FCA keeps a close eye on BigTech entry into the payment industry

In January 2020, the FCA announced the opening of ex-officio proceedings to assess the competitive impact of new technologies applied to financial services, and in particular payment services in France. Following extensive investigative work (including a public consultation launched in May 2020 - see our previous client alert here), the FCA issued its final opinion, outlining in particular the arrival of large BigTech platforms in the payment sector and the potential leverage they have to gain considerable advantages, including:

• full control of their ecosystems based on large communities of users, e.g. by restricting access to NFC smartphone antennas or preinstalling their payment apps in operating systems (Apple Pay, Samsung Pay, Google Pay, etc.);
  
  
• access to large data sets from their other service activities, which they can use to promote their own payment services by tailoring their offers to consumers' needs;
  
  
• ability to make significant profits as they are not subject to the regulatory constraints that weigh on traditional banking players and bank card groups which realize the payment. 

According to the FCA, these advantages could give rise to major competition concerns in the payment sector and in particular:

• Risks that Big Tech firms strengthen their market power by foreclosing consumers in their own ecosystems;
  
  
• Risks associated with the holding of data by payment service providers who manage accounts, by ensuring that they give fintechs access to the data they need to offer their own services;
  
  
• Competition law risks associated with blockchain either through facilitation of coordination of anti-competitive behaviour or restrictions of access to private blockchains;
  
  
• Risks of undermining the activity of the traditional banking players who are increasingly used by fintech and BigTech companies only to perform high fixed cost tasks (e.g. physical networks, payment infrastructures) with the risk that traditional banking businesses be side-lined in the value chain.

This FCA's opinion may also add to the debate and discussions at the European level on the regulation of payments and new technologies in general – in particular around the implementation of the Digital Market Act and the Digital Finance Package, or the Commission's ongoing antitrust probe into Apple Pay announced last summer.

For more information, you can consult the FCA’s press release here (in English) and the full opinion here (in French).

For more information contact Florence Leroux and Eliott Costet.