“Before, this [payments] was regarded as a very technically-driven field, but in recent years, politicians and the EU have put a spotlight on payments much more, and so the market has arguably become more political than ever,” he says.
A number of rules will be actioned in the coming months, including the Cross-Border Payment Regulations 2 (CBPR2) –mandate designed to ensure that cross-border payment charges across member states are fair and transparent. From April 19, card issuers will be obligated to send an electronic message following the authorisation of a payment in another EU currency, detailing the percentage mark-up on the price. This information must be free and distributed via an ‘easily-accessible’ channel, and is part of a much wider political-driven industry shake-up.
“I think the main political driver is Europe’s quest for more strategic autonomy and independence from the rest of the world. It’s even written explicitly in the European Commission’s Retail Payments Strategy that Europe is looking to become less dependent on current global players, and that to do so they must build out and push alternatives into the market.”
For Kai Zhang, special counsel at law firm K&L Gates and member of the legal task force for Pay.UK, CBPR2 will be welcomed across member states but may provide difficulties for UK citizens.
“For consumers, or at least EU consumers and particularly those not in the eurozone, the main benefit is perhaps the reduced fees on cross-border transfers, as these tend to be more expensive,” he said in an email. “In addition, an EU consumer travelling within the EU will have access to more information on how much they’re going to pay for something.”
“But for UK consumers, we might potentially see increases in fees for cross-border payments,” he said.
From June, UK issuers will start randomly checking if e-commerce card transactions are compliant with strong customer authentication (SCA) – part of Europe’s second payments directive (PSD2). Non-compliant transactions will be soft declined. And from September 14, 2021, SCA will officially be applied to all e-commerce card transactions in the UK.
Vandormael believes that 2021 will become considered as a “pivotal year for payments”.
“I think the pandemic put a different perspective on things. It made people rediscover their appreciation for electronic payments and made policymakers understand how complex it can be as well.
“So, whether or not 2021 ends up being a game-changing year for payments, I do think we’re seeing a lot of things happening from a regulatory and market point of view.”