VIEW FROM LLOYDS BANK CARDNET - WEBINAR - Changing Payment Regulations 10am, Thursday 11 June, 2015
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VIEW FROM LLOYDS BANK
CARDNET – WEBINAR
Changing Payment Regulations
10am, Thursday 11 June, 2015
VIEW FROM LLOYDS BANK CARDNET
Changing Payments Regulations
DEVELOPING
TALENT
INNOVATING
RAPIDLY
I
FACILITATED BY INTRODUCTION BY PRESENTATION BY
Juliet Mann Aidene Walsh Steven Bisoffi
Journalist and Presenter Managing
Director,
Senior
Manager,
Card
Schemes
and
RegulaCon,
Lloyds
Bank
Cardnet Lloyds
Bank
Cardnet
CHANGING
CAPITAL…
CHANGING
CAPITAL…
2
CONTEXT
THE PAYMENTS LANDSCAPE
3
PAYMENT SERVICES IN CONTEXT
2nd
Cash is now second after cashless
UK
The largest card payments
payments as the preferred method market in the EU
I
255% 12 billion
Card transactions last year in the UK,
Growth on contactless in the last 12 months amounting to £566 billion in sales
4
CHANGES IN THE MARKET
How UK rejec
ts Europe
p ean B a nk in g Authority has to pre
pare
an
guideline anti-fraud
Euro card
setting PSD2 s ecur for the n s
'role to play' in ity ew p
s expert
requ a
standards, say irem yment
ents
EU revamp EU agrees rules to spur innovation
of payment
services dra
ws nearer
in cross-border payments
PSR con
fir
and time ms terms of refe
table for r
PSD2 - T review i its first m ence
NFRN nto indir a
ha he
Turned U Payments World ect acces rket
for fair ils new EU pside-Dow s
er card
fees
regula n?
tio ns
5
CHANGES IN THE MARKET
How UK rejec
ority h as t ts Europe
nk in g A u th o p r an anti-fr
European Ba in g P S D 2 card se
epare
f o g u id elines
aud
in se tt curit r t
'role to play' y
he ne
standards, sayHARMONISED PAYMENTS ENVIRONMENT
s e x pe rt
requir w payment
em en
GREATER COMPETITION ts
EU revamp EU agrees rules to spur innovation
services dra
of payment
ws nearer
IMPROVED INNOVATION
in cross-border payments
PSR con
fir
IMPROVED SERVICES FOR BUSINESSES AND CONSUMERS and time ms terms of refe
table for r
PSD2 - T review i its first m ence
NFRN
for
hails n
ew OPEN ACCESS T u r TO
n ALL
ed U
he PaUSERS
yments W
o rld
nto indir
ect acces rket
s
a
fairer c
ard fee
EU reg pside-Dow
n?
s
ulation
s
6
MARKET CONTEXT - THE FOUR PARTY MODEL
Visa or
CARD ISSUER Mastercard ACQUIRER
Bank Lloyds Bank Cardnet
I
Consumer Merchant
The four-party model - Merchants obtain card processing services from Acquirers,
who route transactions via Schemes to Issuers, who debit Consumers’ accounts.
7CHANGING PAYMENTS REGULATION: AGENDA
GOVERNANCE
PSR: A new governing body for payment systems and services in the UK
EVOLUTION
I
New interchange regulation and what it means to our clients
REVOLUTION
A new directive called PSD2 – what has happened so far and what to watch for in the near future
8GOVERNANCE
ESTABLISHMENT OF PSR
9GOVERNANCE:
PAYMENT SYSTEMS REGULATOR (PSR)
New Payment Systems Regulator (PSR) in the UK to govern payment systems and services.
Effective April 1st 2015
Aim Make payment systems work well for those who use them
Vision Have payment systems that are accessible, reliable, secure and value for money
Statutory objectives
• I
systems and payment services in the interests of service users
To promote effective competition in the markets for payment
• To promote the development of innovation in payment systems and payment services in the interests of service users
• To ensure payment systems are operated and developed in a way that considers and promotes the interests of service users
Six interbank payment systems and two card payment systems have been designated by HM Treasury for regulation
Bacs, Cheque and Credit, CHAPS, Faster Payments Service, LINK, Northern Ireland Cheque Clearing, MasterCard, Visa Europe.
All ‘participants’ in the designated payment systems will fall under the PSR’s remit. These include the operators managing those
systems, the payment service providers using those systems, and the infrastructure providers for those payment systems.
10GOVERNANCE:
PSR’S POLICY WORK PROGRAMME
Strategy setting projects
• Payments Strategy Forum
• World Class Payments
• Ring-fencing
• Current Account Switch Service (CASS) and Account Number Portability
• Cheque imaging project
I
competition)
Market projects (which are aimed at improving markets and promoting
• Implementation of our access and governance directions and policies
• Market review into the supply of indirect access to payment systems
• Market review into the ownership and competition of payments infrastructure
• Card payment systems programme of work
Pipeline projects (where the PSR will carry out an initial review of the issues and decide whether to initiate more work)
• ATM interchange fees
• Consumer Redress
11AN
EVOLUTION
INTERCHANGE FEES
12EVOLUTION:
OBJECTIVES OF INTERCHANGE FEES REGULATION
Objectives of the European Regulators
• To align cost of card acceptance to cost of cash
£6.5bn
• To help create an EU-wide payments market
• To help users make more informed choices about payment instruments
I
Relates to interchange fees for Card-Based Payment Transactions
Annual estimated cost of these fees
Regulation agreed and to be implemented from 8th December 2015
to Eurozone retailers
13EVOLUTION:
KEY CHANGES TO INTERCHANGE FEES REGULATION
Q3 16
Separation of scheme and processing
Q4 15
Co-badging & choice of application
0.2% cap on debit cards
Q2 15
Unblending
0.3% cap on credit cards
Interchange Regulation Honour All Cards
agreed LicensingI
Q3 15
Q1 16 Q2 16
Prohibition of circumvention
TIMELINE
14A
REVOLUTION
PSD2
15REVOLUTION:
HISTORY OF PSD2
Key Facts
• It will replace the existing PSD with a wider scope
• Aims to create an integrated single market for electronic 2017 onwards – expected date for
payments implementation at national level
• It will widen the regulations at a Europe-wide level to
accommodate the new payments landscape
I
- PSD2 content to be
2015
agreed by July
2013 – PSD2 proposals outlined by
the European Commission
2009
- PSD
TIMELINE
16REVOLUTION:
AREAS AFFECTED BY PSD2
• Surcharging
• Customer authentication (Security of Internet Payments)
• Transparency Payment Services Directive, PSD2
• Currency Conversion
• Access to payment accounts
• Definition of Acquiring
• Liability I
• Earmarking - (can only settle at a pre-agreed transaction value,
impacting on pre-authorisations and estimated value transactions)
17SURCHARGING
Card Scheme Rules
• Visa: Only allows surcharging on credit
• MasterCard: Open to surcharging on all cards
The Competition & Markets Authority (Formerly Office of Fair Trading)
• Power surpasses those of the card schemes
• Consumer Rights Regulations 2012 allowed surcharging for the cost of acceptance
I
Interchange Regulation/Payment Services Directive 2
• Only allow surcharging on payments outside the regulation
• Consumer cards (debit & credit) cannot be surcharged
• Commercial cards (outside the scope of the regulation) can be surcharged
18FASTER PAYMENTS
Lloyds Bank Cardnet Faster Payments
• Able to support speedier settlement, including Faster Payments
• Came into effect in February 2015
I
19SUMMARY
• Multiple changes impacting payments
• Awareness and planning is key
• A new world, a new challenge
I
20VIEW FROM LLOYDS BANK CARDNET
Changing Payments Regulations
DEVELOPING
TALENT
INNOVATING
RAPIDLY
Q&A
I
via the
Submit your questions
webinar player site now
FACILITATED BY PRESENTATION BY
Juliet Mann Steven Bisoffi
Journalist and Presenter Senior
Manager,
Card
Schemes
and
RegulaCon,
Lloyds
Bank
Cardnet
CHANGING
CAPITAL…
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