The Ever-Changing Payments Ecosystem – Between Risks and Opportunities
Euromonitor recently spoke at the 2019 European Payment Summit in the Hague, Netherlands. With panels and keynote speakers from Visa, Mastercard, Lloyds Banking Group and Swift among many others, this insightful event provided attendees with a wide-ranging knowledge on the major issues and trends affecting the global payment industry. We have compiled our key takeaways from EPS 2019.
The proliferation of mobile phones and continuous digital disruption have revolutionised the way we consume, purchase and operate payments. Non-bank players have now entered the game and innovative payment techniques are being developed, as new technologies enable us to bypass traditional models. The ever-changing digital and payment ecosystem landscape have paved the way to instant, cross-border payment and method enhancements, but this does not come without significant threats and security risks. The different EPS panels addressed major issues and dynamic market changes in this space, stressing the need for new regulations to optimise protection of consumers and businesses.
Fintech start-up companies have started to facilitate cross-border payments. However, to create a seamless experience, strong collaboration between banks, technology players and fintech is vital, as such more FinTech firms and third-party service providers should integrate their functionality into banks’ own platforms to enhance the cross-border payments experience.
Blockchain, AI and IoT were identified as technologies holding the potential to enable smarter and more secure payments. Innovative payment apps and digital wallets have the ability to provide a seamless experience, however, to reach full adoption in the forecast period, integrating an “identity” element is crucial. On the other hand, cryptocurrency has not quite taken off, due to high fluctuation and low merchant acceptance.
Regulation in this digitalisation and open-banking context is of fundamental importance and one cannot avoid the Second Payment Services Directive (PSD2). The EU and the UK have already implemented comprehensive open banking legislation and PSD2 requires EU and (pre-Brexit) UK banks to grant licensed third-party payment service providers access to bank infrastructure and account data. PSD2 also specifies regulatory standards for data sharing through APIs. Although the effect of the regulation is becoming increasingly significant, the gap between the regulatory and technological progress is still important today.
On a European but also on a global level, there is still a real need for cash, which grants privacy, control and is a low-cost option. One question remains – will the future of payment be truly cashless or perhaps simply lower cash levels?
To see the full presentation please download it here.