There has been a rapid increase in collaboration between fintechs and other technology firms and more traditional payment service providers (PSPs) such as banks, merchant acquirers, and money transmitters. While fintechs and technology firms are often seen as direct competitors of traditional PSPs, in a market driven by innovation, both sides of the market increasingly consider collaboration a mutually beneficial way to play to each participating firm’s strengths. For more traditional PSPs, the technologies that a fintech or technology firm develops can help enhance and streamline, and in some cases modernize, the services provided to customers. For a fintech or technology firm, partnering with a PSP can provide an efficient and effective way to expand into the payment services market, particularly for customers who are more inclined to use traditional PSPs.
Regulators are monitoring these developments with growing interest and with an eye to potential risks to customers and markets as well as their ability to supervise regulated firms and their operations. This post highlights a number of EU/UK regulatory issues that fintechs, technology companies, and PSPs should consider when collaborating with one another.