Embed Size (px)
Citation preview
Edgar, Dunn & Company A Closer Look at the Payment Regulations
Webinar – 25th June 2015
© Edgar, Dunn & Company, 2015
Confidential 2
This webinar will focus on two key regulatory topics:
Introduction
Multilateral Interchange Fees (MIF) Regulation Designed to help develop an EU-‐wide market for payments to enable consumers, retailers and other organizations to enjoy the full benefits of the EU internal market including e-‐commerce; to foster innovation and efficiency by providing legal clarity and a level playing field
Payment Service Directive (PSDII) The PSDII will replace the current Payment Services Directive; the PSDII will have a wider scope to cover new payment services created by a period of innovation and to provide further clarity and update topics in the previous version of the directive
What is the difference between an EU regulation and an EU directive?
Confidential 3
“A ‘directive’ is a legislative act that sets out a goal that all EU countries must achieve. However, it is up to the individual countries to decide how.”
¡ A directive is more of a guideline and requires transposition into national law to conform to the guidelines set within the directive
DIRECTIVE
Europa.eu
“A ‘regulation’ is a binding legislative act. It must be applied in its entirety across the EU.”
¡ An EU regulation is applicable to all members and must be applied in full
¡ There is no need for transposition into national regulations
REGULATION
Timings of the MIF regulation and the PSDII directive
Confidential 4
Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun
2013
2014
2015
Proposal for a directive on payment services in the internal market (PSDII)
Debate in parliament with decision to adopt amendments
On the 26th of November a revised version of the PSDII was published for the first reading in the EU Parliament containing all changes, additions, and deletions to the prior version
Debate in parliament with decision to adopt amendments
Working party discussions – further amendments proposed
Debate in council
Trilogue process
Confirmation of final text as a result of trilogue – expected publication of final version expected end of June 2015
Publication of preliminary results of the survey on Merchants’ Costs of Processing Cash and Card Payments
Working party discussions – further amendments proposed
Vote in committee
Proposal for a regulation on interchange fees for card-‐based payment transactions (MIF Regulation)
Decision by parliament and approval by European Commission
Regulation adopted by Council
MIF Regulation enters into force
PSDII MIF
Timings of the MIF regulation and the PSDII directive going forward
Confidential 5
2015
2016
2017
2018
PSDII MIF
MIF Regulation enters into force
June 2016 – card schemes and processing must be independent; honour all products rule abolished
December 2018 – three party schemes no longer exempted
December 2018 – review of the MIF regulations
December 2015 – interchange fee caps come into force
Confirmation of final text as a result of trilogue – expected publication of final version expected end of June 2015 after vote in committee
Directive adoption and publication into Official Journal
Directive comes into force 20 days after publication
2017 – transposition into national legislation two years after Directive comes into force
MIF Regulation – what is in-‐scope and out of scope of the regulation
Key elements within the scope of MIF Regulation:
¡ Fee caps: 0.2% for consumer debit cards; 0.3% for consumer credit cards
¡ Caps apply to both cross-‐border and domestic card-‐based payments
¡ Applicable to card transactions at POS, on the Internet and on mobile
¡ Four-‐party payment schemes are within the scope of this MIF regulation
¡ Three party schemes working with external issuer/acquirer will be considered four-‐party and subject to caps
¡ Separation of scheme and infrastructure (processing)
¡ Removal of Honor all Products element from Honor all Cards rule
Confidential 6
Key elements out of scope of MIF Regulation:
¡ ATM withdrawal transactions ¡ Commercial cards are not subject to caps ¡ Three party payment schemes (e.g. Diners, American Express)
¡ Limited network – specific instruments used in a limited way
MIF Regulation – impact of the regulation across the four parties
Confidential 7
Issuers: ¡ Will restructure fee models to offset loss in
income and to cover costs ¡ Will withdraw or modify current products in
the market (e.g. reduce rewards, reduce interest free period, introduce/increase annual card fees)
¡ Some will re-‐classify/re-‐evaluate commercial card products
Acquirers: ¡ In the short term – there is room for
“windfall” profits as acquirers might not pass full reductions to merchants immediately (particularly smaller merchants)
¡ In the long term margins will be squeezed due to lower MSCs and higher pricing transparency
¡ Scale will become even more critical
Consumers: ¡ Card acceptance (credit/debit) will increase ¡ Potential increase in fees to cover banking
services ¡ Potential reduction in benefits and services
(e.g. loyalty schemes) ¡ May face confusion when cards are
rejected due to abolishment of honour all cards (products) rule
Merchants: ¡ Large merchants will see a considerable
decrease in payment acceptance costs ¡ Smaller merchants may not benefit from
seeing a full pass through of reduced interchange until end of contract
¡ Merchants that chose to not accept all products (honour all cards) may need to update POS terminals and systems
WILL SU
FFER
MOST
W
ILL BENEFIT M
OST
Confidential 8
Widening of scope -‐ will now be applicable to: ¡ Payment transactions where just one payment services provider is located in the EU (one-‐leg in transactions from two-‐leg in transactions under the current PSD)
Payment Initiation Services (PIS) ¡ Provider of this service can develop a software bridge between a payee (e.g. a merchant) and payer (i.e. consumer) to verify to a payee that the funds needed for a transaction are available in the account and to initiate a credit transfer from the payer’s account to the payee
Account Information Services (AIS) ¡ Provider of this service can aggregate online information on one or more payment accounts for a user, accessed via online interfaces of the account servicing payment service providers (i.e. banks)
PSD II – significant differences between PSD and PSDII
Confidential 9
European Banking Authority ¡ EBA to take charge to set guidelines and prepare regulatory technical standards on security for payments with regard to strong customer authentication (two-‐factor authentication)
Direct debit refund right ¡ Payer will be have unconditional right to refund for any disputed transaction, or unauthorized or incorrectly executed payment transaction (as in line with SEPA)
Surcharging ¡ Will not be allowed on credit and debit cards subject to the MIF regulations ¡ Surcharging can not exceed the direct costs borne by the payee for use of a payment instrument
Strong Authentication ¡ Expected to require strong (two-‐factor) authentication for all online based payment transactions (if not all electronic payment transactions)
PSD II – significant differences between PSD and PSDII (cont.)
PSDII – Payment Initiation Service
Payment Initiation Service (PIS)
“These services play a part in e-‐commerce payments by establishing a software bridge between the website of the merchant and the online banking platform of the payer’s bank in order to initiate internet payments on the basis of a credit transfer”
Cannot use, access and store any data for purposes other than for the provision of the payment initiation services
Do not hold payer’s funds
User can always address claim for refund to account servicing payment services provider, even when PISP involved
Confidential 10
Customer selects bank and enters online banking
credentials
Customer selects payment initiation
service
PISP access the banking network and
initiate payment instruction
Merchant Bank
PISP
Customer and recipient receive conformation of successful transaction
Customer bank processes payment
AS PSP
PSDII – Account Information Service
Account Information Service (AIS)
“These services provide the payment service user with aggregated online information on one or more payment accounts held with one or more other payment service providers and accessed via online interfaces of the account servicing payment service provider, thus enabling the payment service user to have an overall view of his financial situation immediately at a given moment”
Do not hold payer’s funds
Not request sensitive payment data linked to the payment accounts
Not to use, access and store any data for purposes other than for performing the account information service explicitly requested by the payment service user
Confidential 11
Data analysis / data consolidation by TPP
Credentials allow TPP to access the
customer’s bank(s)
AISP
AS PSPs
AISP retrieves data for analysis
Customer requests account
information
Customer selects bank and enters online
banking credentials
Data analysis / data consolidation provided
to customer
Confidential 12
What’s next for the PSDII directive: EBA to develop guidelines for secure access to accounts and strong consumer authentication ¡ Payment providers and banks are lobbying for open APIs to enable access to accounts as they
are perceived to be more secure
Banks fear risk to reputation, particularly as no contract is required between a PISP/AISP and the banks ¡ Banks are liable to restore funds to the payer in the event of an unauthorized payment
Apart from the regulatory aspects, there are many commercial aspects that also need to be considered:
Who are the future TPPs?
What services will they provide?
Which will be the successful business model(s)? Who will benefit from the new regulation?
Future regulation and commercial impact of PIS and AIS
Confidential 13
Existing players will have to adjust their business models to fit the new regulation...
Payment initiation in cooperation with banks
Account information in cooperation with banks
Payment initiation as a stand-‐alone service
Account information as a stand-‐alone service
Confidential 14
... Whilst new players will actively leverage their USPs to enter this space
Confidential 15
The impact of the MIF regulations and the PSDII regulations will soon unfold; in fact, it is being felt already
Larger merchants are pushing acquirers for a reduction in MSC
Credit card issuers have started to ¡ Reposition their corporate card programs ¡ Pull reward-‐based credit cards from the market, others have made rewards less lucrative to consumers
The PSDII will bring its own set of challenges to the market ¡ Increased competition from new entrants such as PISPs and AISPs ¡ EBA guidelines on strong customer authentication and open access to accounts (including developing APIs)
¡ Increased cost of compliance – including updating IT systems, online banking platforms, etc.
Conclusions
Confidential 16
Any questions?
Don’t forget to use the chat pane on the right hand side to send in any questions and select send to “All Panelists”
We would be pleased to discuss further with you
Confidential 17
More about us
Edgar, Dunn & Company (EDC) is an independent global financial services and payments consultancy
Founded in 1978, the firm is widely regarded as a trusted advisor to its clients
From offices in Frankfurt, London, Paris, San Francisco and Sydney, EDC delivers actionable strategies, measurable results and a unique global perspective for clients in more than 35 countries on six continents
Confidential 18
Don’t miss our upcoming Webinars!
AUGUST
27 Thursday
JULY
30 Thursday
Multi-‐retailer Prepaid Cards
First Floor, Candlewick House 120 Cannon Street London, EC4N 6AS United Kingdom
Tel +44 (0)207 220 0417 Mobile +44 (0) 7472 438229
Fax +44 (0)207 283 1007
Shanta Paratian Consultant
To sign up: Go to: www.edgardunn.com
or Send an e-‐mail to:
Wearables
Confidential 19
Presenters contact details…
First Floor, Candlewick House 120 Cannon Street London, EC4N 6AS United Kingdom
Tel +44 (0)207 220 0406 Mobile +44 (0)7825 027 525
Fax +44 (0)207 283 1007
Mark Beresford Director
Edgar, Dunn & Company Eysseneckstr. 4 60322 Frankfurt Germany
Tel +49 (69) 95421266 Mobile +49 (172) 683-‐0008
Fax +49 (69) 95421222
Ulf Geismar Director
![Edu 5701 7 Dunn & Dunn Learning Styles Model[1]](https://img.dokumen.tips/doc/110x75/545d137caf7959af098b4af9/edu-5701-7-dunn-dunn-learning-styles-model1.jpg)
