When it comes to analyzing the European payments legislative proposals with a potential impact on e-commerce, I have already talked about the risk of fragmentation and an uneven playing field, as well as the implications for the cross-border ecommerce providers. Another risk worth mentioning is the inconsistencies between the different proposals that make it even harder to achieve the goals of the European Union. Several examples illustrate this point. Here are some of them:
We have the eternal conflict between AML and Data Protection where there is more than one specific point of friction:
- First, ‘Profiling’, i.e. the data collection and retention, which is mandatory and needed for AML purposes, clearly conflicts with ‘data minimization’ – which implies collecting the minimum information needed for payment processing, and is mandated by the proposed Regulation on Data Protection.
- This also applies to the fact that data collection and retention, sometimes mandated by AML requirements, might also clash with the right to be forgotten, one of the consumer protection measures that the proposed Regulation on Data Protection is trying to adopt.
The same applies to PSD 2 and AML Directive (aka AML4D).
- In real terms, while the Proposal for a revised Payment Services Directive (aka PSD2) provides a passporting regime under which cross-border Payment Services Providers (PSPs) can provide services in as many European Union countries as their license allows, the AML requirements actually force the providers to comply with as many regimes and local regulators as countries they operate in (and this just includes Europe, so we cannot begin to imagine how the global picture looks in this respect).
Having said the above, if I am to provide an advice right now to policy makers in this respect, I believe the solution to these problems is twofold:
- On the one hand, the different European Parliament Committees involved in drafting these conflicting items need to agree on the priorities, so that they can issue the different sets of requirements consistently. What remains to be seen is how they will sort out the fact that the European Parliament Committees usually involved in this are generally different and with opposing political motivations, so the agenda and other points to agree might be quite an issue.
- On the other hand, players need specific guidance on how to manage these discrepancies while remaining fully compliant.