EU Should Challenge Google, Apple, Facebook, Amazon Payment Systems, ECB Says
A European Union board member gave a speech criticizing the weak presence of European fintech businesses in the continent’s own market. The leader’s comments come in response to several major clashes with American multinationals over their unscrupulous practices.
Yves Mersch, European Central Bank (ECB) member of the Executive Board, addressed a European Institute of Financial Regulation (EIFR) conference on Monday.
In his speech entitled, “Strengthening the European financial industry amid disruptive global challenges,” Mersch heavily criticized European dependence on foreign payment technologies. He began his address by stating that the European Union still faced significant challenges in financial technologies (Fintech), citing the blocs “continued weak performance, with low price-to-book ratios and meagre profitability” as evidence.
“PayPal now dominates the market for online payments in Europe, using the pan-European SEPA credit transfer and SEPA direct debit schemes to provide harmonised services,” Yves lamented. “Meanwhile, Google, Apple, Facebook and Amazon — often referred to collectively as “GAFA” — are also offering significant payment services with pan-European reach, some of which involve joint ventures with individual banks at national level,” he noted in his address.
“At the same time, Chinese giants like Alibaba and Tencent are advancing. While these companies are to be admired for their ability to expand and provide innovative services that consumers want, I would ask why there are no European companies competing in that arena.”
Mersch called for greater continuity of operations in the interest of Europeans, stating that “it is vital to ensure that innovation delivered by banks and non-banks reaches all European citizens.”
“Innovative bespoke national solutions using national — or, more frequently, non-European — technology could threaten the integration achieved by the various SEPA schemes,” he continued.
He also said that “dependence on foreign providers will increase further as regards the development of innovative payment services, since banks are resisting the objectives of PSD2 on this front,” claiming that foreign payment providers have been averse to providing technical access to fintech platforms, aimed at hindering European competitiveness and increasing their market penetration.
Yves Mersch also noted that European governments should look carefully at how payment systems are governed and regulated, as non-European domiciled companies provide dominate the market.
He cautioned against increased dependency on third countries, warning that such technologies could disrupt continuity of operations with European counterparties and citing geopolitical risks which he asserts should be taken seriously by European lawmakers.
The politician cited the revised Payment Services Directive (Directive 2015/2366/EU), which amended rules concerning EU payment systems integration, establishing “a clear and comprehensive set of rules that will apply to existing and new providers of innovative payment services,” according to a EU document.
“These rules seek to ensure that these players can compete on equal terms, leading to greater efficiency, choice and transparency of payment services, while strengthening consumers’ trust in a harmonised payments market.”
European leaders have become worried about US companies committing financial misdeeds on their soil after French president Emmanuel Macron lambasted GAFA multinationals for not paying their share of taxes in Europe. “They ask the sectors they disrupt to pay, because these guys, the old sectors pay VAT, corporate taxes and so on. That’s not sustainable,” Macron said in an interview.
EU competition commissioner Margrethe Vestager also hit back at American information monolith Google, slapping the company with a $3 billion fine for unfairly deranking European online shopping platforms via its search engine. The company faces two similar EU anti-competition lawsuits.
“We propose to update our understanding of where to tax and what to tax — to ensure fair taxation also in our digital world,” Vestager stated in a London Telegraph interview.
