By

John M. Casanova

15 July 2020

Partnering With Tech and Fintech Firms: Key EU/UK Regulatory Considerations for the Payments Sector

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.

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18 September 2019

New EU Strong Customer Authentication Standards: Implications for Payment Service Providers

Under the revised Payment Services Directive (2015/2366) (PSD2), the European Banking Authority (EBA) and the European Commission were required to develop and adopt regulatory technical standards on strong customer authentication and common and secure open standards of communication. These regulatory technical standards were passed into EU law as Commission Delegated Regulation (EU) 2018/389 (the RTS), which entered into effect on September 14, 2019.

The RTS has direct effect on payment service providers (PSPs), including card issuers and acquirers, in all EU member states. However, certain EU member states, including the UK, have implemented transitional measures for a phased implementation of the rules in the context of card-based payments for e-commerce transactions.

This post discusses the requirements under the RTS for card issuers and acquirers to authenticate payment service users (PSUs), which is referred to as “strong customer authentication” (SCA).

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12 September 2018

“Cryptoassets are here to stay”: EU Authorities to Provide Guidance on Cryptocurrencies and ICOs

On September 4, the Innovation Group of the European Parliament’s Committee on Economic and Monetary Affairs met to discuss a proposal presented by the rapporteur Ashley Fox,1 member of the European Parliament, to include a framework for initial coin offerings (ICOs) within the proposed European Union (EU) financial services regulatory regime for crowdfunding2 (see European Commission (Commission) proposal COM(2018) 113 final).3

As part of the public discussion, the Commission, the European Securities and Markets Authority (ESMA), the European Banking Authority (EBA) and the UK Financial Conduct Authority (FCA) were present to provide their thoughts. (more…)

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06 September 2018

European Data Protection Board Clarifies Application of GDPR to Payment Service Providers

On July 5, 2018, the European Data Protection Board (EDPB)1 replied to a request from a Member of the European Parliament (MEP), Dutch Democrat Sophie in ‘t Veld, for clarification on a number of issues relating to the protection of personal data under the EU General Data Protection Regulation (2016/679) (GDPR) and the revised EU Payment Services Directive (2015/2366) (PSD2). In its response, the EDPB set out its position on how the requirement to obtain explicit consent from payment service users under PSD2 interacts with the GDPR. The EDPB also provided guidance on the use of personal data relating to a payee by an account information service provider or a payment initiation service provider acting for a payer.

This post summarizes the EDPB’s stated positions on these points and explores the implications for firms providing payment services in the European Economic Area (EEA).

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22 August 2018

Fintech Without Borders: Regulators Consult on Global Financial Innovation Network

On August 7, a group of regulators from 11 jurisdictions published a consultation (the Consultation) on the Global Financial Innovation Network (the GFIN), which aims to promote international cooperation on innovation and the use of technology in financial services (FinTech) and in regulatory processes (RegTech).

The group — which includes the U.S. Consumer Financial Protection Bureau, the UK Financial Conduct Authority (the FCA), the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) — is one of the first major collaborative efforts on FinTech and RegTech issues among regulators in developed financial services markets. The Consultation builds on the FCA’s proposal earlier this year to create a “global sandbox” for innovative financial services firms.

This post summarizes the proposed role of the GFIN, the issues on which its founding regulators are consulting and how these may affect financial services firms.

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15 March 2018

Singapore Joins APEC Cross-Border Privacy Rules System and Privacy Recognition for Processors Program

On March 6, 2018, Singapore announced that it has joined the APEC Cross-Border Privacy Rules (CBPR) system as well as the APEC Privacy Recognition for Processors (PRP) program. Singapore is the sixth member of the CBPR system, which includes Canada, Japan, Korea, Mexico and the United States, and is the second member of the PRP program after the US. (more…)

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01 March 2018

Monetary Authority of Singapore Consults on Proposed E-Payments User Protection Guidelines

On Feb. 13, 2018, the Monetary Authority of Singapore (MAS) issued a Consultation Paper on the Proposed E-Payments User Protection Guidelines (Consultation Paper). Under the Consultation Paper, the MAS proposes to issue a set of guidelines (Guidelines) to standardize the protection offered to individuals or micro-enterprises from losses arising from unauthorized or mistaken payment transactions.

The Guidelines are part of MAS’s ongoing review of Singapore’s regulatory framework for payment services.  They are meant to provide general guidance and are not intended to be comprehensive or to replace or override any legislation.

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11 September 2017

FinTech and Regulatory Sandboxes in the UK, Hong Kong and Singapore

As the FinTech industry continues to expand, regulators around the globe are starting to react. The past 18 months have seen the emergence of a new trend in financial services regulation, the “sandbox.”

Since the launch of the UK’s regulatory sandbox in May 2016, regulators across the globe have adopted similar frameworks. There are now regulatory sandboxes in Abu Dhabi, Australia, Canada, Hong Kong, Lithuania, Singapore, Switzerland and Thailand, to name a few, and the European Union recently set out proposals for a possible EU-wide regulatory sandbox. (more…)

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30 May 2017

Money Laundering Regulations 2017: Preparing for the UK’s New Customer Due Diligence Regime

The UK is expected to introduce its updated customer due diligence regime with effect from June 26 or shortly thereafter. The changes are wide-ranging and will affect virtually all financial services firms doing business in the UK.

The Government has published a near-final draft of the new legislation. To the extent they’ve not already started, affected firms should be planning for the changes that will be required to their existing policies, procedures and systems.

In this post, we highlight the key issues for financial services firms, and propose a series of action points that they may wish to consider over the next month as they move to implement the new requirements. (more…)

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