The aforementioned press release followed the publication of the Annual NBB Financial Market Infrastructures & Payment Services Report in June 2019. This document interestingly underlines how changes in legislation and politics (Brexit) influenced the financial markets and payment services.
PSD2: how the new directive opened the way for new players in the Belgian marketThe PSD2 is the second version of the Payment Services Directive which was adopted in 2007. In Belgium, the directive was transposed into the Belgian law in 2018 with the Law of 11 March 2018.
Payment services are services enabling cash to be deposited in or withdrawn from, for example, a bank account, as well as all the operations required to operate the account. This can include transfers of funds, direct debits, credit transfers, and card payments.
The PSD2 is the reply to the need for Open Banking. The directive calls for the opening up of the payment account infrastructure. Open banking is a model that requires the banks to open (with client consent) their information systems to third parties called third-party providers or "TPPs".
Is Brexit the new chance for EU markets?The NBB report stretches the fact that already two important entities, Moneygram and eBury have moved their business from the UK to Belgium, because of the upcoming exit of the UK from the EU. Countries like Luxembourg, Belgium, and the Netherlands have started welcoming UK entities.
As Brexit is foreseen for October 2019, many digital payments entities want to have their backs covered and keep a place in the single market.
Moreover, many entities are members of the Single European Payments Area (SEPA). The UK is currently part of the geographical scope of the SEPA schemes due to its EU membership. The European Payments Council published in March 2019, a paper where the Council analyses different scenarios regarding SEPA and Brexit. According to the report, 84 UK payment service providers (PSPs) participate in the SEPA Credit Transfer (SCT) scheme, 40 in the SEPA Direct Debit (SDD) Core scheme, 27 in the SDD B2B scheme and 5 in the SCT Instant scheme. Although the scenarios seem to leave the door open for participation to SEPA even in the event of a hard Brexit, the uncertainty has led many companies to move their business in EU member states. Belgium is a euro-centric country and this gives confidence to the companies who want to keep their position in the Union.
Brexit and PSD2 have led to a substantial increase in payment traffic activity in Belgium in 2019. What is left is to see if the increase will continue and how Belgium will take advantage of this tendency.