The Paypers has caught up with various thought leaders, industry experts and players, inviting them to share their views on this particular topic. Here is what we found:
Aran Brown, Hyperwallet: Could PSD2 stifle the burgeoning marketplace industry in Europe?
Unless the UK follows through on the Brexit referendum and invokes Article 50 sometime this year, the impending effects of the Second Payment Services Directive will have the greatest impact on the European payments industry in 2017. Whereas they were previously exempt, PSD2 brings two-sided marketplaces (e.g., Britain’s Deliveroo, France’s BlaBlaCar) firmly within the scope of the regulations applied to traditional payment service providers and is sure to change how these businesses operate.
Could PSD2 stifle the burgeoning marketplace industry in Europe? It’s possible. At the very least, many two-sided marketplaces in the European Union will need to revisit their payment handling processes before regulations become law on 13th January 2018. One option is to apply for authorization as either a Payment Institution (PI) or E-Money Institution (EMI), but it would require full operational compliance and months spent waiting on approval. The other option is to leverage the services of a business already authorized to provide payment services.
The full implications of this legislation won’t be realized until next year. Still, the scramble for marketplaces to get compliant is sure to have ramifications for the European payments landscape as a whole.
Daniel van Delft, Visa The Netherlands: The impressive growth of mobile payments – No 1 trend in payments
The number one trend in payments is the impressive growth of mobile payment initiatives. In the Netherlands, the number of contactless transactions quintupled in 2016. Two thirds of the Dutch POS terminals accept contactless payments, and the number of mobile devices supporting contactless is growing rapidly. At Visa, we see contactless cards as a precursor of mobile contactless payments. While mobile initiated contactless transactions are still limited in the Netherlands, the overall number of mobile contactless POS transactions are expected to grow significantly in 2017, because banks introduced wallets and smartphones are almost by default contactless ready, enabled by Visa Tokenization solutions reducing the complexity of the payment value chain. Furthermore, we foresee the combination of IoT and payment solutions in 2018 and thereafter as a catalyst for further growth of tokenized payment solutions.
Visa enables these developments with its globally standardized tokenization service, a technology that protects sensitive data and enables banks to adopt innovative payment solutions. Personal card data are replaced by sets of random numbers, so-called tokens, that are meaningless to outsiders. These tokens take the place of the end user’s card details throughout the transaction, and are device and retailer specific. This technique makes paying secure and more user-friendly. And above all, it enables banks to offer their customers a wide range of choices in innovative mobile payment solutions.
Perspective from the Merchant Risk Council (MRC): Seamlessness, speed, regulations
MRC's primary objective is facilitating knowledge sharing between our members and the broader eCommerce community. With that in mind, here are three industry topics we believe will be key this year.
Seamlessness: Checkout processes are becoming so seamless that payments are almost invisible, especially within smartphone apps. 3D Secure 2.0 solutions, now in development, will offer numerous benefits, including support for digital wallets and in-app purchases.
Speed: Several countries have developed faster payment schemes, and we anticipate the initial European-wide rollout of the SEPA Instant Payments Scheme in late 2017. In North America, Payments Canada continues work on its modernization initiative, and the U.S. Federal Reserve's Faster Payments Task Force is set to complete its final report mid-year.
Regulations: As part of PSD2, European Banking Authority Regulatory Technical Standards on strong customer authentication may necessitate new approaches to risk assessment. Companies will also be actively preparing for the General Data Protection Regulation, which takes effect in May 2018 and concerns the application of data protection laws to European Union residents.
As the pace of innovation in payments and eCommerce continues to accelerate, we feel professionals who connect regularly with industry experts and peers will be best positioned to succeed in 2017 and beyond.
Anders la Cour, Saxo Payments: The emergence of the payments ‘utility’
Disruption was the order of the day for 2016 in the payments industry; 2017 is looking to be just as exciting. New regulation, improved support for non-bank players and increased collaboration are all set to further shake up the status quo.
Open banking is an emerging term in financial services, driven by regulations that promote consumer choice and competition. With the advent of XS2A under PSD2 and Open Banking Standard, there are plenty of new opportunities for FinTechs, empowered by the freedoms of new legislation. However, doing everything ‘in-house’ won’t necessarily be the key to success.
Both the tier two and three banks and established payment providers are aware that it makes no sense to build the utilities that underpin their service. And this, I believe, will result in the emergence of the stand-alone ‘utility’. Using a ‘utility’ will be the route to success for those operating in banking and FinTech in the next few years. By outsourcing non-core functions to third parties, operations could become more digitised, relationship-driven and focused on the customer relationship. And that has to be good news for the customer – and the service providers.
Chris Skinner, The Finanser – The FinTech buzz continues, but not in the US (look East)
Rather than making this a long and detailed blog update, it’s just 10 headlines we can expect to see this year. Here you go:
- The FinTech buzz continues, but not in the US (look East)
- Ant Financial gets global applause (these guys aren’t staying in China)
- A FinTech unicorn stumbles (this market is still nascent)
- RegTech moves deeper into bank infrastructure (and demands real-time access)
- Regulators compete to innovate more (2016 bubbled, 2017 steams)
- A major global bank gets broken into pieces (systemically important with systemic issues)
- SWIFT gets hacked again (how many times can this happen?)
- A blockchain proof of concept goes mainstream (how long can we test the technology?)
- Banks get chatty (chatbots are all the rage)
- Machine learning and artificial intelligence are all the rage (related to above, but data wars begin)
The second part of this article will be published here.
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