August 24, 2016
White Paper: European Regulation Presents Opportunities for Nimble Companies
May 5, 2016
While the implementation of new regulation usually is not welcomed by the regulated industry, the two major regulatory initiatives in Europe directly affecting the card-not-present payments space may present opportunities as well as hurdles, according to a new white paper from payments provider PAY.ON and consultancy First Annapolis. The revision of the Payment Services Directive (PSD2) expands and codifies requirements for consumer protection, payment security and third-party access to accounts. The Regulation on Interchange Fees for Card-Based Payment Transactions (MIF) caps interchange fees but also sets forth requirements on acquirer pricing transparency and the separation of card schemes from processing.
Both sets of regulations are sweeping and affect multiple stakeholders in the payments value chain. So, each will affect different constituencies differently. But, according the report, companies that can adapt quickly to the new environment should have opportunities to flourish.
“PSPs and the merchants that they serve are well positioned to benefit from an expanded set of connectivity and payments processing options [as a result of the PSD2],” the authors wrote. “Instant bank payments, carrying little cost, will become a strong alternative to cards, providing more choice for both merchants and consumers. PSD2 will also stimulate a new round of innovative market entrants who will satisfy the demand for connectivity services, smart authentication, identity verification, and information services.”
From the perspective of the MIF, the paper nodded to the obvious benefit the caps will confer on large merchants and, to a lesser extent, acquirers. But, it’s the “unbundling section of the interchange regulation, and the separation of schemes and processing, that will escalate competition for switching services and leave Visa and MasterCard searching for ways to replace lost assessment fee revenue.”
This year’s CNP Expo in will focus on the legislative and regulatory environments in the U.S. and Europe in a special panel discussion. Take a look at our entire agenda and register for the CNP Expo today.