The views expressed in this article are solely those of the authors and should not be attributed to the European Payments Council.
The European retail payments landscape has changed due to a multitude of reasons: innovation, regulatory developments, the Covid-19 pandemic and changing consumer habits. Against this background, in July 2022 , the European Central Bank (ECB) presented a report on accessibility to retail payments in the European Union (EU) to the Euro Retail Payments Board (ERPB). We wanted to find out more about it by interviewing Kerstin Junius, Senior Market Infrastructure Expert in the Directorate Market Infrastructure and Payments and Karine Themejian, Deputy Head of the Market Innovation and Integration Division at the ECB.
How would you describe the current situation regarding accessibility to retail payments in the EU?
The European retail payment landscape has undergone significant transformations due to innovations, regulatory developments and changing consumer habits. The Covid-19 pandemic accelerated already-strong digitalisation trends.
A few key pieces of data can help us better understand the current situation regarding accessibility to retail payments in the EU.
Access to retail payments starts with having a payment account. In the EU, the share of the population that has access to a payment or transaction account is high, with more than ninety percent on average1. Those shares are typically higher for younger generations.
Second, the internet is a key prerequisite for accessing digital payment services. The share of the population with access to the internet is generally high in the EU, ranging between close to eighty-five and more than ninety-five percent across Member States.
Lastly, we observe higher use of e-payments in e-commerce, and e-banking emerging as a convenient alternative to bank branch visits across the EU.
How is the digitalisation of payments impacting on their accessibility?
Digitalisation is bringing positive changes for most people, enabling them to make payments in a more efficient and convenient manner, at lower costs and higher speed. However, some developments linked to digitalisation can pose risks to maximising access to retail payments by all citizens.
Ensuring everybody in the EU has access to retail payments is paramount to ensure that everybody, including those from vulnerable groups, are able to pay in a convenient, affordable, and efficient manner.
This is the reason why the topic of accessibility to retail payments is part of the Eurosystem’s retail payment strategy2. A stock-take exercise at the European System of Central Banks (ESCB) level identified two main risk areas stemming from the ongoing digitalisation of financial services. The first is the risk of increasing fraud related to electronic payments as numerous forms of social engineering are increasingly being used to commit fraud across all jurisdictions. Moreover, a growing offering of financial services by unlicensed or unsupervised entities presents risks of increased illegal financial activities. This could lead to a potential loss of trust in electronic payment services, especially by those who are the relatively more common targets for these activities, typically individuals with low financial or digital skills.
The second is the risk of excluding vulnerable groups from the access to convenient and safe retail payments. The stocktake we conducted highlights the biggest challenge is for people with disabilities who face difficulties in conducting payments via electronic tools and devices, whether due to strong customer authentication processes or due to new technologies (e.g. Quick-Response (QR) codes, contactless payments, etc). Also, lacking digital and financial literacy and having no access to digital devices or the internet pose a significant barrier to accessing and using electronic retail payment services. The increasing difficulty to obtain staffed banking services via bank branches is a further challenge under this second risk category. These issues would mostly affect people living in remote or rural areas and less digitally savvy individuals such as senior citizens, who are more dependent on non-automated banking services.
Could you share the key findings of the Accessibility to retail payments in the EU report?
The report3 finds that most citizens have easily adapted to new means of electronic payments and are not dependent on having a physical bank branch nearby. However, increasing digitalisation poses a challenge for vulnerable groups, such as those with disabilities or reduced cognitive abilities, often seniors, or individuals with low education or financial and digital skills.
These groups are more prone to be victims of fraud and are, in addition, adversely affected by a trend towards higher prices for traditional (paper-based) bank services, on which they depend more than the rest of society.
Relevant stakeholders such as governments, National Central Banks (NCBs) and payment service providers (PSPs) seem to be aware of these challenges. For instance, several countries’ national payment councils have dedicated workstreams covering financial inclusion and accessibility to retail payments. While fostering accessibility to retail payments is in most cases not strictly part of the mandate of National Central Banks, most of them actively support accessibility to some degree e.g. with educational activities, mainly via publications.
The report also highlights the positive impact on the accessibility to retail payments from the introduction of key regulations, such as the Payment Account Directive and the revised Payment Services Directive (PSD2).
Despite legislative action in place or under way that will address some of the problems, e.g. with the mandatory transposition of the European Accessibility Act by 2025, stakeholders across society must remain vigilant and future discussions may be warranted as to whether further action is needed to make sure that specific vulnerable groups are not affected by current transformations in the payment landscape. This is why we brought the findings of our stocktake to the attention of the Euro Retail Payments Board (ERPB) in July 2022.
1. World Bank
2. Approved by the Governing Council in December 2020 and published on the ECB website
3. Accessibility to retail payments in the EU – a stock-take
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Kerstin Junius
Kerstin Junius is a Senior Market Infrastructure Expert in the Directorate Market Infrastructure and Payments at the European Central Bank (ECB). She is working on a variety of retail payment related topics, which include costs of retail payments and financial inclusion. Kerstin is lead author of the ECB occasional paper „Costs of retail payments - an overview of recent national studies in Europe.”
Karine Themejian
Karine Themejian is Deputy Head of the ECB’s Market Innovation and Integration Division in the Directorate General Market Infrastructure and Payments. She is notably coordinating the secretariat of the Euro Retail Payments Board (ERPB) which contributes to the further development of an integrated, innovative and competitive market for euro retail payments in the EU.