Nina Stoyanova: The way forward for cash


Thanks for inviting me to open at the moment’s fourth Banking and Finance Discussion board on the subject of The Way forward for Cash.

New applied sciences are altering the monetary sector at the moment and resulting in the providing of more and more various and handy fee merchandise in a extremely aggressive setting. The insurance policies of the European Fee, the European Central Financial institution and nationwide regulators are geared toward catalysing this course of, to use extra absolutely the potential provided by know-how and to realize cheaper, safer and extra accessible fee options. The dynamics of the processes in Europe can also be absolutely legitimate for our nation.

Knowledge on funds processed by fee programs in our nation present a big progress. For the primary six months of 2021, the worth of funds made by means of the BNB-operated Actual-time Gross Settlement System in BGN (RINGS) elevated by 30% in comparison with the primary half of 2020, whereas for a similar interval the worth of funds in euro by means of the nationwide element system of the large-value fee system in euro – TARGET2-BNB elevated by 65.7%. I wish to contact briefly on a few of the current technological developments within the discipline of fee companies within the European Union and in our nation.

Safety of funds

The fast improvement of e-commerce lately and the elevated use of digital channels to provoke funds pose new challenges associated to making sure the safety and clients’ knowledge. As of September 2019, it has develop into necessary in Europe to implement sturdy buyer authentication. Which means that when an digital fee is initiated, at the least two impartial components from completely different classes – data, possession and inherence – should be used within the course of. Within the case of distant fee transactions, e.g. through web, an extra requirement is launched to carry out so-called dynamic linking – linking the code for every transaction to a certain amount and a particular payee. These necessities are applied by the fee service suppliers in our nation.

For the sensible implementation of those regulatory necessities, new applied sciences are once more coming to the rescue. Lately, biometric authentication has proven nice potential by offering verification of components characterising the person: fingerprint, iris scanning, facial recognition, and so on. Many fee service suppliers in Bulgaria have already launched related buyer identification strategies utilizing cellular banking purposes. Other than comfort, this results in a big enhance within the safety of the fee course of, permitting using biometric knowledge for buyer identification.

On the event of the forthcoming evaluate of the Second Fee Providers Directive, a complete evaluation of the impression of sturdy buyer authentication on the extent of fee fraud is to be carried out. Alternatives are additionally being explored for using digital identification and certificate-based options to fulfill the necessities for sturdy buyer authentication at account login and initiation of fee transactions.

Cellular applied sciences

With the development of applied sciences, the smartphone is being established as an more and more common instrument able to combining all kinds of capabilities. These days the smartphone can also be changing into a instrument for initiating funds. That is potential due to companies like digitalisation of fee playing cards, using digital wallets, and cellular banking purposes.

Lately, work has been achieved in direction of the potential use of smartphones as units for receiving bodily card funds. This has develop into potential because of technical requirements developed by the Fee Card Trade Safety Requirements Council. These requirements permit using NFC-enabled cellular units, resembling smartphones and tablets, for accepting contactless funds and likewise for the payer to enter a PIN code on the display screen of the cellular system. Thus, cellular units have gotten a type of software program POS terminals able to accepting funds with fee playing cards and different fee devices built-in into the cell phone. We additionally have already got fee service suppliers that supply this software program POS service. It will make contactless funds simpler and extra handy to the shoppers and retailers in Bulgaria.

One other new chance is a fee switch through phone performed between accounts with fee service suppliers the place a cellular phone quantity is indicated as an alternative of an account quantity, primarily based on a know-how that permits linking the phone quantity to the IBAN account quantity. This service can also be already provided on the Bulgarian market. All this follows the pattern of elevated utilization of cellular fee options in Europe.

Open banking

The brand new payment initiation and account info companies, regulated by the Second Fee Providers Directive, create situations for implementing the so-called ‘open banking’. This enables the entry of recent members within the funds market and the event of modern companies in addition to value-added buyer options.

So as to adjust to the regulatory necessities, the banks in Europe, together with these in Bulgaria, most well-liked to decide on the event of devoted interfaces, referred to as ‘software programming interfaces’ or ‘APIs’, to the potential of modifying their shopper interfaces for entry. Some great benefits of devoted interfaces are appreciable – they’ve the next diploma of safety, velocity and are able to accepting a lot of simultaneous requests. Nevertheless, using devoted interfaces additionally presents an excessive amount of challenges – their improvement is a expensive and sophisticated course of which requires coordination between numerous items of the banks, their exterior builders, and the suppliers of the brand new companies. Principal precedence is guaranteeing the safety of the processes, with out compromising their performance.

Insofar because the authorized provisions of Delegated Regulation (EU) 2018/389 are extra normal, its sensible software raises many points that require further clarification. To this finish, in 2019 the European Banking Authority (EBA) established a Working Group on APIs beneath PSD2. Inside this group, representatives of the EBA, the nationwide competent authorities, the European Fee, and the European Central Financial institution seek the advice of the market members (banks, third get together suppliers and trade organisations) and determine potential sensible implementation issues and potential options thereof.

Primarily based on the consultations, by 31 July 2021 the EBA has printed clarifications on 31 points regarding the sensible software of the necessities for APIs. With the goal of converging the supervisory practices among the many Member States of the European Union, in June 2020 the EBA printed its Opinion on obstacles beneath Article 32(3) of the regulatory technical requirements on sturdy buyer authentication and customary and safe open requirements of communication (EBA/OP/2020/10). The work on the raised points continues to be happening through the Q&As printed by the EBA.

The Bulgarian Nationwide Financial institution, in its capability as a regulator, has lively communications with the market members with the goal of bettering the performance of the devoted interfaces already constructed by the banks within the nation. The method is creating in keeping with the European progress and in compliance with the authorized framework, the opinions and clarifications printed by the EBA. The primary authorised in Bulgaria suppliers of the 2 new fee companies began their actions in 2020.

In conclusion, we will sum up that the tendencies in Europe are associated to the event of a single European funds infrastructure primarily based on widespread requirements and devices, aiming to make sure a pan-European scope and attain. Instantaneous funds, that are in a strategy of introduction additionally in Bulgaria, open banking, and the rising use of cellular applied sciences are topical points each within the nation and within the European Union, points that we are going to proceed to speak about. The fee companies in Bulgaria are evolving in keeping with the dynamic processes in Europe, gathered round digitalisation, new applied sciences, and the ensured safety of the fee course of.


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