Bank of Lithuania has recently called for attention in terms of risk management and cross-border cooperation among regulators in order to tackle emerging risks in the cyberspace. The country seeks to become a regional FinTech hub. For that to happen, authorities have heightened their attention to the cyber resilience of FinTech firms in order to ensure a supportive regulatory environment, while at the same time guaranteeing adequate security standards.
UK-based institutional and corporate Fx service provider, Alpha FX has announced the appointment of HiFX founder Matt Knowles to its Board as an Independent Non-Executive Director with immediate effect.
Matt Knowles is a seasoned industry veteran having close to two decades of experience at HiFX, the company he founded and provides international payment services to both retail and corporate clients. He led the company through an MBO and number of acquisitions until in 2014 he sold the company to the Nasdaq listed Euronet Inc. Post sale he continues as in the position of CEO until February 2017, overseeing the digital initiative of the company and leading the acquisition of integration of XE.com in July 2015. Under his leadership, the company witnessed phenomenal growth with over 400 employees across six countries.
As an Independent Non-Executive Director, Knowles will become a member of the Company’s Remuneration Committee and Audit Committee.
Morgan Tillbrook, Chief Executive Officer of Alpha FX said:
“Matt is a great addition to our Board and I’m looking forward to working with him. He not only understands our industry and its dynamics, but also has valuable experience leading a rapidly growing company domestically and internationally.”
Paysafe Makes New Appointment for CFO
Global payments solution provider, Paysafe has hired Peter Smith as its new Chief Financial Officer (CFO). Peter Smith will be based in US office at Houston and report directly to President and CEO, Joel Leonoff. Peter will take over the role of CFO from Brian McArthur-Muscrof.
As CFO, Peter Smith will responsible for functions that include treasury, tax, financial planning and analysis, audit, controllership and procurement. Peter has an extensive knowledge and experience of the global payments industry that spans over 20 years. He joins Paysafe from Evertech Inc. and has led the company into several strategic acquisitions which led to the strong growth of the company.
Joel Leonoff, President and CEO of Paysafe Group, commented:
Peter’s extensive and highly relevant financial leadership experience, combined with his deep-rooted understanding of the payments technology industry, and proven track record of scaling high-growth companies, make him an excellent fit for the CFO role at Paysafe. He is a huge asset to the team as we enter our next phase of growth and continue to redefine global payments for our diverse range of clients across the globe.
Peter Smith, CFO of Paysafe Group, also added:
I’m excited to join such a dynamic business that is leading positive change within the payments technology sector. I look forward to applying my knowledge and experience to the Paysafe finance function and business at large. Paysafe has significant growth opportunities and I look forward to working with Joel and the team to capture these and create value for all of Paysafe’s customers and stakeholders.
Speech by Yves Mersch, Member of the Executive Board of the ECB, at the European Institute of Financial Regulation (EIFR), Paris, 3 September 2018
Europe’s financial industry still faces a number of challenges. Its continued weak performance, with low price-to-book ratios and meagre profitability, is ample proof of that.
Some of those challenges – such as high levels of legacy assets, the need for deleveraging and the burden of stricter regulation – are a result of the financial crisis. But even before the financial crisis, the industry was facing pressure on various fronts, and those challenges are still there. In particular, fundamental technological change continues to call established business models into question.
Today, I will focus on disruptive challenges that are arising in a particular area of business: digital technology. Such technology is becoming ever more important in banking and is opening the door to competition from non-banks in core areas such as payments. Cascades of complementary innovations have already fundamentally altered the payment landscape, and European banks need to act now if they want to avoid losing out to bigger international players.
The euro area has been very successful in providing a top-tier foundation for innovative payment services. However, this foundation has not yet been fully utilised by European players to provide true state‑of-the-art pan-European services. There is currently a window of opportunity for Europe’s financial industry to make use of this top-tier infrastructure and the changing patterns in retail payments. But in order to seize these opportunities, it needs to avoid the mistakes of the past.
Laying the foundations
The euro was introduced in 1999, with physical banknotes and coins following in 2002. However, that success was not matched by integration in the market for electronic retail payments in euro, with national solutions remaining disparate and lacking interoperability. While the establishment of TARGET, the real-time gross settlement system for the euro, resulted in a fully integrated money market and wholesale payment market, cross-border retail payments in euro remained expensive, slow and inefficient, with no standardised way of making electronic payments across the euro area. For far too long, huge economies of scale remained unexploited.
The ECB played a key role in laying the foundations for such standardised cross-border payments through the establishment of the Single Euro Payments Area (SEPA) – an endeavour that required substantial efforts by all stakeholders. That initiative consisted of two key stages.
First of all, a harmonised legal framework was needed for payment services in the EU. Thus, the Payment Services Directive (PSD) was adopted in 2007 and entered into force in 2009.
Second, it was important to ensure that consumers and businesses in the EU could send payments to each other quickly and easily across borders, with no differences between domestic and non-domestic payments. The SEPA credit transfer and SEPA direct debit schemes replaced all domestic payment schemes in the euro area, using fully interoperable global standards.
Catering for innovation
In the current age of rapid technological progress, it is vital to ensure that innovation delivered by banks and non-banks reaches all European citizens. Innovative bespoke national solutions using national – or, more frequently, non-European – technology could threaten the integration achieved by the various SEPA schemes.
Innovation may start at domestic level, but it should not face barriers preventing pan-European expansion. Thus, national solutions should provide for pan-European reach in their initial design. As these solutions tend to be provided by non-banks or disseminated by local banks on behalf of non-European entities, third-party providers need regulated access to payment accounts. The revised Payment Services Directive (PSD2), which is currently in the process of being implemented, will provide secure and interoperable payment account access and will allow innovative new payment services to be provided in the EU. What we don’t need is integration with non-European countries that runs counter to European standards.
While legislation is indispensable for an integrated market and to promote innovation, it is not the only precondition. Cooperation between stakeholders is also essential in order to ensure smooth and harmonised processes throughout the EU.
The ECB has brought the market together, initially via the SEPA Council and then via the Euro Retail Payments Board (ERPB). The ERPB was instrumental in the development of the SEPA instant credit transfer scheme, which is now live, with over 1,000 providers participating. Those instant payments have been achieved without legislation, with the ECB instead facilitating dialogue and consensus between market actors.
Moreover, that scheme will soon be complemented by the ECB’s new Target Instant Payment Settlement service, which is set to go live this November, providing a real-time, high-end platform for payment service innovation.
The challenge for Europe
Progress towards an integrated market for payments has not been without its problems. Europe still does not have an integrated, standardised card payment network, with the vision of being able to use any card at any payment terminal in Europe having yet to be realised.
Europe’s largest card payment networks are still not interoperable. For example, Germany’s Girocard and France’s Cartes Bancaires account for a substantial number of card payments in the euro area’s two largest economies. However, owing to significant technical differences, a supposed lack of a business case and an absence of political will, these two networks remain separate – as do most other national card schemes. As a consequence, it is more convenient to use non-European cards when travelling across Europe.
Although some standardisation work has been carried out via the European Cards Stakeholders Group, Europe still does not have its own Europe-wide card scheme, so we remain fully reliant on non-European schemes when making cross-border card payments. Although they provide a valued service, those schemes raise certain questions from a governance perspective. European banks have relinquished their influence in this area, possibly because of short-term profit considerations.
Indeed, large non-European companies now play a significant role in the provision of payment services in Europe, while European banks are focused solely on serving their national markets.
Let’s face it: the foundations laid by European institutions have not been leveraged by European providers in order to offer pan‑European services. Instead, those foundations are often exploited by multinationals from outside Europe offering innovative, consumer-friendly solutions. Indeed, European banks seem to have surrendered much of the pan‑European payment business.
PayPal now dominates the market for online payments in Europe, using the pan-European SEPA credit transfer and SEPA direct debit schemes to provide harmonised services. Meanwhile, Google, Apple, Facebook and Amazon – often referred to collectively as “GAFA” – are also offering significant payment services with pan-European reach, some of which involve joint ventures with individual banks at national level. At the same time, Chinese giants like Alibaba and Tencent are advancing. While these companies are to be admired for their ability to expand and provide innovative services that consumers want, I would ask why there are no European companies competing in that arena.
There is a risk that our dependence on foreign providers will increase further as regards the development of innovative payment services, since banks are resisting the objectives of PSD2 on this front. They have been defensive when it comes to granting technical access to new and innovative payment service providers, which will limit European fintech companies’ ability to provide competitive solutions. Indeed, I fear that global giants from outside Europe will use their network power to increase their presence further.
In other sectors, European companies have succeeded in achieving global reach. In the car industry, for example, European vehicles set the standard when it comes to quality and reliability. There is no reason why this success cannot be replicated in the area of payment services – or financial services in general.
The way we pay in Europe is changing. Significant numbers of consumers are moving to online payment channels, with retail payments increasingly being carried out via mobile phones. At the same time, virtual currencies have long been a topic of debate – and not only among experts, either.
European citizens demand pan-European services that are safe and efficient. Consequently, there is a need to look carefully at the governance and regulation of payment solutions. Many payment channels are provided by non-European companies. Although those companies comply with our legislation and use our payment infrastructure, they are, for the most part, not domiciled in Europe. This increases our dependence on third countries. In particular, we have to be mindful of the fact that extraterritorial jurisdiction could, in a worst‑case scenario, affect the operation of those companies and disrupt payments between European counterparties. In the current geopolitical environment, such risks are, unfortunately, not as remote as they once were and need to be taken seriously by European policymakers.
We have laid the groundwork by providing safe and efficient market infrastructure, and this should be used as a basis for innovative, user-friendly solutions. The way to protect the integrity of European payment services is not by closing them off to the world, but by making them global players. Building on local or national solutions is anachronistic and will not meet the needs of the market.
If we are to succeed at a global level, the issue of domestic governance needs to be addressed. Our reliance on non-European card schemes for domestic payments in Europe is suboptimal. European card schemes should make interoperability and full pan-European reach their main priorities, enabling any card to be used at any terminal. At the same time, governance arrangements need to cater for European needs, given that cards are the single most important electronic payment instrument in Europe.
However, protectionism should not be used to artificially promote European innovation in payment services. We should remain open to global players, but should focus more on addressing the reasons for the lack of major European providers in the payment market.
It is important that European payment service providers are active at a global level. Rather than establishing national solutions, we should seek to develop global solutions based on European open governance that use European infrastructure.
Europe boasts state-of-the-art payment systems. They should be used by pan-European providers to offer innovative, safe and user-friendly solutions for the benefit of people across Europe and all over the world.
The Financial Conduct Authority (FCA) is consulting on rules and guidance to improve conduct standards and communications in the payment services and e-Money Firms sectors.
The Consultation Paper proposes to extend the application of the Principles for Businesses and certain specific rules about promotions and communications so that they cover wider categories of businesses that we regulate (including businesses authorised or registered under the Payment Services Regulations or the Electronic Money Regulations). This includes broader types of activities (including the provision of payment services and the issuing of electronic money where they are not connected to an activity regulated under the Financial Services and Markets Act (FSMA)).
These proposals follow modifications to the FCA’s rule-making powers in 2017, which brought certain businesses authorised or registered under the Payment Services Regulations or the Electronic Money Regulations within their scope alongside businesses authorised under FSMA.
The FCA has also proposed new guidance to help ensure that firms do not mislead consumers when they are advertising payment services that involve a currency conversion. This delivers on a commitment by the FCA made last year, to act on concerns about firms’ use of currency converter tools in relation to their currency transfer services.
These measures should help customers to better understand that standards the FCA expects of firms in the market, and will make it easier for the FCA to intervene when it sees harm. The FCA’s disciplinary powers under FSMA would apply to breaches of the proposed new rules, including those relating to marketing and communications, and this would reinforce the effectiveness of the FCA’s enforcement approach across the markets for payment services and electronic money.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA said:
“This is a measured intervention – for many it will simply reflect current good practice and ensure that
they are subject to the fundamental obligations that we expect of regulated firms.
“For some, however, it should be a clear signal that through our rules, supervisory and enforcement action, we will not tolerate customers being misled or being treated unfairly.”
The FCA is now seeking comments on the proposals set out in this Consultation paper, which closes on the 1 November 2018.
Notes to Editors
- CP18/21: General standards and communication rules for the payment services and e‑money sectors.
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority.
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.
“At the time we wanted to [buy] MoneyGram and overhaul it to help people all over the world solve this issue,” he said. “Due to reasons from the US our deal with MoneyGram did not succeed, so I said, ‘Let’s make one better [than MoneyGram]’ that uses the most advanced technology”, Jack Ma commented.
Swissquote Group Holding SA (SWX: SQN), specializing in online financial and trading services has announced the launch of its Multi-Currency Credit Card for making payments in various currencies. The credit card offers payments in twelve-different currencies including US Dollar, British Pound and Swiss Franc.
The new Multi-Currency Credit Card will be accessible only to users of Swissquote’s Trading Services. As opposed to traditional Credit Cards offering, Swissquote’s multi-currency credit card allows direct payment in one of twelve available foreign currencies without prior conversion into Swiss Francs and the addition of exchange fees. For instance, a customer from Japan can make payments in Pounds and then charge the amount in customer’s trading account. In cases, when customers don’t have sufficient balances of any particular foreign currency, Swissquote automatically carries out the transaction in the currency with the highest balance.
The conversion is done of Swissquote exchange that is more competitive and offers great rates compared to other Swiss counterparts in the exchange business. The twelve currencies that are on offer are Swiss Francs, Euros, British Pounds, Yen, Danish, Swedish, Norwegian Crowns, Dirham (AED); USD, CAD, AUD and Hong Kong Dollars.
The Credit Card is offered in Silver and Gold version and is being offered without card fees during the first year. In the second year, annual fees are charged at 100 Swiss Francs (CHF) for Silver version and 200 Swiss Francs (CHF) for the Gold version. The payments conducted in any of the twelve currencies are free of processing fees. Transaction in other currencies is subject to 1.5 per cent of processing fees and cash withdrawal at 3.5 per cent.
The services are launched in partnership with SIX Payment Services; a payment solution provider based in Switzerland, and will be providing card issuing licenses and will facilitate transactions made using the card.
Lino Finini, Head Back Office & Banking Applications and a member of the Swissquote executive team commented:
“With the launch of our Multi-Currency Credit Card, we want to allow credit card customers to benefit from our unique expertise and transaction terms in foreign exchange trading. Customers who maintain a trading account with us are already used to trading in a variety of currencies. We can now provide them with a credit card that addresses their complex payment requirements.”
The Board of Directors of SIX announced the appointment of all the members of the future Executive Board as the company realigns itself and two weeks after the new CEO, Jos Disjsseolhof, assuming office. The newly constituted Executive Board will take over operational management of SIX on 1st April 2018.
Jos Dijsselhof, CEO SIX: “I look forward to working with my new Executive Board. Together, we will further develop SIX and strengthen SIX’s competitiveness. I am convinced that this strong team will successfully master the coming challenges and continue the success story of SIX. By realigning SIX and focusing on our core business, we will be the driving force that will make the Swiss financial centre more agile, more efficient and thus stronger.”
The company realignment is a move to face the challenges presented by a market environment that has undergone fundamental changes. SIX will adopt a systematic focus on infrastructure services for shareholders and the financial centre in the areas of securities, payment services and financial information. These areas represent the future core business of SIX, while all innovation activities of SIX will be consolidated in a new innovation unit that will have more funding at its disposal.
Apart from Jos Dijsselhof, CEO SIX since 1 January 2018, the new Executive Board of SIX will comprise of Thomas Zeeb (member of the Group Executive Board of SIX since 2008 with responsibility for the division Securities Services) as Head of Securities & Exchanges, Marco Menotti (former UBS executive) as Head of Payments, Robert Jeanbart (member of the Group Executive Board of SIX since May 2014 with responsibility for the division Financial Information) as Head of Financial Information, Marc Schluep (responsible for the current division Payment Services) as Head of Cards, and Christoph Landis (responsible for the division Swiss Exchange since 2015) as Head of IT. Additional Members of the Executive Board are Daniel Schmucki, Chief Financial Officer (CFO) and Jochen Dürr, Chief Risk Officer (CRO). SIX is consolidating all its innovation activities in the new Business Unit Innovation & Digital which will be led by Daniel Dahinden.
Robert Bornträger, Division CEO Global IT, has decided to leave SIX at the end of February 2018. He has been responsible for the development and operation of the entire IT infrastructure of SIX since 2008 and has thus contributed substantially to the successful triple merger and transformation of SIX.