Challenges for European retail payments after SEPA migration Rui Pimentel Head of Unit 14 May 2014 Seminar Seminar name The views expressed in this presentation are solely those of the author and do not necessarily reflect those of Banco de Portugal
Agenda Innovation in retail payments Focus on security issues Competition vs cooperation in a market with new players Approach by regulators & authorities 2 14 May 2014 Challenges for European retail payments after SEPA migration
Innovation in retail payments After the conclusion of the SEPA migration process for credit transfers and direct debits (by 1 Aug 2014), new challenges are foreseen to gain focus Harmonisation in the cards domain Innovative payment solutions Security issues 3 14 May 2014 Challenges for European retail payments after SEPA migration
Innovation in retail payments The Eurosystem s view on a SEPA for Cards is reflected in the report CARD PAYMENTS IN EUROPE A RENEWED FOCUS ON SEPA FOR CARDS, published on 29 Apr 2014 http://www.ecb.europa.eu/press/pr/date/2014/html/pr140429.en.html 4 14 May 2014 Challenges for European retail payments after SEPA migration
Innovation in retail payments The report refers to multiple aspects of market integration in this field Growth potential of card payments Unbundling scheme management and transaction processing Certification, Standards & Business Rules Efforts towards market integration: the Eurosystem s view of a SEPA for Cards 5 14 May 2014 Challenges for European retail payments after SEPA migration
Innovation in retail payments The payments market is fertile ground for Lots of hype about mobile solutions: Remote, proximity & wallet-based payments Multiple players part of this ecosystem 6 14 May 2014 Challenges for European retail payments after SEPA migration
Innovation in retail payments Participation of non-traditional players in retail payment solutions to add complexity to business models Telcos Handset manufacturers Trusted Services Manager Apart from banks/psps 7 14 May 2014 Challenges for European retail payments after SEPA migration
Innovation in retail payments Other developments in the field of mobile shape new trends in retail payments experience mpos mcommerce Multi-channel approach 8 14 May 2014 Challenges for European retail payments after SEPA migration
Focus on security issues On the other hand... New fraud types are identified Mitigation measures & initiatives are needed Common approach by authorities Activities of the European Forum on the Security of Retail Payments (SecuRe Pay Forum) 9 14 May 2014 Challenges for European retail payments after SEPA migration
Focus on security issues SecuRe Pay Forum Scope of intervention The Forum s work focuses on the whole processing chain of electronic retail payment services (excluding cheques and cash), irrespective of the payment channel. The Forum aims to address areas where major weaknesses and vulnerabilities are detected and, where appropriate, makes recommendations. The ultimate aim is to foster the establishment of a harmonised EU/EEA-wide minimum level of security. ( ) Given the current experience of regulators, legislators, PSPs and the general public that payments made over the internet are subject to higher rates of fraud than traditional payment methods, the Forum decided to develop recommendations for the security of internet payments. In RECOMMENDATIONS FOR THE SECURITY OF INTERNET PAYMENTS Final version (Jan.2013) 10 14 May 2014 Challenges for European retail payments after SEPA migration
Focus on security issues SecuRe Pay Forum Published documents 1. Recommendations for the security of internet payments (Jan 2013 final) 2. Draft recommendations for Access to Payment Account Services (public cons Jan-Apr 2013) 3. Draft recommendations for Mobile Payments (public cons Nov 2013-Jan 2014) 11 14 May 2014 Challenges for European retail payments after SEPA migration
Competition vs cooperation in a market with new players The activities of third parties in the retail payments domain need to be addressed New providers in the market a clear trend Potential vulnerabilities Third Party Providers (TPPs) offering services Revision of the Payment Services Directive 12 14 May 2014 Challenges for European retail payments after SEPA migration
Approach taken by regulators & authorities The current context poses challenges to regulatory bodies and other authorities Applicable legal framework Licensing & supervision New solutions often entail more complex payment ecosystems & business models Authorities to foster dialogue with market participants to assess developments, both at National and European levels Advantages of co-operation between European authorities 13 14 May 2014 Challenges for European retail payments after SEPA migration
Approach taken by regulators & authorities Outlook In a context of growing innovation, consumer protection also takes a prominent role underpinning confidence in the solutions provided Dialogue and co-operation between authorities and with market players plays a central role, as these issues gain added complexity Security of solutions provided is of paramount importance Compliance with Recommendations Competitionin the market needs to be ensured 14 14 May 2014 Challenges for European retail payments after SEPA migration
Approach taken by regulators & authorities Retail payments governance On 19 Dec 2013, the European Central Bank set up the Euro Retail Payments Board (ERPB) as new governance body The objective of the ERPB is «to contribute to and to facilitate the further development of an integrated, innovative and competitive market for euro retail payments in the EU» Its first meeting will take place on 16 May 2014 Representatives of the supply side, the demand side and National Central Banks to take part in the ERPB European Commission to participate as observer http://www.ecb.europa.eu/paym/sepa/stakeholders/governance/html/index.en.html 15 14 May 2014 Challenges for European retail payments after SEPA migration
Challenges for European retail payments after SEPA migration THANK YOU! Rui Pimentel Head of the Payment Systems Analysis and Development Unit Payment Systems Department Banco de Portugal rpimentel@bportugal.pt 16 14 May 2014 Challenges for European retail payments after SEPA migration