The Smart Payment Association (SPA) said that Europe’s new draft Payment Service Directive (PSD 2) represents a significant restructuring of financial regulation applicable to retail payments. Its chief goals are to increase competition in the retail payments market and to give European citizens the confidence of a reinforced legal system that works for, and protects, them.
The Munich, Germany based non-profit association added that this confidence will contribute to the wide adoption of innovative payment instruments – an objective for SPA members expressed in its position on the green paper ‘Towards an integrated European market for card, internet and mobile payments’ in 2012.
SPA therefore welcomes the legal support the Directive offers to electronic payments initiated with personal devices and adapted to open networks.
While technology neutral, SPA believes there remains a strong need to support the European industry in its effort to promote the smart card. It is smart card technology that enables payments interoperability, alongside the highest levels of standards-based security and payer convenience. In addition, because smart cards are marketed in different hardware form factors adapted to different devices, they allow traditional bank card payments to be securely and conveniently extended to other channels – including mobile and internet open networks.
Furthermore, smart card-based technology offers the natural security and data protection advantages of ‘user possession’ when compared to cloud-based alternatives. The centralised nature of cloud systems creates a very real target for hackers – their servers being vulnerable to large scale attack. The user-owned and decentralised smart card, in contrast, does not.
It is therefore accurate to view smart card technology a true driver for safe innovation – a central objective of the new regulatory framework.
SPA believes the new release of the PSD will have a major impact on the retail financial services industry for years to come: not least because the Directive extends regulatory framework to cover new legal entities seeking to provide payment services. It shares the view that trust in the single euro payments area (SEPA) retail payment systems can only be achieved if all the players participating in the payment value chain are properly regulated – and that no gaps are apparent.
SPA added that it also maintains the importance of strengthening standardisation efforts – outlining its own investment and commitment in this area through work within the EPC- Cards Stakeholders Group (CSG), representing the vendors sector. It recommends that the CSG continues to play a central role in the development of the SEPA for cards standards.
Finally, SPA warned of potential conflict in the provision and requirement of future laws relating to retail payment systems, such as data protection and the fight against financial crime. Here, SPA considers that additional insight and investigation is required in order to better understand how technology may offer a harmonised and standardised technical solution.
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