Online and mobile payments
The provision of payment services to consumers is going through a period of rapid change driven by technological innovation. Ensuring consumers’ interests are protected when making payments through these new and emerging delivery channels presents a major challenge to supervisory authorities.
New services and delivery channels offer many potential benefits to consumers, such as access to payment services in an easier, quicker and more convenient manner, and sometimes at a lower price, allowing also consumers to make cross-border transactions with payment service providers (PSPs) not established in their jurisdiction. Digital payment services available have increased in number and currently offer a greater choice of features across the world. In developed economies, new generations are motivated to quickly adopt new digital payment services. The development of electronic commerce also explains the increasing use of these payments. In developing countries, digital payment services are a key instrument for financial inclusion, and mobile devices are an important tool for cross-border flows of funds (remittances).
However, the various components of payment services are not standardised and there are no itemised and statistical data on the digital payment services available, and their acceptance. Moreover, digital payment services are regularly associated with a specific provider, which prevents their categorisation. The number and diversity of PSPs has increased in recent years, and their activity targets the online and mobile payments markets. The importance of non-financial providers in the digital payments market has also increased. The lack of a categorisation, statistical data, and the provision of payment services by different players may hamper a comprehensive and thorough knowledge of the market and may compromise the issue of international guidance.
Online and mobile payments also present risks to consumers, in particular regarding security. Fraud, deceptive practices and lack of reliability of devices and infrastructures are the main security incidents. Transparency of charges and disclosure of information are also challenging supervisors, from a consumer protection perspective.
FinCoNet members identified the issue of security risks as an important threat to consumer protection, which required detailed examination. Thus, a working group (Standing Committee 3) was set up to study the supervisory approaches adopted in overseeing online and mobile payment services and providers, to promote reflection among supervisors, and to share findings and examples of actions to be adopted by conduct of business supervisors.
This report is the result of the work undertaken by Standing Committee 3. It is based on the assessment of the responses given by national supervisory authorities to the ‘FinCoNet Survey on online and mobile payments: supervisory challenges to mitigate security risks’ (the ‘survey’). The analysis of the responses was complemented by desk-based research.
