Security requirements for mobile payments
Produced in partnership with Puesan Lam of DLA Piper
Security requirements for mobile payments

The following Financial Services practice note produced in partnership with Puesan Lam of DLA Piper provides comprehensive and up to date legal information covering:

  • Security requirements for mobile payments
  • Introduction
  • What is a mobile payment?
  • What are the issues regarding security for mobile payments?
  • Lack of clarity in the regulation of mobile payments
  • Data protection
  • Customer verification
  • Lack of customer knowledge around mobile payments
  • How are these issues addressed in PSD2?
  • Development of PSD2
  • More...

Introduction

This Practice Note outlines the key legal issues regarding security faced by mobile payment service providers as well as those faced by the customer, and how these are being addressed in upcoming European legislation.

Mobile payments, as an industry, is rapidly expanding in the UK with the launch of Apple Pay, Google's 'Android Pay' and Samsung's 'Samsung Pay'. The retail payments market has experienced significant technical innovation, with rapid growth in the number of electronic and mobile payments and the emergence of new types of payment services in the market place, which challenges the current framework.

This has resulted in payment services legislation, such as the Payment Services Directive (2007/64/EC) (PSD), which was implemented in the UK by the Payment Services Regulations (SI 2009/209) (PSR), becoming outdated in some respects, particularly in relation to security issues, leading to reform of the PSD. The European Parliament adopted the second Payment Services Directive (PSD2) on 8 October 2015. The Council of the European Union adopted PSD2 in November 2015. On 23 December 2015, the text of PSD2 was published in the Official Journal of the EU. Member States have until 13 January 2018 to transpose PSD2 into their national laws and regulations.

Challenges from a regulatory perspective arising from these developments include:

  1. Fragmentation of the market—significant areas of the payments market—in particular card, internet and mobile payments—remain fragmented along

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