EMPOWERING EUROPE’S DIGITAL ECONOMY
How is regulation impacting payments?
The digital economy is growing at seven times the rate of the rest of the economy. The Digital Agenda for Europe aims to help Europe's citizens and businesses to get the most out of digital technologies. It is the first of seven flagships initiatives under Europe 2020, the EU's strategy to deliver smart sustainable and inclusive growth.
MyBank aims to drive forward the growth of the Digital Agenda for Europe by providing secure identity protection and simple, trustworthy on-line and mobile payment solutions.
In December 2014, the payments industry saw three different regulators taking actions that prepare the way for a transformation in payments over 2015 and 2016.
The European Banking Authority has published its recommendations for the security of internet payments, citing the “continually high levels of fraud”. These recommendations come into effect on 1st August 2015 and cover mandatory rules for payment initiation, e-mandates, wallets and cards when used over the internet and will require that all these channels use two factor authentication
The European Commission published the latest draft on the second Payment Services Directive (PSD2) which defines requirements for Account Servicing PSPs to allow retail customers to initiate payments through third parties. The definition of regulated Payment Service Provider has been expanded to include all parties that perform payment initiation, even if they do not hold the funds.
The European Central Bank called for the industry to provide “Instant payments”, and with a general trend moving in this direction, it is clear that there will be a real-time component to payments in the short to medium term.
How does MyBank support the Digital Economy?
MyBank allows secure payments, electronic mandates and trusted identity verification for on-line and mobile commerce
MyBank requires two factor authentication and allows Banks and Payment Service Providers to comply with internet security requirements and keep data safe
MyBank provides real-time processing between banks, and provides a real-time experience between end-users.
MyBank is inclusive. All citizens in Europe are entitled to have a bank account, and so everybody can use MyBank.
MyBank as a service infrastructure
Regulators want to ensure that payments remain a regulated activity, giving a safe and simple payment options to all society. The emerging regulatory requirements create a demand for a new type of “service infrastructure” between market participants. MyBank fills this role.
MyBank is the service infrastructure that provides:
A secure channel between Payment Initiation Service Providers and Account Servicing Payment Service Providers
A simple customer experience with a logo to show consumers, that they are paying using a secure mechanism.
The need for a light, service infrastructure has been recognised by the EBA in their opinion paper published in December 2014.
MyBank as an API
Increasingly there is talk about the need for API’s that allow banks to provide services to their customer via Apps and other tools. The benefit of having a standardised payment layer built into customised apps by, for example, your supermarket, is a compelling way to balance standardisation, security and simplicity, with innovative and tailor made user experiences.
MyBank is an open API to the account, which allows merchants (via an appropriate payment service provider) to request a credit transfer, to confirm a mandate or to check an IBAN and to get a response. All this is provided via a proper security protocol, the explicit consent of the account holder, and the comfort of secure authentication.
MyBank and instant payments
The European Central Bank has called for instant payment to be made available by the industry in the short to medium term. MyBank already provides real-time information about the payment initiation of an irrevocable credit transfer giving the beneficiary (payee) certainty that funds will arrive the next day. In many cases, this is enough, but there may also be occasions where real-time funds are needed.
MyBank will support instant payments when available, providing both real time information AND real time funds availability between the payer and the payee
- The European Central Bank said in a report in February that on-line fraud was rising in Europe. The report found that fraudulent on-line card payments were responsible for 794 million euros, or about $977.7 million, in losses in 2012, the most recent data available. The fraudulent payments were up 21.2% from the previous year
- The French Central Bank’s “Observatoire de la securite des cartes de paiement“ states that “Distance payments represent the major part of the value of the fraud (64.6%) while they only represent 11% of the value of all the payments.”