EU to tighten mobile payment regulations as Apple iPhone promises mobile payments boom

Council of Ministers plans to tighten rules on authentication of payments made via mobile wallets

The European Union Council of Ministers is preparing new regulations to govern mobile payments - just as the Apple iPhone 6 promises to make mobile payments and digital wallets take-off.

In a document promising a new "Payment Services Directive in the EU" the Council of Ministers' presidency recommended that the regulations should mandate "strong customer authentication" over a range of digital payment schemes, including "sensitive payment data to be used in a wallet solution".

According to Outlaw.com, the legal news and guidance service of law firm Pinsent Masons, third-party payment initiation service providers would need a licence to operate in the EU. It also set out a process by which payment initiation service providers and other payment institutions could obtain regulatory authorisation for operating across different EU countries.

"Payment institutions authorised to operate in its 'home' EU member state would be able to apply to the regulator in that country for permission to expand its service offerings into other EU countries.

"The 'home' regulator would then have to liaise with the 'host' regulators in the other EU countries the payment institutions wish to operate in on the businesses' plans. The host regulator would then have a chance to issue an opinion on the application, although it would be the responsibility of the home regulator to determine the outcome of the application and it would have freedom to go against the views of a host regulator so long as it explains its reasons.

"Responsibility for regulating payment services being delivered across the EU would rest with the home regulator, although host regulators would have limited powers to take action against payment institutions based elsewhere in the trading bloc if there was a 'serious threat to the smooth functioning of the payment system or to the collective interests of the payment service users in the host member state'," explained Pinsent Masons.

The plans to increase regulation of mobile and digital payments follows on from the launch of the Apple iPhone 6, which includes a tight integration between its built-in near-field communication (NFC) technology and Apple Pay, a payment app intended to make it easier to use the smartphone to store debit and credit card information, linked to people's accounts.