The key stakeholders in the sector discuss the challenges facing the different financial institutions at a conference organised by Cecabank and CincoDías
The payments market is constantly changing, driven by the ease with which customers are adopting different systems, leading to a proliferation of other services that go beyond the simple act of paying. The Bank for International Settlements (BIS) stated in its latest quarterly report that in countries where automated payment systems have been developed, access to credit has also advanced. It is important to pay quickly and easily, but it is essential to be prepared for the challenges ahead.
With the implementation of instant transfers by the ECB and the digital euro under development, it is imperative to analyse the role of emerging technologies in payments and to reflect on the present and future regulatory framework. This was the message conveyed last Wednesday by the financial industry, banks and payment operators during a conference organised by Cecabank and CincoDías which brought together 200 attendees from more than 85 different organisations, inaugurated by Juan José Gutiérrez, Corporate Director of Technology Services at Cecabank, and Nuño Rodrigo, Editor-in-Chief, Markets, at EL PAÍS.
The first speaker to take the floor was Juan Carlos Martín Guirado, CEO of Sistema de Tarjetas y Medios de Pago (STMP), who welcomed Spain's role as a benchmark in the world of digital payments: 'In three years, card use compared to cash has increased by more than 10% in our country. We have to be prepared for the changes that artificial intelligence will bring and generate muscle through collaboration between companies', Guirado said. Eduardo Prieto, CEO of Visa in Spain, also stressed the need to foster collaboration between companies and took the opportunity to talk about the potential of AI: 'We need to go further with artificial intelligence and look for new uses, such as its value as an identifier of customer consumption patterns. We need collaboration, investment and common sense to keep up with technology'.
Security, under examination
In this changing environment, one of the areas that may suffer most is security. While it is true that companies work to the highest standards, these exhaustive controls can cause friction in the user experience. In this regard, the Chairman of Swift Iberia, Rubén González, believes that it is essential to generate increasingly digitalised economies that generate fewer frictions and faster payments. 'Swift is working on building an API (Application Programming Interface) based platform that enables transaction pre-validation and streamlines the entire payments system', added Gonzalez.
Ángel Nigorra, CEO of Bizum, emphasised that banks should make complex tasks simple for customers: 'We must create added value and thus focus on the right technology for the users. In this respect, we are working on complementing payments by securely identifying users on the internet through their reliable data provided to banks'.
The Vice President for Digital Asset Security at Mastercard, Alberto Lopez, highlighted that fraud under the Payment Security Directive 2 (PSD2) has been reduced by 25% over the past year and by more than 50% since its implementation in 2013, but he believes there is still room for improvement: 'The path leads towards simplifying transactions for the user. It is not only the obligation to authenticate the customer, if we recognise the device, its IP, the purchase behaviour... probably, the person behind the device is the actual customer. This data will serve to put an end to the frictions in the transaction', Lopez explained.
Alejandra Bernabei, CEO of Euro 6000, emphasised the burden that the entry into force of PSD3, scheduled for the end of 2024, will place on the streamlining and adaptation of the payment system to the developments to come: The sector is aware of the need to stop fraud, but we believe that the responsibility that is being attributed to it is not the right way to put a stop to it. We also need the collaboration of the telecommunications companies and the public administration'.
Gonzalo Pérez del Arco, Vice President of Government Affairs at AmEx Europe, called for PSD3, which is at risk of 'excessive regulatory oversight', to return to the original objectives of PSD and PSD2: the harmonisation of the payments market, openness to third markets and increased security of transactions.
Pérez del Arco did welcome the potential unification of criteria when it comes to defining the different types of fraud, although each country will continue to apply the sanctions that best suit it.
Digital currencies and their impact on payments
As was the case last year, central bank digital currencies, or CBDC, were also discussed at the conference. To discuss their creation and their impact on payments, Cecabank invited two of the main drivers of these digital currencies: as a member of the Eurosystem, Ana Fernández, Head of the New Products and Services Unit at the Bank of Spain, and Diana Carrasco, Head of Digital Pound at the Bank of England.
Fernández thanked Cecabank for its collaboration in the development of the Digital Euro and explained that the Eurosystem is prioritising payments between individuals and to public administrations when developing this currency, as well as promoting offline payments between users without the need for internet, which would also provide a level of privacy similar to that of cash.
In turn, Carrasco explained that the Bank of England is currently in the process of receiving ideas regarding the potential uses of its digital currency: 'There are things that we have taken for granted as normal in the experience of receiving payments that can perhaps be improved. For example, every time I buy something I am immediately charged for it, but when I return it, it takes a week for it to show up on my account. Perhaps someone can come up with a solution through the CBDCs'.
Santiago Carbó, Director of Financial Studies at Funcas, was skeptical about CBDCs: 'The digital dollar will not be launched. Perhaps we should be cautious about embarking on something that the Americans are going to pass on'. Carbó noted that they could make sense as a means of reducing financial exclusion, but 'the big test for digital currencies will be in adoption. The key will be to ride on the coat-tails of existing private systems'.
José Luis Encinas, CEO of Iberpay, was clear in this regard: 'The objectives behind Europe's digital euro are the same as those it is pursuing with the introduction of instant transactions: Sovereignty, pan-Europeanism, alternative solutions to card networks and efficiency. If European banking and industry brings instant business-to-business payment to the mainstream, the digital euro will bring very little to the table'.
