Challenges for European retail payments after …...11 • Focus on security issues 14 May 2014 Challenges for European retail payments after SEPA migration SecuRe Pay Forum –Published

Seminar Seminar name

Rui Pimentel • Head of Unit14 May 2014

Challenges for European retail payments after SEPA migration

The views expressed in this presentation are solely those of the

author and do not necessarily reflect those of Banco de Portugal

2 •

Agenda

• Innovation in retail payments

• Focus on security issues

• Competition vs cooperation in a market with new players

• Approach by regulators & authorities

14 May 2014 Challenges for European retail payments after SEPA migration

3 •

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


4 •


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

5 •


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


6 •


The payments market is fertile ground for

Lots of hype about mobile solutions:

Remote, proximity & wallet-based payments

Multiple players part of this

ecosystem


7 •


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


8 •


Other developments in the field of “mobile” shape new trends

in retail payments experience

mPOS

mCommerce

Multi-channel approach


9 •

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)


10 •



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)

11 •



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)

12 •

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

13 •

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

14 •



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

Competition in the market

needs to be ensured

15 •



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

16 •

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

[email protected]

Documents

Challenges for European retail payments after …...11 • Focus on security issues 14 May 2014 Challenges for European retail payments after SEPA migration SecuRe Pay Forum –Published