The role of standardisation and interoperability

ERA Conference on Legal Challenges to Payment Services in the single market

October 10, 2013

Alfonso Lamadrid de PabloGarrigues Brussels

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INTEROPERABILITY BASICS____________________________________________________■ What is INTEROP?

■ Why is INTEROP important?

■ Is INTEROP desirable?

■ Consumers perspective

■ Public policy perspective

■ Industry perspective

■ What is the optimal degree of INTEROP?

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How is INTEROP attained?_______________________________________________________________

■ “Who” is central to the question of “How”

■ Private actors through market forces:

■ Unilateral actions: interop by design (e.g. Google maps), Vertical interop (Lync-Skype); de facto standards (e.g. Windows)

■ Industry coordination (consortia, JVs, SSOs),

■ Public actors:

■ Direct public regulation (e.g. mandatory interconnection in telecomm)

■ Other sorts of public intervention (e.g. competition law enforcement)

■ Public encouragement (e.g. SEPA)

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The current landscape for payments________________________________________________________________■ Credit transfers and direct debit standardised through SEPA

■ Card payments:

■ Green paper identified 3 standard-related issues: A2I domain; T2A domain; Certification standards.

■ SEPA card framework

■ E-payments

■ Rely on internet as common platform so standards are less on an issue. Interop issues arise in processing phase (same as regular cards or bank transfers)

■ EPC interoperability framework – EU Commission investigation.

■ M-payments

“Standardisation work on m-payments should ensure full interoperability between m-payment solutions and favour open-standards to enable consumer mobility (…) Standardisation should address the issue of portability of m-payment appliccations”.

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Interoperability in mobile payments (I) ________________________________________________________

Gaining impressive traction riding on popularity of mobile phones as payment enabler-

Great looking pie!

■ Everybody wants a piece

■ Traditional PSPs

■ MNOs

■ Tech companies (handset makers, OS developers, etc)

■ Others

“Banking is essential.Banks are not.”

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Interoperability in mobile payments (II)_________________________________________________________

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Interoperability in mobile payments (III)__________________________________________________

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Interoperability in mobile payments (IV)____________________________________________________

■ Bumpy road ahead

■ Remote v NFC

■ Within NFC: SE embedded in chip v embedded in handset v embedded in SD card

■ Revenue sharing

■ Access issues

■ Others: security, privacy, etc.

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Interoperability in mobile payments (V)

■ When would competition law kick in?

■ Default regulation (particularly in payments industry)

■ Looking out for instances of exclusion in self-regulatory initiatives

Standard setting (EPC investigation; see also Commission Guidelines on Standardisation Agreements)

■ Access/Interop issues (Project Oscar Decision)

■ Strategic alliances (indispensable? less restrictive alternative?)

■ Past is Prologue

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Thank you!alfonso.lamadrid@garrigues.com

Phone: +32 2 545 37 00

Fax: +32 2 545 37 99

Avenue d’Auderghem 22-28

B-1040 Brussels, Belgium