The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.
The Single Euro Payments Area ( ) initiative has been a key enabler for the integration of the retail payments market in the European Union ( ): the development of Credit Transfer ( ) and Direct Debit ( ) were crucial steps in this regard.
Traditional payments business is increasingly challenged by new entrants armed with disruptive technologies. That is pushing rapid change in the payments landscape, and with it, changing consumer expectations. The revised Payment Services Directive ( ) has been instrumental in opening up the banking ecosystem and fuelling the development of innovative payment services by FinTech firms.
The Commission’s recently adopted retail payments strategy (RPS) is a long term policy framework that has been conceived to support the future development of retail payments in the and to exploit the opportunities that digitalisation offers. With the RPS, the European Commission is taking the lead and showing the way towards the achievement of a customer-centric, modern, competitive and innovative payments ecosystem.
Europe is a model in payments integration and we intend that it remains so, addressing existing challenges and facing up to new ones.
One such challenge is that a significant share of payments in Europe effectively depends on international players (such as international card schemes) and, increasingly, of large technology companies. It is crucial, for the ’s open strategic autonomy, to reduce this dependency and to support the emergence of European champions in the payments sector. This will also increase competition and choice for end-users. The negative effects of that dependency are further aggravated by restrictive practices with regard to certain technologies that have become essential, in particular for mobile and contactless payments.
Despite recent progress, the retail payments market in Europe is still very fragmented along national borders. There is virtually no European payments card that works across borders, and there is no European payment app that allows instant transfer of money across borders, despite the existence of numerous and successful payment solutions in the domestic sphere.
Furthermore, as digitalisation progresses, the payments ecosystem becomes increasingly complex, with many actors –regulated or non-regulated- intervening in the payments chain.
It is important to ensure that regulation remains well-calibrated and that it adequately covers all actors and services that might carry risks to the financial system. All relevant players should also be subject to strong supervision and oversight.
Responding to these challenges, the RPS calls on the industry, regulators and other Institutions to share our vision, which rests on three overarching goals:
- That citizens and businesses in Europe benefit from a broad and diverse range of high-quality payment solutions, supported by a competitive and innovative payments market and based on safe, efficient and accessible infrastructures.
- That competitive home-grown and pan–European payment solutions are available, supporting Europe’s open strategic autonomy.
- That the makes a significant contribution to improving cross-border payments with non- jurisdictions, including remittances, thereby supporting the international role of the euro.
In order to achieve those goals, the RPS was designed around four main pillars. Taken together, these four pillars encompass the three facets of the payments ecosystem: payment solutions, markets and infrastructures. The RPS also includes an external dimension covering retail payments between the and other jurisdictions, which are often slower, more complex and expensive than payments made within a single jurisdiction.
The first pillar focuses on European payment solutions that work cross-border and take full advantage of the potential of instant payments. The main policy initiative calls for the roll-out of instant payments by end-2021. This is supplemented by measures designed to support the emergence of European players and pan-European solutions, also leveraging on digital identity (ID) solutions that marry convenience with safety, and broadening the network of acceptance of digital payments. As cash is currently the only form of public money directly available to citizens for their retail transactions, the RPS also includes measures to preserve cash access and usability. Furthermore, the strategy also supports the European Central Bank’s (ECB) work on the potential issuance of a digital euro.
The second pillar aims to achieve a competitive and innovative retail payments market, ensuring a high level of consumer protection. The main policy action includes the forthcoming review of and its further alignment with the second Electronic Money Directive (EMD2), to ensure that the licensing regime for payment services remains fit for purpose in the context of an increasingly complex payments landscape. Furthermore, as has become a world standard in terms of payments security and open banking, the Commission will continue to strive for a wide adoption of the Strong Customer Authentication ( ) and the full deployment of open banking in the .
The third pillar seeks to ensure access to payment infrastructures and other technical infrastructures. With a view to supporting the full interoperability of Clearing and Settlement Mechanisms (CSM) processing instant payments, the Commission calls for the measures developed by the ECB in close consultation with the industry to be widely implemented by end-2021. This will support the full deployment of instant payment solutions that work cross-border in the . In addition, in the framework of the review of the Settlement Finality Directive, the Commission will address the issue of direct access to payment systems by non-bank payment service providers. Finally, the Commission will also address restrictions of access to key technical infrastructures, such as those enabling mobile contactless payments.
The fourth pillar aims to improve international payments between the and other jurisdictions, including remittances, which are currently still too expensive and inefficient. This will also support the international role of the euro and the measures proposed are consistent with the recently adopted G20 Roadmap for cross-border payments, which calls for increased transparency, speed and convenience.
The RPS is a major undertaking and a genuine blue print for the years to come. It requires extensive work and collaboration between all stakeholders, public and private.
Being at the very heart of , the European Payments Council ( ) is ideally placed to play an instrumental role in the shaping of a truly European payments landscape.
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