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04 December 2020 / news

ACM calls for a level playing field for (online) payment services providers

The ACM has carried out a market study into the activities of ‘Big Tech’ companies in the (online) payments market. As a result, the authority calls for the amendment of the existing competition rules to create a level playing field for (online) payment services providers.

The Dutch Authority for Consumers & Markets (the ACM) has carried out a market study into the activities of ‘Big Tech’ companies in the (online) payments market. The results of this study were published on the 1st of December 2020. The market study provides an overview of the current and expected development of the activities of ‘Big Tech’ companies (companies such as Apple, Facebook, Ant Group (Alibaba) or Amazon) in the payments market both online and at the point of sale. The role of Big Tech companies in the payments market has remained rather modest thus far, but the ACM observes that Big Tech companies are strengthening their market positions through acquisitions and collaborations.

Big Tech companies are increasingly offering their own payment facilities, both online and at the point of sale. At the point of sale, more and more possibilities for contactless payment are being offered, for example through smart phones and smart watches. Consumers also increasingly make actual use of these new possibilities to pay at the checkout in-store. Surveys among retailers also show that the market for contactless payments through mobile phones is increasing.

Webshops targeting the Dutch market almost universally use iDEAL as a payment option, and credit cards are also widely used as a means of payment online. Online merchants have indicated that they expect other online payment methods such as the E-Wallet to grow in importance.

The ACM advocates a level playing field for all providers of payment services, now and in the future. The ACM believes that Big Tech companies should ensure that their platforms or devices are suitable for use by all payment service providers, just as the banks currently need to ensure for e.g. ATMs. According to the ACM, only with such a level playing field will payment service providers continue to compete and innovate, as a result of which consumers shall retain their freedom of choice. ACM chairman Martijn Snoep deems it appropriate to address competition in online payment markets at a European level. Snoep said: [freely translated] “It would be good if the European rules regarding this issue would become stricter, before the market will be dominated by one or several major competitors”.

The ACM states that the PSD2 Directive could be amended to maintain this level playing field. Big Tech companies that only facilitate payment services are not yet covered by this Directive: the ACM therefore recommends amending the Directive in such a way that Big Tech companies also have to comply with it. The ACM considers these Big Tech companies to be gatekeepers for online payments. Without further regulation, the ACM believes that this gatekeeper position may enable them to restrict competition and consequently also consumer choice.

As a second solution, the ACM suggests an amendment of the competition rules so that ex ante conditions can be imposed in advance on dominant platforms to open up their platforms to others. This would also ensure that a level playing field can be maintained. The European Commission is currently in the process of drafting proposals for such rules (see our recent blog for Kluwer on this topic). The draft texts for these proposals are currently expected to be published on 15 December 2020.

This market study has also triggered a concrete investigation. On 4 December 2020, the ACM announced that it has launched an investigation into payment apps’ access to Near-Field Communication (NFC). NFC communication offers the ability to make contactless payments using smartphones at the point of sale. The software on some smartphones only allows the software developer’s own payment app to connect to NFC communication. The ACM fears that this problem may stifle innovation with respect to payment apps, and that it may reduce the freedom of choice for consumers and businesses. The ACM explicitly mentioned that it received this signal during is market study. Further details regarding the investigation are not provided in the press release.

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