Emerging trends
Digital payments have gained widespread adoption in the European payments industry, driven by their user-friendly and convenient nature. To adapt to this shift, investments in payment infrastructure, including the development of new networks and faster systems, have further enhanced the efficiency and seamlessness of the payment environment for businesses and consumers. Additionally, the payments industry in Europe operates under strict regulatory oversight, which has fostered a more secure and transparent payments ecosystem, benefiting both consumers and businesses.
The emergence of fintech companies has significantly influenced the European payments industry by challenging traditional banks and payment providers. These innovative players provide payment solutions that are more convenient and cost-effective, fostering increased competition and driving industry-wide innovation that ultimately benefits consumers and businesses.
Geographical disparities
The European payment landscape exhibits a high degree of diversity, with innovation primarily taking place at the country and regional levels, despite the EU’s mandate for a standardized regulatory framework. The adoption of PSD2, intended to foster payment innovation, varies significantly across Europe. The UK emerges as a dominant player in the Open Banking market, accounting for approximately 40% of all registered TPPs in Europe. In contrast, Europe faces challenges, due to fragmented technical standards for example.
Various disruptive events, such as the 2008 financial crisis, Brexit, the COVID-19 pandemic, and the conflict in Ukraine, have hindered regulatory harmonization in Europe. While PSD2 introduced innovative payment services, concerns have also emerged regarding the protection of personal data. Strong Customer Authentication (SCA), a pivotal aspect of PSD2, significantly influences customer journeys and serves as a key differentiator in the payments landscape. The European Commission initiated consultations on Open Finance and data sharing frameworks for the financial industry, along with a public consultation to assess the application and impact of PSD2 on the payments sector. These initiatives reflect a clear intention to promote regulatory harmonization and level the playing field.
Structure of the report
In part 1, Deloitte presents the main developments of the payment industry over the past year at European level, including Luxembourg, and provides valuable market insights. As Open Banking reshapes the boundaries of payment services, various drivers of change and new trends are driving significant developments across the industry.
