On July 31, 2018, the U.K. Payment Systems Regulator published a Report setting out its understanding of the Contactless Mobile Payments sector, following information-gathering during 2016 and 2017. CMPs are in- store payments made by consumers, using apps installed on their mobile devices, usually using Near Field Technology for communication between the mobile device and the retailer's point-of-sale terminal and with payment security enabled via a "tokenization" process.
The PSR conducted two calls for information in 2016 and 2017 to increase its understanding of:
- whether the way CMPs operate and the way they are being offered in the U.K. potentially affects competition, innovation and the interests of people and organizations that use payment systems (and, if so, how); and
- whether there were any restrictions affecting the provision of tokenization services.
The Report explains how CMPs work from a functional and technical perspective, outlines the main participants and their respective roles, summarizes the PSR's consideration of particular issues and proposes next steps.
The PSR concludes that, while only a small percentage of transactions currently use CMPs compared with other methods, usage is rapidly rising and CMPs could represent a sizeable part of all U.K. payments sector in the near future. This will potentially impact all three of the PSR's statutory objectives. In the PSR's view, CMP is an alternative payment method that can potentially benefit both participants and end-users. The PSR does not propose any specific actions at this stage, but it will continue to keep the CMP sector under observation as the same develops further. The PSR has stated its readiness to take any necessary action to address any emerging issues that may hamper efficient competition and innovation in the markets concerned.
The Report is available at: https://www.psr.org.uk/sites/default/files/media/PDF/Contactless_mobile_payments_July_2018.pdf.
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