) of the ISO 20022 Registration Management Group (RMG) whose mission is to “ensure that ISO 20022 is a trusted standard providing high quality business models for exchange of information for financial services.”

Read more