The European retail payments strategy – a small reminder of what’s to come

Most of us should have heard it: those interested in payments were not able to miss the European retail payments strategy (RPS) that the EU Commission published on 24/09/2020 and that details the framework conditions for the future orientation of payments in Europe. The paper is worth a read and contains specific recommendations for action and ideas. Of course, a strategy is not yet a law. It is not yet a matter of concrete regulations or implementation dates. However, one can predict which changes will become relevant for payments sooner or later. Specifically, it is about the next 2-4 years.
The retail payments strategy comprises four pillars with 17 measures:

The first pillar deals with digital and instant payment procedures. Here, one aspect is of particular importance. If the circulation of instant payments (SCT Inst) is not sufficient across Europe by the end of 2021 (which is the current trend), there will be a legal obligation to provide and accept SCT Inst. However, the EU Commission would like to see an "SCT Inst return option" to give consumers similar rights to a credit card payment (chargeback) when they make a transfer. There will also be a European standard for the use and acceptance of payments by means of QR code, and a digital identity will be promoted. The acceptance of cashless payments is also to be expanded.

The second pillar is about an innovative and competitive payment market. Here, an important aspect that needs to be mentioned is the PSD2. Two years after the last amendments came into force, the hoped-for success is not yet fully visible. Various interpretations form a multitude of obstacles that also exist within individual countries. A review of the current implementation is planned by the end of 2021. The results and experiences are to be incorporated into a proposal for an open banking framework by mid-2022. Whether this will then be called PSD3 or given another name will not be decisive.

The third pillar is about efficient and interoperable payment systems. Here, the focus is on the technical infrastructure that should be available across Europe. Cross-border European payments, including from member states with different national currencies, should be possible in real time.

The fourth pillar comprises efficient international payments. Efficient payments include the traceability of payments that is already being implemented with SWIFT gpi. The use of standardised and modern formats also contributes to this and is already being promoted by the worldwide transition to ISO 20022. Payments to third countries should generally be made faster and more comfortable.

It remains exciting to see which concrete measures will follow. We all know that regulation can never keep up with market developments. When the PSD2 was adopted, for example, hardly anyone had any idea of the diversity that biometrics, voice assistants and paying items (rings, watches, bracelets) would already occupy in everyday life. The legislator can only control the market by means of framework conditions. The retail payments strategy does present some interesting framework conditions, more on its content will follow soon.

The original EU retail payments strategy can be found here:
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52020DC0592

Author: Swaantje Anneke Völkel