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~ Wijnand Jongen ~

COLUMN

GIVING A NEW BOOST TO COMPETITION IN THE EU
RETAIL PAYMENT MARKET

he issue of retail payments has often been to arise. This, in turn, could allow for the development
dealt with separately from the overall busi- of payment solutions that could better compete with
Tness strategy. Retail payments were guided establishing banking and payment solutions and better
by financial concerns such as ensuring a manage- cater to the needs of retailers (at a lesser cost). That was the
able level of fraud and keeping costs acceptable. But objective which had the support of European online retailers
the growth of digital commerce, innovation in the united within E-commerce Europe.
payment sector, changing consumer behaviour, and
expectations and evolving regulatory frameworks are However, PSD2 has not brought up the payment revolution
redefining the way merchants look at payments. that was expected. The share of new payment services based
on open banking remains low. These solutions did not reach
Payments are increasingly perceived as a potential strategic a sufficient level of maturity to compete against established
tool to improve brand awareness, consumers’ checkout payment methods. Because of the remaining barriers, the
experience and the evolution of new sales channels (e.g. impact of PSD2 on the merchant community at the EU level
development towards omnichannel). remains limited in terms of widely accepted new solutions
and costs. A missed opportunity!
Now the question we can ask ourselves is whether the EU is
granting the right regulatory framework to empower retailers The European Commission is now considering revising
to embrace this evolution. What has been/is being done to certain aspects of the PSD2 next year in order to address
improve the level of competition and innovation and address some of these shortcomings. The objective is to give a new
the high costs linked to accepting payments in the EU? boost to alternative payment solutions that surely have been
We will explore two aspects of the problem in this article. growing across the EU over the past years. The next step
would be to ensure that these solutions can grow to also offer
More choices, widely accessible
better services? “PAYMENTS ARE INCREASINGLY cross-border
In the area solutions.
of payments, PERCEIVED AS A POTENTIAL STRATEGIC
one of the key In parallel, the
objectives—pursued TOOL TO IMPROVE BRAND AWARENESS, Commission has
by authorities in just published a new
the EU for many CONSUMERS’ CHECKOUT EXPERIENCE legislative proposal
years—is promoting on Instant Payments
a more open and AND THE EVOLUTION OF NEW SALES in the EU, which
competitive market. reiterates the EU’s
With the Payment CHANNELS.” objective to foster
Services Directive the development of
2 (PSD2), which “competitive home-
entered into force in 2018, the EU created the foundation for grown and pan-European market-based payment solutions”
the development of open banking in the EU. Firstly, PSD2 in the EU. In the proposal, the Commission is suggesting
created clear legal status and roles for new players, such as making the provisions of instant credit transfer in euro
Payment Initiation Services Providers. Secondly, it created a mandatory for all PSPs. This means that people could send
requirement for banks to offer access to their customer’s data and receive money in less than 10 seconds, either to other
(including to these new players mentioned above). people but also to merchants (online with IBAN information
or offline with QR codes, for example). The proposal also
The EU was hoping to allow for a myriad of new alternative wants to make these instant transfers of money cheap and
payment methods based on account-to-account transactions reliable.

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