On 29 April The French Competition Authority (FCA) published its report on the Fintech sector (available here, in French). This report follows its payment sector inquiry launched in January 2020, which primarily focused on the disruption brought by new technologies and new market players.
In this report the Authority points to the arrival of large BigTech platforms in the payments sector (Apple Pay, Google Pay, Amazon Pay in particular) leveraging their position to gain considerable advantages, such as :
- full control of their ecosystems based on large communities of users,
- access to large data sets which they can use to promote their own payment services
- the technical capacity to develop tailored services
Big Tech companies also have the ability to make significant profits as they are not subject to the regulatory constraints faced by traditional banking players, and bank card groups which facilitate the payment.
According to the FCA, these advantages could give rise to major competition concerns in the field of payment services. Currently no enforcement action has been officially announced. but the FCA will be vigilant with regard to the following risks:
- 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;
- 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 Big Tech 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.
The FCA's opinion may add to the debate at the European level on the regulation of payments and new technologies in general - in particular the Digital Market Act and the Commission's ongoing antitrust probe into Apple Pay announced last summer.
For more information, you can find a more detailed summary of the FCA's opinion here.
If you would like to receive our regular Payments alerts in your inbox, click here.
If you would like to read Bird & Bird's previous alerts, please check out our Payments InFocus webpage here.