Especie Caprina
8. FLORIDA
A Legal Analysis
Gabriella Gimigliano
Abstract Gimigliano examines mobile payment services within the European Union framework. In the European Union, policymakers are developing a process of integration to build up a single payment area. Th is process is based on self-regulation under the umbrella of the European Payment Council and the institutional sources of law, such as Directives and Regulations. Both actions promote interoperability among stake-holder standards, fi nancial stability and fund customer protection. To this end, it is critical to ascertain to what extent Community-based rules and regulations on payment services and electronic money may also be applicable to mobile payments.
G. Gimigliano ( )
Lecturer in Business Law, Department of Business and Law, University of Siena , Italy
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Introduction
Mobile devices and mobile payments (henceforth referred to as m- payments) have been studied recently as a means of fi nancial inclusion by leading international regulators and fi nancial supervisors. 1
According to the 2015 Consultative Report, co-authored by the Committee on Payment and Market Infrastructure at the Bank for International Settlements and Th e World Bank Group, the objective of fi nancial inclusion should be pursued so that all individuals and micro-enterprises can be provided with at least one transaction account.
Transaction accounts will allow account holders to make and receive pay-ments and store money value. In fact, the access to payment services is regarded as an important part of the overall package of fi nancial services.
However, the studies carried out revealed direct and indirect factors infl uencing the de facto choices of unbanked and underbanked people.
Such factors range from high fees for access to, and maintenance of, transaction accounts, costs of transportation to the next branch or point of service, especially in rural areas, and the low level of fi nancial literacy as well as the state of economic and labour “informality”. Additionally, the report underlined the lack of attention to cultural and religious diver-sity, scarce payment product design and the perception of unsafe service providers. 2
Th e goal of fi nancial inclusion is also threatened by the lack of a busi-ness case for service providers. In fact, unbanked and underbanked peo-ple have, most of the time, irregular incomes or small value incomes, while payment service providers have to meet a set of fi xed costs, such as anti-money laundering requirements or “know your customer” rules, costs which are diffi cult to recover. 3
Within the above framework, mobile devices are regarded as a via-ble alternative to the traditional access to the payment system. In fact, m-payment services emerge as a large potential market and, as a rule of
1 M-payments together with e-money products and basic transaction accounts have generally been treated as a means of fi nancial inclusion.
2 CPMI and Th e World Bank Group, Consultative Report. Payment Aspects of Financial Inclusion, September 2015.
3 See CPSS, Innovations in retail payments, May 2012.
thumb, 4 they may turn out to be a suitable tool for lowering access and processing costs of payment transactions for both users and providers.
However, the higher risk level is an issue. Accordingly, a 2014 International Monetary Fund study established operational resiliency, fi nancial integrity and safeguarding customers’ funds as oversight pri-orities for m-payments. Apart from operational and liquidity risks, the bankruptcy of m-payment providers and the m-payment infrastructure may drag down the reputation of the payment system as a whole.
Despite the higher level of risk, it is widely recognized at international level that these m-payments do not pose a new type of risk. Rather, the proper functioning of the payment system and the stability of the fi nan-cial system are threatened by the new design of the payment system: “the more contact points there are between the networks and the users and the more complex is their functioning, the more challenging is risk control”. 5 In this regard, the widespread enforcement of bank-based requirements to non-bank m-payment providers has been proposed as a workable leg-islative solution. However, the Community-based regulatory experience on e-money and e-money institutions has revealed how such a solution is likely to cramp innovation and competition.
Th is chapter aims to critically investigate m-payments within the Community-based legal framework.
Th e chapter will, fi rstly, provide an overview of the main achieve-ments of self-regulatory activity and, secondly, establish to what extent the institutional framework—namely the European rules and regulations for banks, e-money institutions and payment institutions—is applicable.
Th is chapter contains three further sections. Th e next section covers the self-regulatory approach, examining the early results of cooperation among fi nancial intermediaries and their associations on the one hand, and the European Payment Council (EPC) on the other. Th e penultimate section turns to the institutional framework investigating m-payments in
4 See Chap. 6 .
5 Terry Bradford, Fumiko Hayashi, Christian Hung, Simonetta Rosati, Richard J. Sullivan, Zhu Wang, and Stuart E. Weiner, “Nonbanks and Risk in Retail Payments: EU and U.S.”, edited by M. Eric Johnson, Managing Information Risk and the Economics of Security (Berlin: Springer 2009), pp. 17–53.
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comparison with the notion of “payment service” and “e-money”, while the fi nal section draws conclusions from the main results of the analysis.