Digitalisation: Shaping the retail payment markets while posing new challenges to authorities

Abstract

Digitalisation is shaping almost every sector of the economy, enabling new ways of doing things, not merely digitising old, often manual, processes. Numerous new digital payment applications have emerged in retail payment markets, but the underlying payment infrastructures have remained almost unchanged. However, it is expected that technological advances combined with increasing competition enhanced by regulatory changes will shape retail payment markets in the coming years. With this evolving new environment will come new requirements, most notably for the authorities responsible for safeguarding the security, reliability and efficiency of payments. To analyse this challenge, this paper first reviews the theoretical framework that can be applied in examining the development of retail payment markets. Based on this, it outlines possible policy actions for the authorities. Secondly, it assesses the roles of authorities in practice, focusing on their position as catalyst for development in the European and national payment landscapes. Finally, it draws policy conclusions, emphasising the importance of multi-stakeholder cooperation bodies involving both payment service users and providers as well as relevant authorities.