WORLDLINE_REGISTRATION_DOCUMENT_2017

B

Worldline positioning and strategy Industry andmarket overview

B.1.2.4

Regulatory changes in the payment sector are expected to create new opportunities

This proposal could have an impact on certain payment activities carried out by the Group, in particular services related to the iDEAL and MyBank e-payment platforms and WL Sips card payment platform, and would require a review of the authentication and authorization procedures that would be implemented in the context of PSD2 in order to adjust the Group’s payment platforms, as necessary, so as to comply with the applicable directive. For a description of these services, see Section C, “The Group’s business” of this Registration Document.

Banks in Europe are facing a range of regulatory changes that have the potential to create new outsourcing opportunities for payment service providers and to drive increased demand for value added services to create new revenue opportunities. Regulatory changes have significantly decreased interchange fees. Since December 9, 2015, Interchange Fee Regulation (or “IFR”) is enforced in Europe, by which interchange fees are capped at 0.2% of the transaction value for consumer debit cards and at 0.3% for consumer credit cards and by which transparency and competition in the card market are improved. At constant volumes, the reduction in interchange fees reduces mechanically the revenue of card issuing banks. This may create new opportunities for outsourcing, as banks reexamine their business models and look for ways to lower their costs. At the same time, it may create opportunities for providers of value added services (such as fraud detection services or card-linked offers) that banks can provide to their customers as new sources of revenue to replace the loss of the interchange fee. At the same time, by reducing the cost of accepting non-cash payments, the reduction in interchange fee is expected to encourage more merchants to accept card-based payments and to do so for lower transaction amounts. This is expected to help drive additional non-cash transaction volume. Regulatory changes are expected to promote the emergence of new players and the development of innovative mobile and internet payments for both existing and new payment service providers in Europe. The regulations applicable to payment services are constantly changing. The Payment Services Directive number 2 (PSD2) entered into force on January 13, 2016 followed by a transposition period of 2 years, as described in Section C.5. For implementation, the European Banking Association (EBA) has finalized most of the 6 Regulatory Technical Standards (RTS) and 5 sets of Guidelines (GL). The directive enlarges the scope of the existing PSD regulation by limiting the exemptions provided for in the PSD and extending its applicability to “third-party payment service providers” who provide remote access to payment account services or payment initiation services through online platforms, in relation to payment accounts held by other payment service providers. PSD2 will result in the creation of new regulations applicable to payment initiation services and services for accessing account payment balances.

B.1.2.5

Newentrants and their impact on the industry business Model also create newopportunities for Payment Services Providers

The GAFA (Google, Apple, Facebook and Amazon) and BATX (Baidu, Alibaba, Tencent and Xiaomi) have not only changed the way consumers view customer service and shopping, they have now well and truly entered the world of payment and with the financial means they have, payment services such as Apple Pay, Android Pay, Facebook’s P2P payment service via messenger etc. should not be ignored. The same goes for Alipay and WeChat Pay services of the chineses giant Alibaba and Tencent. New Fintechs, unencumbered by legacy technologies are also changing the way consumers interact with financial service providers as we see a new wave of digital only banks for example.

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Worldline 2017 Registration Document