Introduction: Banks and Non-Banks in the European Market for Payments

Banks have traditionally played a prominent role in the offering of electronic payment (Payment) products. The question that arises is whether the position of banks does not impede fair market forces for Payment products in terms of their functionality and pricing. Since the beginning of the twenty-first century, the pace of technological innovation has accelerated considerably, thereby creating new business opportunities for different types of payment service providers (PSPs). As a result, we have seen an increasing number of new technology focussed service providers, such as FinTechs and BigTechs, entering the European market for Payments. In order to have a competitive market for electronic payments, it is essential to have sound competition between different types of PSPs (i.e., banks and Non-Banks). This chapter suggests that having a so-called ‘level playing field’ between banks and Non-Banks is a requisite for achieving such sound competition in the European market for Payments. Given the dominant position of banks in this market, a profound European legal framework is required that is supportive of Non-Bank participation. This chapter suggests that the following elements of the European legislative framework are of particular relevance to the level playing field between banks and Non-Banks: (i) market access for Non-Banks; (ii) the security of the Payments market; (iii) the integrity of the Payments market; (iv) payment service user protection in case of an unauthorised or erroneous Payment; (v) payment system access; and (vi) collaboration between competing PSPs to develop common standards for fostering interoperability.