2. The role of standardisation and interoperability ERA Conference on Legal Challenges to Payment Services in the single market October 10, 2013 Alfonso Lamadrid de Pablo Garrigues Brussels

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4. 3 INTEROPERABILITY BASICS ____________________________________________________ ■ What is INTEROP? ■ Why is INTEROP important? ■ Is INTEROP desirable? ■ Consumers perspective ■ Public policy perspective ■ Industry perspective ■ What is the optimal degree of INTEROP?

5. 4 How is INTEROP attained? _______________________________________________________________ ■ “Who” is central to the question of “How” ■ Private actors through market forces: ■ Unilateral actions: interop by design (e.g. Google maps), Vertical interop (Lync-Skype); de facto standards (e.g. Windows) ■ Industry coordination (consortia, JVs, SSOs), ■ Public actors: ■ Direct public regulation (e.g. mandatory interconnection in telecomm) ■ Other sorts of public intervention (e.g. competition law enforcement) ■ Public encouragement (e.g. SEPA)

6. 5 The current landscape for payments ________________________________________________________________ ■ Credit transfers and direct debit standardised through SEPA ■ Card payments: ■ Green paper identified 3 standard-related issues: A2I domain; T2A domain; Certification standards. ■ SEPA card framework ■ E-payments ■ Rely on internet as common platform so standards are less on an issue. Interop issues arise in processing phase (same as regular cards or bank transfers) ■ EPC interoperability framework – EU Commission investigation. ■ M-payments “Standardisation work on m-payments should ensure full interoperability between m- payment solutions and favour open-standards to enable consumer mobility (…) Standardisation should address the issue of portability of m-payment appliccations”.

7. 6 Interoperability in mobile payments (I) ________________________________________________________ Gaining impressive traction riding on popularity of mobile phones as payment enabler- Great looking pie! ■ Everybody wants a piece ■ Traditional PSPs ■ MNOs ■ Tech companies (handset makers, OS developers, etc) ■ Others “Banking is essential. Banks are not.”

8. 7 Interoperability in mobile payments (II) _________________________________________________________

9. 8 Interoperability in mobile payments (III) __________________________________________________

10. 9 Interoperability in mobile payments (IV) ____________________________________________________ ■ Bumpy road ahead ■ Remote v NFC ■ Within NFC: SE embedded in chip v embedded in handset v embedded in SD card ■ Revenue sharing ■ Access issues ■ Others: security, privacy, etc.

11. 10 Interoperability in mobile payments (V) ■ When would competition law kick in? ■ Default regulation (particularly in payments industry) ■ Looking out for instances of exclusion in self-regulatory initiatives Standard setting (EPC investigation; see also Commission Guidelines on Standardisation Agreements) ■ Access/Interop issues (Project Oscar Decision) ■ Strategic alliances (indispensable? less restrictive alternative?) ■ Past is Prologue

12. 11 Thank you! alfonso.lamadrid@garrigues.com Phone: +32 2 545 37 00 Fax: +32 2 545 37 99 Avenue d’Auderghem 22-28 B-1040 Brussels, Belgium