Payments Law Update | Autumn 2018
Published on 7th Nov 2018
Welcome to the latest edition of Osborne Clarke’s Payments Law Update.
If you would like to discuss any of the content, or have a subject that you would like us to cover in the next edition, please let us know.
Q&A | Market review into the supply of card-acquiring services
Following our recent article ‘Card Acquirers under the spotlight: PSR turns the microscope on Scheme Fees and Interchange Fees’, this Q&A addresses the broader questions arising from the PSR’s proposed market review into the supply of card-acquiring services.
What’s next for Euro cross-border payments?
Under current rules, there is no difference for euro area consumers or businesses whether they carry out euro transactions within their own country or with another country in the eurozone.
In March 2018, the European Commission presented a proposal to extend this benefit to non-eurozone countries. This would allow all consumers and businesses in the EU to fully reap the benefits of the Single Market when they send money, withdraw cash or pay for something abroad.
So where has this proposal got to, and what would it mean for PSPs, particularly in light of the UK’s withdrawal from the European Union on 29 March 2019?
New FCA proposals on the approach to RTS and EBA Guidelines under PSD2
As we await the final rules and guidance from the FCA on the SCA-RTS, following its consultation through CP18/25, we take the opportunity to summarise some of the FCA’s key proposed changes on the final pieces of the PSD2 puzzle, namely: fraud reporting; notification and reporting changes; the exemption from contingency measures as PSPs gear up to designing, developing and testing their dedicated TPP interfaces; and strong customer authentication and applicable exemptions.
Proposed Perimeter Guidance changes under PSD2
In amongst the FCA's consultation paper (CP18/25) on the SCA-RTS, there are also a trio of small but important changes to the FCA's perimeter guidance relating to AISPs and PISPs working with third parties, e-commerce platforms and closed loop gift cards. The FCA has taken the opportunity to make clear its views on these three areas of notoriously tricky perimeter issues.
New draft code to tackle APP fraud, but questions remain unanswered
The Authorised Push Payments Scams Steering Group was created by the Payment Systems Regulator earlier in 2018 to look at the rising problem of customers being tricked into sending money to fraudsters – known as authorised push payment (APP) fraud. The Steering Group was tasked with designing a reimbursement model, and a funding model for that reimbursement.
On 1 October 2018, the Steering Group published a consultation paper and draft industry voluntary code. Ultimately, the success of the Code will depend upon industry uptake, which requires some outstanding issues to be addressed in a way that ensures that it works on a practical level and provides customers and PSPs with the necessary incentives to comply.
Another hurdle for fraudsters | New ‘Confirmation of Payee’ rules and standards for PSPs
On 18 October 2018, Pay.UK announced the release of new standards and rules for the confirmation of payee service, alongside a set of guidelines that offer insights into how PSPs should meet users’ needs, in terms of language and customer experience. These form part of a package of industry measures aimed at tackling the rising problem of APP fraud, alongside the APP Steering Group's voluntary Code.
The PSR has indicated that the guidance will continue to develop organically in line with users’ experience as CoP is introduced to the market. This will help ensure that CoP evolves in line with its objectives and strikes the right balance between security and providing the consumer with as frictionless a payment journey as possible.
Levelling the playing field | New proposals to extend the FCA’s general standards and communication rules to EMIs and PIs
On 1 August 2018, the FCA published proposals to align the regulatory requirements around communication that are applicable to FSMA-authorised firms (i.e. banks) with those that apply to payment institutions and e-money issuers.
According to the FCA’s Consultation Paper, extending the application of certain conduct and communication standards across the payment services and e money sectors will: (1) clarify expectations in terms of firms’ behaviour and treatment of customers; (2) help the FCA address harm more effectively and directly; and (3) improve confidence and trust in the payment services and e-money markets.