5. International Conference on Regional Card Organizations

5. International Conference on Regional Card Organizations organized by European Card Payments Association (ECPA) with the support of World Bank Group took place in 16th and 17th October in Istanbul.

ECPA whose head office is located in Brussels, Belgium is established as a non-profit association in June 2014 in order to monitor, evaluate and react to initiatives concerning:

• technological developments and regulations impacting the usage and users of payment cards or similar payment instruments,
• security and standardization regarding cards and similar payment instruments,
• stakeholder communications to contribute to the healthy sustainable growth of payment systems

While domestic card schemes and payment associations in Europe are members of ECPA, TROY Turkish domestic card scheme became its first member from outside of Europe. The organization, which took place in Istanbul, was hosted by TROY after the membership.

The World Bank, which has supported the conference since its first day, has been working on the development of payment systems in less developed and developing countries. Their goal is to establish solid payment systems to decrease use of cash for payments in order to increase financial inclusion and improve economic prosperity in these countries.

The main theme of this year’s conference was “Change and Innovation in Domestic Payments”. In the opening presentation made by Chair of European Payments Council, shared information about the innovation from different fields such as physics, economics, politics, history, literature, mathematics and production. The aim of the presentation was to summarize the council’s view of the frameworks that they prepare for regulators in European zone to regulate the payments in Europe. He summarized the points to be considered in the process of innovation as follows:

• Accept confusion, “feel stupid”.
• Make choices and trade-offs.
• Don’t overlook the obvious and closest.
• Adapt to the environment, but not blindly.
• Don’t mistake daydreaming for creativity.
• Aim to provide delight.
• Don’t wait until everything is completed.
• Nurture ideas but remain in touch with the market.“Going innovation is a risky business but not going is even much more riskier”.

“Going innovation is a risky business but not going is even much more riskier” is how John Chaplin started his speech and shared the results of “Domestic Payment Schemes Innovation – Finding The Right Route” research completed by “Payments Innovation Jury”. I recommend you to review the details of the research.

Our Vice President of BRSA Mr. Muhammet Cerit detailed the regulatory framework in Turkey starting from the banking umbrella into the payments. He gave information about the working groups composed of public institutions established in the recent years, in order to keep track of new technologies and trends closely. He mentioned the recent regulatory areas including open banking concept which drafted in 2019.

In the panel moderated by The World Bank, representatives from Central Bank of Turkish Republic, South African Reserve Bank and European Central Bank discussed the roles of central banks as overseer, operator and catalyst in the payment systems. In this panel, the common denominator that regulators unite in the face of the rapid development of new technologies was cyber risks and protection of data.

Following the panel, International Director of the PCI Security Standards Council brought a new perspective to the main theme of the conference by saying “Fraudsters innovate too” for the issues considered beforehand. Cyber-attacks and data fraud/theft ranked 3rd and 4th in the annual report, namely “The Global Risks Report 2019”, published by World Economic Forum. I would like to take your attention to the fact that almost all the other risks in the top 10 are related to the environmental risks. He emphasized to the misconception that information security and innovation are often seen as pulling against each other. But on the contrary, they should pull together to combat against cyber-crime.

It was my honor to share the developments in the Turkish card market, the opportunity windows with a potential to increase digital payments, where our domestic card scheme stands at the moment and what our future plans are, in the closing session of the first day. During presentation the traditional payment habits of Turkish people, which is the reason behind the growth of card payments, took the attraction of attendees. Banking sector has successfully implemented these habits into card products and we have come to these days. Just like the motto that TROY uses in advanced payment techniques marketing communication, “That’s how Turkish people pay”.

At the opening of second day, the managing director of BankServAfrica, the South African clearing and switch company, made a hard start by saying, “Cash kills”. At that moment I was thinking about the germs in the paper money, he mentioned about the high frequency of armored CIT cars being robbed.

He shared “instant payments on mobile phones” roadmap that aims increasing financial inclusion in the society. However, he also emphasized that the economic and social development they dreamed of would not be sufficient unless there was a platform for financial literacy with governmental support and financial literacy education.

In an environment where payments were debated, it would be impossible not to mention Bitcoin, Libra and digital currency developed by Central Bank. Jean Michel Godeffroy, former Director of European Central Bank Payment Systems and Market Infrastructures, assessed whether blockchain-based payment systems would pose a threat to conventional card payments. Could these coins replace official money?

• Bitcoin is not suitable due to fluctuations in value. Regulators have considered bitcoin not as a currency but as a highly speculative crypto-asset.
• Libra’s impact would be to a very limited extent. It seems that many governments/regulators have over-reacted.
• In the long run, e-krona may have an impact, because bits and bytes have replaced paper everywhere. But it is not clear whether people will see the benefits of using digital money rather than bank money. In any case, central banks will not issue cards; card schemes could also process these central bank digital currencies in principle. But competition with instant credit transfers.

The most interesting session of the second day was Innovation Showcase, which lasted nearly 1.5 hours, where solutions that dramatically impacted domestic payments in their markets were shared in the last 1–2 years. We listened the use of the local card scheme in India for transportation, the change of the in-store payment habits in Norway via merging domestic card scheme, digital wallet and digital ID, the financial inclusion strategy that domestic card scheme of Nigeria that is implemented on virtual cards tied to mobile phones, Morocco’s fight to decrease cash by implementing a switch for both card payments and instant payments and the development of Egypt domestic scheme.

ECPA invites the conference participants through the network of its members together with The World Bank. A kind of half-closed group composed of 110 people from 45 countries left Turkey with potential business relationships and beautiful memories about İstanbul after 1.5 days-long intensive program.

For me the proudest moments were where our representatives from BRSA and Central Bank of Turkish Republic thanked our company BKM by highlighting the strong card payment infrastructure owned by Turkey and when each and every participant of the conference separately thanked TROY and BKM for the organization.