“Bizum was born with the objective of making easy payments between people by linking their phone numbers and email addresses with their bank accounts. People can send or request money just by typing the recipient’s mobile number or by simply choosing it from their contact list. The service has strengthened the ability of our member banks to provide digital services that build a community to cope with potential competition from big tech companies. . . Bizum was [first] created to cover mobile payments . . .” *
Keynote speech at European Payment Institutions Federation Annual Conference (Excerpts)
16 November 2021
©European Union (CC BY4.0)
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This year, the European Payment Institutions Federation [EPIF] is marking ten years representing much of the EU non-bank payment industry. . . The first Payment Services Directive dates back to 2007, and it was a key milestone in reforming our laws for retail payments. And EPIF was founded in response to this directive.
Since then, Europe has developed a diverse and competitive payments market. . .
The world of payments
New technology has made payment services more diverse, convenient and secure.
Chip-and-pin technology for cards already seems almost antiquated as we have become used to contactless payments, QR codes, mobile and digital wallets, and secure online payments.
There are new players offering new services.
Over the past decade, non-banks have entered the payments market, offering services directly to consumers without the need for a bank licence. . .
More competition is not a bad thing, but. . . we need to make sure we address possible risks, protect consumers and maintain a level-playing field.
It’s not just the market that’s changing, consumer behaviour is changing too.
Consumers want to be able to shop and pay anywhere, any time, safely and at low cost. They want to send money internationally as easily as at home.
The pandemic accelerated this trend. During lockdowns, e-commerce exploded, contactless payments reached an all-time high, and payments via apps and mobile phones increased.
. . .In the euro area, 40 percent of consumers during the pandemic used less cash and made more contactless payments. . .
Safe, instant, frictionless payments should be the norm in Europe.
Instant payments are a game-changer. The benefits go beyond speed and round-the-clock availability.
When combined with new add-on services – such as “request to pay” – they can support innovative business models, like payment initiation services.
Instant payments can increase competition and diversify the payment options offered to consumers. Given the current level of market concentration, this is key.
EU payment initiation service providers and fintechs are also counting on instant payments to scale up their offerings and compete globally.
Instant payments with direct access to payment systems can dramatically improve international transfers, including remittances.
And as other countries advance on instant payments, the opportunities multiply.
In the European Union, we want to be among the global leaders in the area of payments, with an innovative and competitive payments market where all players can compete on equal terms.
That requires us to support instant payments. . .
Today, two-thirds of European payment service providers are ready to offer and receive instant payments.
This means that there may well be a provider of instant payments at the sending end, but not on the receiving end, or vice versa.
So we need to get the other one-third on board.
[Next], we need to make sure consumers are protected. . .A number of protective measures are already in place, including two-factor authentication, but fraud evolves quickly. . .
We need good safeguards in place to reassure consumers. . . If there are effective ways to reduce fraud or errors, the Commission will take them into consideration in the impact assessment.
Providers offering instant payments need a commercially viable business model. But high fees are a significant deterrent for consumers.
We need to find a balanced and proportionate approach to pricing to ensure that instant payments do not remain a premium service, but become the norm.
Finally, we need to look at sanctions screening. Sanctions are a vital part of our foreign policy. And screening is an essential part of making sure that this action is effective.
But it needs to be carried out efficiently. . .
The Commission is determined to accelerate the rollout of instant payments in the EU and we will take the action that is necessary to do so. . .
In the recently adopted Commission Work Programme, we announced that the Commission will deliver an initiative on instant payments in the first half of next year [that is, 2022].
The plan is to foster the full uptake of instant payments in the EU.
I would like to make it very clear. We are aware that the rollout of instant payments is a serious issue, and we want to address it in a serious way. . .
. . .
International Payments beyond the EU
Looking for a moment beyond the EU.
International efforts around payments are intensifying.
In the EU, we need to have rules in place that can handle the evolving landscape and make sure we are consistent with the G20 Roadmap on cross-border payments. . .Our goal is to ensure that the costs for cross-border payments are fully transparent, including currency conversion charges.
Payment service providers are now able to improve the predictability of cross-border payments, particularly when it comes to speed. . .We need to make sure EU legislation reflects this reality, especially as the world moves towards instant payments. . .
Ensuring EU rules facilitate fast, low-cost cross-border payments will also have a positive impact on remittances.
Over the course of the pandemic, the global average cost of sending remittances has decreased slightly.
The World Bank estimates that the global average cost of sending 200 US dollars fell to just under 13 dollars in the first quarter of this year. But that is still more than twice the 3 percent target in the UN Sustainable Development Goals.
We need to do more to bring costs down. Millions of migrants and their families depend on remittances and cutting fees is vital.
Stablecoins could be an attractive channel for remittances, offering a fast and cost-effective way to transfer money.
It is likely that stablecoins will become mainstream, so it is very important that they are properly regulated.
The EU is one of the first places in the world to look to regulate crypto-assets and stablecoins. . .
Our goal is to protect end-users, maintain financial stability and uphold monetary sovereignty whilst supporting innovation.
Central Bank Digital Currencies & the Digital Euro
As stablecoins started gaining traction, central banks took note.
Private stablecoins are attractive to many in terms of possible lower costs and faster transactions. But they raise a number of questions and risks.
Then Covid-19 happened, and people became even more reliant on digital payment options.
With a drop in the use of cash came a potential threat to a key pillar of financial stability – the ability to convert commercial bank money into central bank money.
In a world where private stablecoins are increasingly popular, and cashless accessible, there is a risk that only private money remains, and the market becomes even more concentrated.
So central banks are looking into their own digital currencies. . .
In the EU, the ECB [European Central Bank] has launched an investigation phase into a digital euro. . .
A digital euro could give consumers more choice. And it could be good for financial inclusion, by bringing people without access to a bank account into the financial system.
And for payments, it could have big implications. It could help private intermediaries develop truly European payment solutions using European infrastructures, and support instant payments.
But there are big questions that need to be answered. A digital euro could have far-reaching implications for the financial system. . . [And] how would we keep the digital euro secure?
The Commission will continue to cooperate closely with the ECB on the questions emerging from the possible introduction of a digital euro. . .
Introducing a digital euro would be a big decision, and we need to get it right.
. . . [A] digital euro. . . highlights the seismic shifts that the financial system is undergoing.
If the very nature of money is changing, then that challenges how we think and act – both regulators and the financial industry. . .
As regulators, we want to support innovation in the European Union, and we will provide the legal certainty the market needs. . .
*Interview with Fernando Rodríguez Ferrer, Head of Business Development at Bizum. “Bizum: The Spanish instant mobile payment solution”
Disclaimer: This report in no way implies that Bizum is sponsored by the EU nor that the European Payment Institutions Federation has Bizum specifically in mind in the above-excerpted speech.
Featured image/Gerd Altmann from Pixabay
Cryptocurrency/Cryptocurrency News, PD
Locked down theater/Edwin Hooper, Unsplash
Remittances/Monito-Money Transfer Comparison, CC BY2.0
El Corte Ingles/Tinou Bao, CC BY2.0
Ursula von der Leyen/Renew Europe, CC BY-ND2.0
Bitcoin vs Banks & Centralization/Credit: BeatingBetting Co.UK, CC BY2.0
Euro coin/Gerd Altmann, Pixabay
Binance cryptocurrency market/Crypto Dost, CC BY2.0
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