Portuguese payments market paves the way for digital payments

European expert in payments and financial services, Andréa Toucinho talks about how the Portuguese payments market paves the way for digital payments

Portuguese payments market wants to accelerate the development of digital payment. This ecosystem defined in February 2020 its strategy for 2020-2022, based on four key points. The project has been submitted to the market at the end of March through a public consultation to be held until April 30th of 2020. The idea is to contribute to the development of this market through a real collaboration between all stakeholders.

Portuguese payments market is accelerating its transformation. This ecosystem, which has been evolving since 2018 with a real goal of opening of the market, aims at gaining a new step in its development.

A pragmatic strategy for 2020-2022

In fact, it is important to remind that even if the Portuguese payments market is composed of diverse proposals, it has been dominated by cash for a long time. According to Forum para os Sistemas de Pagamento – a national organisation which defines the Portuguese national strategy in the field of payments in relation with European institutions – cash represented 60% of the number of payments in 2017 (+4% growth per year since 2015). Nevertheless, this country shows a huge interest in the field of payment cards and strong opportunities in the development of electronic solutions such as SEPA Credit Transfer, SEPA Direct Debit, and instant payment, which has been launched in 2018 in the country. One of the examples of this reality is the interest for electronic mean of payment MB Way, created by SIBS. Other key point to mention in this context is the decision of Banco de Portugal to allow PIN-less contactless payment for up to 50 euros in relation with Covid-19 crisis. This testifies to real opportunities, nowadays, in the field of electronic payments.

Information and communication: a key point for Portuguese payments market

To foster these developments, the national Forum para os Sistemas de Pagamento defined four key points in its strategy for the next two years. The first one is the promotion of information in the Portuguese payments market. According to the organisation, this is a key point to accelerate the adoption of electronic solutions, for both old and young generations. The idea is to give Portuguese consumer the opportunity to gather some knowledge in order to realise a real choice in the field of payments. It is important to remind that some actions have already been done in this field like the creation of some tutorials, by Portuguese regulator Banco de Portugal, to explain the benefits of instant payment for young generations. In addition, Banco de Portugal is a national regulator which constantly speaks in Portuguese newspapers to explain some key evolutions of this market like PSD2, or even the collaboration with fintechs. For instance, the launch of the second edition of Portugal Finlab has been announced during Web Summit 2019 with large media coverage.

Therefore, developing the adoption of electronic means of payment for a long term implies some new actions to foster information and knowledge among market and consumers. All stakeholders have a role to play: from national regulator Banco de Portugal to operational companies and public administration, according to the Forum para os Sistemas de Pagamento.

The role of instant payment

The second key point is to develop the benefits of digital transformation in the field of payments. First action: the development of contactless technology in Portugal to gain the same position as other European countries like France or UK which experience a huge growth of contactless payments. This implies some operational actions like the development of contactless cards and points of sale and some work with retailers in the field of acceptance.

Second action: the growth of instant payment transactions with the idea to give the Portuguese payments market the same position as in Netherlands: instant payment as ‘the new normal’. This purpose will require some important options like defining another limit for instant payment transactions (EUR 100 000), interoperability between instant payment in Portugal and paneuropean solution of payments, and the creation of a database allowing links between IBAN and proxies (like mobile phone number, for instance). Other key actions in the field of instant payment will also be linked with the creation of a European brand and the works that are realised in the field of Person-to-Person (P2P), Electronic Invoice Presentment and Payment (EIPP) and Request-to-Pay (RTP) at a European level.

The evolution of Portuguese payments market is also linked with the actions of companies. In this context, the third key point mentioned in the strategic plan of Forum para os Sistemas de Pagamento for 2020-2022 is the evolution of national regulation of checks in order to foster the adoption of electronic alternatives. The Forum para os Sistemas de Pagamento wants to reinforce the sanctions for fraud in checks and to promote the use, by companies, of electronic solutions instead of checks. The last key point defined of Portuguese Forum para os Sistemas de Pagamento is security and regulation. In this context, PSD2 and strong Customer Authentication are seen as a real asset to boost security. Other key element: the development of electronic signature, seen as a real merging point between security and efficiency in a digital context. In this purpose, companies – like consumers – will also have a strong role to play. Next step: the feedback of the market about these proposals is waited until April 30, 2020.

About Andréa Toucinho

European expert in payments and financial services, Andréa Toucinho is Director of Studies, Prospective and Training of Partelya Consulting and Country Ambassador for France of European Women Payments Network (EWPN). France Representative of national fintech associations of Spain and Portugal (Aefi Spain and Afip Portugal), she realized two books about payments in 2018 and 2019 and is one of the co-authors of the international PAYTech Book published in January 2020 by Wiley.