Finance Watch responded to the European Commission consultation related to instant payments and the Single European Payment Area (SEPA) Instant Credit Transfer Scheme (SCT Inst).
The consultation purpose was to inform the Commission on the remaining barriers impeding access and use of instant credit transfers and the potential opportunities to enable both EU citizens and companies to participate in a fully integrated, safe, convenient and cost-efficient instant payment framework within and across EU borders. The consultation occurred at a time when only 64.6% of payment service providers (PSPs) had joined the scheme.
Barriers
Costs, the risk of fraud and any informational obscurities for users are fully important potential barriers to user uptake in the use of instant payment services. The speed of service and the availability of service outside of business hours are also viewed as rather important to expanding the uptake of service. For instant payment services to be accessible to all and widely used, it is important that costs to users are at least comparable to regular credit transfer services, though ideally use of service would be free to private users to extend access. Additionally, any fees incurred through the transfer must be transparent prior to the execution of a transaction and substantial anti-fraud mechanisms put into place.
In addition to cost and security, convenience of the service is anticipated to be an influential factor in the uptake of use. The speed of technology should therefore be equivalent to existing payment methods and applications consumer tested for ease of use by a broad range of individuals. Individuals vulnerable to exclusion from the use of digital technologies must be considered and accommodated for.
Opportunities
Previously developed instant payment transfer services exist to provide examples of good practices in regard to consumer protection. User-driven password protection, pre-transaction payee identification tools and Request to Pay options are just a few examples of functioning anti-fraud mechanisms.
The development of the SCT Inst scheme provides an opportunity for the Commission to harmonize and update consumer protection regulations across all payment schemes. These protections should include as a minimum the right to request a refund in a timely manner for a reasonable amount of time after the transaction, contest a payment and be made aware of all fees involved prior to completion of the transaction.
Risks
As alluded to above, security is a major concern for users of instant payment services. The digital logging of transactions and possibility of cyber-attacks are legitimate threats to user privacy and security. Additionally, it would be unethical and detrimental to consumers if their data were monetized in any way. A Least Privilege Model information access for data processors, opt-in disclaimers informing customers on data usage and the most secure Cloud, Data and Application measures should be utilized.
Instant payment services could result in an exacerbation of the risk of financial and social exclusion of vulnerable individuals and tourists to the EU. This list of vulnerable individuals includes older people, those with lower education, living in rural locations, with disabilities, as well as individuals who lack digital technology or skills, bank account access, internet service or those who prefer to use alternative payment methods. Therefore, it is of great importance that the development of the instant payment services network be viewed and promoted as an alternative payment option and that other methods of payment, particularly cash, remain supported and accepted by merchants.
In order to be a benefit rather than a detriment to financial inclusion, the development of instant payment services must also be complemented with an expansion in the affordability and access to personally tailored assistive technologies for those with physical disabilities or impairments.
More about the consultation
The consultation was open to a broad range of stakeholders, including but not limited to payment service users, providers, technical support services, public authorities and national regulators. Questions specific to service providers and merchants were left unanswered unless specifically relevant to Finance Watch’s area of expertise.
