Good afternoon everyone. Allow me to guess what you are thinking right now.
“Apparently, I’m supposed to wander freely in the world of payments, to think outside the box, and to innovate. But this is already the third regulator giving a speech ! Surely they must see the irony themselves, won’t they?”
I can assure you that we do.
But I also hope that you can appreciate what we are trying to do today. Rules and regulations in the financial sector are complex and intrusive. Today is about regulators trying to help you navigate through that world.
The Netherlands Authority for Consumers and Markets oversees all sectors of the Dutch economy. So, as a board member, I am supposed to give each market their fair share of attention. Well, PSD2 and the payments market have taken up quite a bit of my time lately.
And this makes perfect sense. First, ACM has received several new tasks regarding PSD2. Second, and more importantly, PSD2 works as a catalyst for the emergence of new competitors and new technologies on the payments market. This market has, for a long time, been dominated by a couple of big competitors. More competition will lead to more innovation and to more choice for consumers. This fits well with ACM’s mission: creating opportunities and options for businesses and consumers.
ACM has several powerful instruments for fulfilling that mission. One of them is competition law. Competition rules prohibit dominant firms from abusing their dominant positions, for example, if a large firm makes it harder for another firm to compete and innovate by not competing on the merits. Competition rules also prohibit cartels, for example if two or more firms collude to raise prices or divide the market.
To be very clear: competition law applies in addition to the PSD2 Directive. Abuse of dominance and cartels were already prohibited long before anyone had even heard of the PSD2.
Each firm has its own responsibility to comply with competition law.
The PSD2 provides consumers with the opportunity to benefit from new competitors and innovative services. In that context, banks are thus mandated to provide third parties access to the payment accounts of their customers.
After the establishment of the Regulatory Technical Standards, there has been a lot of discussion about the type and design of access that banks need to provide. The PSD2 and the Regulatory Technical Standards provide some guidance. And several working groups at the European level have been working hard to take this one step further.
Let me give you an idea of how competition law looks at this.
In general, the creation of technical standards is regarded as something that offers many benefits, both to market participants and to users. This means that competition law, in general, is in favor of standardization. There is, however, a clear boundary: standards cannot lead to foreclosure.
The process of setting standards therefore needs to allow for the participation of all interested parties. Another condition is that market participants cannot impose one single standard. There should always be room for other competing standards.
Competition law also sets clear rules with regard to granting access to an infrastructure or any input that a new competitor might need.
Dominant firms that control an essential input need to provide access to that input in an open, transparent, and non-discriminatory manner. Competition and innovation should not be unnecessarily restricted.
What does all of this mean in relation to the current implementation of PSD2 in the Netherlands? This may not be the right occasion for a thorough legal analysis, but I will give you three pointers.
First, it means that new competitors need to be involved in any standard-setting process. To prevent the risk of foreclosure, the key question should be what kind of access new competitors need in order to be able to innovate and compete.
Second, it is not enough to look at the current situation. The market is constantly evolving, and new kinds of access may be needed in the future. Banks need to look ahead and be flexible enough to deal with that reality.
And third, banks cannot offer one type of access to one party, but not to another. That includes alternative types of access or other arrangements with third parties that are partly or wholly owned by banks. Or with new competitors that they consider ‘preferred’ counterparts.
Let me conclude.
It should be clear that ACM considers it vital that new competitors are involved in any discussions or decisions about how access is effectuated: not as part of a single ‘kick-off’ or ‘implementation’ project, but as an ongoing effort. I am convinced that standards and competition can go hand-in-hand, as long as the resulting standards meet the criteria I just explained.
New competitors may need different types of access compared with current competitors. They cannot be refused that kind of access, simply because they did not sit at the table earlier. Any solution should allow for future developments, and also stimulate potential competition.
ACM is here to help new competitors and upcoming technologies make the market function better. Over the next few months, ACM wants to focus on barriers that new competitors and new technologies might encounter, such as barriers that might make it harder to compete and innovate.
At the other end of the spectrum, we are monitoring the possible emergence of new dominant players. And especially if this dominance leads to new forms of abuse. Competition rules apply to all market players: banks, Fintechs and Bigtechs.
But we need your help for that. We need information about the opportunities you see, but also about potential barriers that you encounter. I wish both sides of the market – banks and Fintechs - an open and fruitful discussion today.
