Innovation in retail payments: Challenges posed to regulators

Retail payment systems have undergone significant changes in the last few years, taking into account several dimensions and perspectives. Innovative services have been continuously developed, shaping a range of new products offered by the market. The profile of the providers of these services has evolved, from an area of business traditionally confined to banks, to a landscape where new players, such as technology companies, have also started to operate.In this context, a new regulatory framework underpinning this new reality in the European landscape needs to be taken into account. In the European context, the creation and implementation of the Single Euro Payments Area (SEPA)1 is a clear example of the adoption of these changes, one of its goals being to open the market to new stakeholders, thus benefiting the consumer and increasing overall market competition. As a result, payment habits of end users have also been changing, with the younger generations likely to play a key role driving this process in the coming years. In parallel, regulators, most notably the European Commission (EC) and the European System of Central Banks (ESCB), have been paying increasingly more attention to these developments as a whole, of which issues related to the security of retail payments have also been gaining a prominent place in the agenda.