France’s competition authority has launched a consultation on the fintech sector, focusing on the role of ‘large digital platforms’ in payment services.
The Autorité de la concurrence has announced the move in a year when scrutiny of new technologies’ impact on financial services has increased, amid concern over non-French companies’ penetration of the growing e-payments market.
The consultation covers three primary areas: the evolution of the payments market in recent years; the “delimitation of the markets concerned and analysis of the position and competitive advantages of the players involved”; and the “commercial practices likely to be implemented by the different actors”.
The three-page consultation document – available in French only, although law firm Bird & Bird has provided an English-language translation – contains 12 questions, including asking respondents for their view of the entry of ‘digital giants’ into the French payments sector; the acquisition of fintech companies specialising in payment services; and competition issues related to ‘crypto-assets’, blockchain and cloud services. The consultation closes on 19 June.
Digital finance among top priorities
The Autorité said that the “impact of the digital revolution on the financial sector” was one of its priorities when unveiling its 2020 priorities at the start of the year. The Paris-headquartered authority’s president is Isabelle de Silva, who has previously highlighted her concern about US-headquartered tech companies’ moves into online payments in France.
The consultation document names “the American services” Apple Pay and Google Pay as among “some payment services [being] already established in France”. The Autorité imposed a record €1.1bn (US$1.2bn) fine – its biggest fine ever imposed – on Apple in March for engaging in what it sees as anti-competitive practices with two of its wholesalers in France. Apple said it would appeal.
Regulator’s ‘high interest in the sector’
Reacting to the French consultation and using the Autorité’s English acronym the FCA, Florence Leroux from the Paris office of Bird & Bird told Global Government Forum: “The consultation is welcome and shows the FCA’s high interest in the sector. The FCA seems to be particularly concerned with the entry of digital giants into the financial sector (mainly US companies) – which echoes a concern raised earlier this year by the French Ministry of Economy in [its] report dealing with the prominence of US companies in the payments sector in the EU, and whether those companies should be required to keep the data on European soil. The consultation comes, however, at a time when two European Commission consultations are running on fintech and payments, and one might fear some overlapping here.”
The Commission noted, in launching the consultations Leroux refers to, that the coronavirus pandemic means there is a heightened need for well-regulated digital infrastructure across Europe. The executive branch of the 27-member European Union said coronavirus had “underlined the importance of innovation in digital financial products, as reliance on remote services has increased considerably”. Both Commission consultations close on 26 June.
Banque de France CBDC blockchain trial success
Also in France, there has been further momentum towards a potential central bank digital currency (CBDC). Specifically, Banque de France and Société Générale have successfully trialled blockchain to settle a ‘wholesale’ CBDC transaction, it was announced last week.
Société Générale issued €40m (US$44m) worth of covered bonds as security tokens registered on a public blockchain and then settled them in digital euros, according to reports.
“This experimentation was performed end-to-end using blockchain infrastructures [and] demonstrates the feasibility of financial securities being digitally settled and delivered in CBDC for interbank settlements,” said Société Générale.
Banque de France, the country’s central bank, said the SocGen experiment is just the first of several it will undertake in the coming weeks with other financial services players as it seeks to test the use of a digital euro. It said it has a “high number” of interested parties.