Abstract
The authors deal with the evolution of the regulatory approach to innovative payments and describe the roles and actions of the authorities involved. The 2011 Green Paper “Towards an integrated European market for card, internet and mobile payments” sets out the first coherent European policy stance and priorities on e- and m-payments. Various initiatives have since been undertaken by the European Central Bank, the European Banking Authority and the European legislators especially in the field of security of payments, a key factor in enabling a sound growth of the new instruments. The final aim is to reflect on the adequacy of the present institutional architecture (division of powers, international cooperation, etc.) in fostering the development of an integrated, inclusive and competitive market of payment services.
Banca d’Italia. Market and Payment System Oversight. The opinions expressed do not necessarily reflect those of the Banca d’Italia.
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Blind, Knut. “The Use of the Regulatory Framework to Innovation Policy” in The Theory and Practice of Innovation Policy – An International Research Handbook, eds Smits, Ruud, Shapira Philip and Kuhlmann Stefan (Cheltenham: Edward Elgar, 2010).
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Aghion, Philippe, Akcigit Ufuk and Howitt Peter. “The Schumpeterian growth paradigm” in Annual Review of Economics, (Palo Alto, CA, 7 (2015) 557–575. Aghion, Philippe, Bloom, Nicholas, Blundell, Richard, Griffith, Rachel, and Howitt, Peter. “Competition and innovation: An inverted-U relationship” in Quarterly Journal of Economics, (Oxford, UK, 120(2) 2005): 701–728.
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Brandolini, Andrea and Ciapanna Emanuela. “L’ambigua relazione tra concorrenza e crescita.” In Concorrenza e crescita in Italia: il lungo periodo, eds Gigliobianco, Alfredo and Toniolo Gianni (Venezia: Marsilio, forthcoming).
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Bank for International Settlements, Innovation in retail payments. (Basle: Committee on Payment and Settlement Systems, May 2012), pp. 1–58.
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Organisation for Economic Co-operation and Development (OECD). The governance of regulators. (Paris: OECD 2014) 13–28 and Recommendation of the Council on Regulatory Policy and Governance. (Paris: OECD, March 2012), pp. 3–19.
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Goodhart, Charles, Llewellyn David and Hartmann Philipp. “Reflections on Financial Regulation.” in Financial Stability Review, (London: Bank of England, n.3 1997), pp. 51–60.
- 12.
After the introduction of the euro, disappointment with the state of cross-border integration for retail payments drove the European Commission to move actively in this field, having less confidence in a purely ‘market-led’ integration process (Ciani, Daniele and Masi, Paola. “Integration of EU Payment Systems: a ‘tolerable straight line’?” in Ianus Special Issue 2014 (Siena: Università di Siena) 7–23).
- 13.
P2P mobile payments enable the exchange of funds in real-time person-to-person using a dedicated mobile app downloaded on the smartphone, functioning on the same basis as messaging services like ‘whatsapp’. The app generates a SEPA credit transfer between two accounts of the payer and the recipient which are associated with their respective telephone numbers.
- 14.
ERPB, Statement, 29 June 2015. https://www.ecb.europa.eu/paym/retpaym/shared/pdf/3rd_erpb_meeting_statement.pdf?6b0bc1dab8413a918607df831ad883df
- 15.
As declared in the PSD2 “recitals” it is essential that payment service providers report major security incidents “in order to ensure that damages to other payment service providers and payment systems, such as a substantial disruption of a payment system, and to users, is kept to a minimum”.
- 16.
European Commission, A Digital Single Market Strategy for Europe, (Bruxelles: COM(2015)192), 6 May 2015.
- 17.
Other major pillars of the framework are Regulation (EU) N°910/2014 on electronic identification and trust services for electronic transactions in the internal market (eIDAS Regulation) adopted on 23 July 2014 and EU General Data Protection Regulation (currently in the final stage of approval).
- 18.
PSD2 “recital”, no. 4.
- 19.
The two main examples are the Payment Committee and the Expert Group on Banking, Payments and Insurance, created after the entry into force in 2009 of the Treaty of Lisbon. The two committees support the delegation of executive powers to the European Commission, provide advice/expertise in the area of payments and assist the Commission in the preparation of Implementing Acts and Delegated Acts of each regulation.
- 20.
The possibility to include regulation of virtual currencies in PSD2 was excluded during the negotiation of the directive PSD2; a new opportunity could arise with the next update of the directive on electronic money.
- 21.
As part of the proposal of the Directive on the prevention on the use of the financial system for the purpose of money laundering and terrorist financing (AMLD4). According to the Committee on Payment and Market Infrastructures (CPMI, Report on Digital Currencies (Basle: CPMI November 2015)), the borderless online nature of digital currencies and the absence of an identifiable “issuer” of the instrument have raised important concerns by law enforcement authorities about the use of these systems and currencies for illegal activity, as well as compliance with AML/CFT obligations that apply to traditional payment methods and intermediation.
- 22.
The reference is to the Interchange Fee Regulation (IFR), which requires the EBA to develop Regulatory Technical Standards (RTS) to ensure separation between card schemes and processing entities, and to the revised Payment Services Directive (PSD2), which confer on the EBA the task of developing six Technical Standards and five sets of Guidelines. In accordance with the procedure laid down in Article 15 of Regulation (EU) No 1093/2010, the technical standards are formally adopted by the EU Commission.
- 23.
https://www.ecb.europa.eu/paym/retpaym/shared/pdf/ERPB_mandate.pdf. On the supply side of the market, there participate four representatives of the banking community, two representatives of payment institutions and one representative of e-money institutions; on the demand side of the market, two representatives of consumers and one representative of each of the following stakeholder categories: (i) retailers with a physical presence, (ii) internet retailers, (iii) businesses/corporates, (iv) small and medium-sized enterprises and (v) national public administrations.
References
Aghion, P., Nicholas, B., Richard, B., Rachel, G., & Peter, H. (2005). Competition and innovation: An inverted-U relationship. Quarterly Journal of Economics, 120(2), 701–728.
Aghion, P., Ufuk, A., & Peter, H. (2015). The Schumpeterian growth paradigm. Annual Review of Economics, 7, 557–575.
Baldwin, R., Scott, C., & Christopher, H. (Eds.) (1998). A reader on regulation. Oxford: Oxford University Press.
Bank of International Settlement. (2012, May). Innovation in retail payments. Basle: Committee on Payment and Settlement Systems.
Blind, K. (2010). The use of the regulatory framework to innovation policy. In S. Ruud, S. Philip, & K. Stefan (Eds.), The theory and practice of innovation policy – An international research handbook. Cheltenham: Edward Elgar.
Brandolini, A., & Emanuela, C. (forthcoming). L’ambigua relazione tra concorrenza e crescita. In A. Gigliobianco & T. Gianni (Eds.), Concorrenza e crescita in Italia: il lungo periodo. Venezia: Marsilio.
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Hancher, L., & Michael, M. (1998). Organising regulatory space. In R. Baldwin, C. Scott, & C. Hood (Eds.), A reader on regulation. Oxford: Oxford University Press.
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Visco, I. (2015, May 7). Remarks, harnessing financial education to spur entrepreneurship and innovation. In 3rd OECD/GFLEC Global Policy Research Symposium to Advance Financial Literacy. Paris: OECD.
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Giambelluca, G., Masi, P. (2016). The Regulatory Machine: An Institutional Approach to Innovative Payments in Europe. In: Gimigliano, G. (eds) Bitcoin and Mobile Payments . Palgrave Studies in Financial Services Technology. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-57512-8_1
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