The European Commission will unveil later this year a strategy to integrate the retail payment sector in Europe and reduce dependency on third-country credit card firms. Mastercard, one of those players, is supportive of the EU strategy, its senior executive, Jason Lane, told EURACTIV.
In an interview conducted before German fintech Wirecard filed for insolvency (25 June), Lane also commented that this case “will not be detrimental to the European fintech”.
Jason Lane is group executive of Market Development for Europe at Mastercard.
Contactless payment systems, like credit cards, have been one of the booming sectors during the coronavirus crisis. What is your assessment of the situation at this stage?
What we saw is the result of years of vision, execution and implementation. We have definitely seen a growth of contactless payment in the retail sector, and will continue as shops open across Europe. In addition, we increased the limits for payments without pin requirement, to 45 pounds in the UK (and €50 in Belgium). This growth is a good proof of a technology and innovation that is well understood by customers, including the security and safety it brings, something that we will continue to see in the future.
How do you see this future for the retail payment sector?
The shift to contactless payments is happening quicker, but cash will remain relevant across Europe. When it comes to innovation, apps and digital wallets will offer new benefits to customers, and also financial institutions. This will continue to evolve and customers will demand more. In Europe, consumers have additionally benefited from the new Payment Service Directive (PSDII) that provides the safety and security that is fundamental to them.
Will digital wallets, like those we carry on our smartphones, represent a new growth engine for credit card companies?
Smartphones can hold an avatar that turns them into a token similar to what a piece of plastic is for contactless transaction. We see that these digital wallets will bring incremental growth to our business. Again, safety and security is an issue that customers will look at. From our side, ensuring that safety and security is important, and we will deliver through artificial intelligence and cybersecurity.
The European Commission will present later this year an EU strategy to integrate the retail payment sector. What would you like to see in it?
EU institutions have been very forthcoming on this front. We want the payment market for customers to grow in Europe. We are very comfortable with what the Commission is looking for. The retail payment sector will be a very competitive market in Europe.
The EU institutions are trying to open up the market for more than financial institutions, as the PSDII already did. In addition, there is the issue of strengthening the European sovereignty. It is one of the primary objectives of the Directorate- General for financial services (DG FISMA) and the Commission as a whole. From our side, we are a key partner in Europe, and we want to help European companies to achieve this sovereignty.
One of the ideas is to put forward a European debit card in order to reduce the dependency on international players such as Mastercard. What do you think of such a proposal?
We are great proponents of innovation and competition. This idea is long well established in Europe, if we look at the Single Euro Payments Area (SEPA). We are in discussions with the Commission to understand and help them to establish this European scheme. We appreciate that Europe is looking for competition, this is not detrimental to our market. The sector will continue to grow and develop. Mastercard still will have a role to play in delivering it, interacting with the new European payment scheme.
Speaking of PSDII, the Commission does not want to postpone further the implementation of the Strong Customer Authentication for online payments planned for December, as retail associations requested. Were you supportive of a new delay?
We were ready for the first milestone in March this year. We implemented the guidelines issued by the European Banking Authority on this. But the payment ecosystem is very diverse and other partners also need to be ready.
The COVID-19 has been a dent. Businesses had to deal with this crisis, and at the same time pay for the adoption of the new SCA system. And it’s been a lot to digest for some players. So there was a root cause to postpone its adoption. But the important thing now is that there’s clarity, the new requirements will be in place by the end of the year and customers understand what it is about.
What do you think of the Wirecard scandal? Are there many hidden false idols or bubbles in the fintech ecosystem in Europe or was this case an exception?
This is a developing case, so it is hard to say if it is an exception. But fintech firms in Europe are doing fantastic things. There are players such as Adyen and N26. So the Wirecard case will not be detrimental to the European Fintech. The sector will continue to evolve and thrive.
[Edited by Zoran Radosavljevic]