Hogan Lovells 2024 Election Impact and Congressional Outlook Report
Insights and Analysis
Payments Conference 2024
12 December 2024
On Wednesday, 20 November, the Hogan Lovells Payments Conference 2024 brought together some of the brightest minds in industry and government for a day of insightful discussions on the future of payments. Please find summaries and links to recordings of the sessions below. Fuller summaries are included for sessions for which the recording is not being made available.
Global Payments Evolution
In this panel, moderated by Eimear O’Brien, a Financial Services partner in our Dublin office, our global payments team explored the dynamic landscape of payments law and regulation in key jurisdictions from around the globe. The session covered current market developments and the future direction of payment systems worldwide, highlighting key changes and challenges that shape the industry.
Fireside chat with Charlotte Crosswell OBE
Roger Tym hosted an engaging fireside chat with Charlotte Crosswell, a prominent leader in the payments industry and the Chair of CFIT (The Centre for Finance, Innovation and Technology), which delved into her background and career journey as well as CFIT’s history, current position and future aims. The discussion went on to explore current developments in fintech and payments as well as future challenges and opportunities.
Unlocking growth in payments with data and technology
Hogan Lovells partner John Salmon led the panel discussion on the power of data and technology in transforming the payments space. The panel included Dr Louise Beaumont (Senior Vice President, Global Open Banking & Open Finance Engagement, Mastercard), Henk Van Hulle (CEO, Open Banking), Adnan Sarwar (Vice-President, Legal, J.P. Morgan) and Chris James (General Counsel, Zing).
The panel began by reflecting on the recently published National Payments Vision (NPV) and the Mansion House speech delivered by the Chancellor of the Exchequer Rachel Reeves on 14 November 2024. The panelists shared their optimism for these developments and welcomed the clarity brought by the NPV regarding the roadmap for the future of the payments sector. A key point which was drawn out (among other things) is the helpful confirmation of the single authority approach to regulating Open Banking to ensure coherence between data sharing and payment initiation. Panelists also highlighted the significance of the NPV’s recognition for the need to establish a commercial model at the heart of the Open Banking ecosystem, which will help to encourage investment in innovation and facilitate growth.
The panelists also welcomed the transition from Open Banking towards Open Finance -the publication of the NPV injects fresh momentum into this space, which will hopefully be carried forward into the implementation of Open Finance frameworks and smart data schemes more broadly. There is potential in exploring the sharing of both private sector and public sector data (depending on the use case), in order to power those services which in future should be more personalized, predictive and pre-emptive, and ultimately for the benefit of the customer.
The issue of interoperability was highlighted as a critical factor for success. Notably, interoperability is a concept which spans beyond technology (e.g. APIs), but also in other areas such as economics (i.e. to ensure value creation for all participants) and data privacy (i.e. to protect and monitor exchanges of data), as well as interoperability of data schemes to enable cross-border payments and data-sharing. Additionally, the discussion highlighted the need for innovators to focus on novel use cases and new ways of creating value arising from being granted access to multiple sources of data, beyond making marginal improvements to existing solutions or processes. More broadly, the panelists agreed that a healthy level of competition, driven by rich access to data is important to support diversity of service providers.
With regards to artificial intelligence (AI), the panelists discussed potential use cases for AI, with fraud and consumer protection being clear examples. Another is the potential for AI to empower individuals to take control of their finances through more personalized solutions which are powered by an individuals’ data. The panelists further discussed a more gradual way that AI may transform the sector, by leveraging the ability of AI to solve minor but numerous frictions in everyday life based on pattern recognition (e.g. payment processes in supermarkets).
Focus on Financial Crime – risks & strategies
Financial crime remains one of the biggest challenges for the payments industry. This session, moderated by Financial Crime Partner Claire Lipworth and including Jamie Slater (Senior Policy Advisor, HM Treasury), Janine Hirt (CEO, Innovate Finance) and Andreas Doser (Counsel, Hogan Lovells) as panelists, discussed the evolving landscape of financial crime, including the new reimbursement regime for APP scams and the role of technology in detecting and preventing fraud.
Where is money and its use for payments heading?
The form of money has evolved significantly over centuries, but we are now witnessing a rapid, multi-generational transformation. This panel examined the future of money in an increasingly digitized payments landscape.
The panel painted a vivid picture of payment trends, noting that innovation is often more rapid in markets with fewer legacy systems: such as the rise of the PIX payments system in Brazil or QR code payments in Asia. The panel noted that federally mandated programs helped to build consumer trust and led to wider adoption; by contrast the lack of regulatory clarity tends to stifle innovation.
Central banks across the world are exploring central bank digital currencies - we have seen adoption of a CBDC in China for example, but in Europe and the UK there is more caution and debates continue about the merits of both retail and wholesale CBDCs. From a UK perspective, the case for a digital pound is considered stronger for wholesale transactions, where stability and interoperability are key. For retail transactions, it is arguable that the private sector should be able to innovate without the need a retail CBDC. Generally, when it comes to CBDCs, one has to be mindful of the important economic role of the banking sector in creating credit - a role CBDCs cannot fulfil. Similarly in the EU, the European Central Bank (ECB) is focused on particular use cases and has placed greater emphasis on a digital euro as a payment mechanism rather than a store of value. In the EU there are differing views about the benefits of introducing a digital euro when current payment systems, such as instant payments, are viewed as already delivering efficient and cost-effective solutions for consumers.
The emergence of tokenized deposits and stablecoins represents the next frontier. However, these innovations must align with policy objectives, which differ around the globe. The panel noted that stablecoins are gaining traction, particularly in markets like Singapore, where they have been used in high-volume transactions. Stablecoins are the only on-chain asset that currently offer transferability and are seen as an important tool in the evolving financial ecosystem. Work is underway in industry to explore how stablecoin transactions can align with traditional settlement methods. Central banks see stablecoins as an opportunity to improve efficiencies and lower costs in the financial system, while maintaining the stability of money. Whether CBDCs, tokenized deposits or stablecoins, the goal of any future form of money must be stability, trust and utility.
Building on the success of Open Banking, Open Finance continues to hold promise but requires a cultural shift towards greater comfort with data sharing. In the EU, the FIDA regulation is poised to be a game changer. The UK is also committed to legislate to unlock the potential of Open Finance. And as payment regulation often reflects market dynamics, we are reminded that the growth of contactless payments during COVID proves that consumer needs will drive change and innovation.
Looking ahead, the panel surmised that in future there would be a diverse system with a broader range of payment options, with stablecoins, tokenized deposits, and CBDCs each serving different purposes. Different forms of money could have different functionalities and it makes sense to have competition amongst these to encourage innovation. Ultimately, the goal should be to ensure seamless interoperability across these various forms of money, supporting the concept of the "singleness of money" and paving the way for the development of open finance and wholesale digital money. A key challenge remains creating standardized interfaces to ensure smooth transitions across a range of payment options.
National Payments Vision – Insights and Q&A with Roisin Edwards from His Majesty's Treasury
Roisin Edwards, Senior Policy Advisor at HM Treasury, provided an in-depth look at the government’s ambitions for UK payments in 2025 and beyond, including the government’s work on the National Payments Vision. For the second half of the session, Roisin was joined by Senior Associate Elizabeth Greaves who moderated the Q&A.
Break-out sessions
To close the conference, we asked participants to join one of the below three breakout sessions to participate in an interactive discussion on PSD3, other regulatory developments in payments or the future of the payments industry.
Breakout 1: PSD3
Hosted by Counsel Franck Dupret and Senior Associate Charles-Henri Bernard, this session explored the latest developments and implications of the new Payment Services Directive with the discussion focusing on the new e-money regime (licensing, safeguarding, distribution), security of payment transactions, fraud, exemptions and UK areas of divergence.
Breakout 2: Regulatory developments in Payments
Facilitated by Eoin O’Connor and Nikki Ogun, this conversation explored upcoming regulations set to impact the payments industry in addition to PSD3. Key areas covered were the requirement of payment services to acquire licences to operate in the Crypto industry, the current regulatory landscape for digital assets being used for payments in the UK and EU, how UK regulators should treat the growing use of credit at point of sale and finally, the regulation of marketplaces, specifically in relation to continued narrowing of the scope of payment services licence exemptions.
Breakout 3: Future of the Payments Industry
This session, led by Global Head of Financial Services Jon Chertkow, Counsel Charley Elliott and Senior Associate Charlie Middleton, explored emerging trends and technologies shaping payment systems. Key themes raised in the session included the introduction of stablecoin to facilitate cross border payments, a greater coordinated fraud response facilitated by the more efficient sharing of data, the future of cash and the continuing need for developing trust in differing payment methods and services.
Participants included Roger Tym, Eimear O’Brien, Jonathan Chertkow, James Black, Elizabeth Boison, Isabel Costa Carvalho, Federico De Noriega Olea, Jeffrey Greenbaum, Sebastien Gros, Tommy Liu, Claire Lipworth, Sinéad Meany, Eoin O’Connor, Andrew McGinty, Richard Reimer, Pierre Reuter, John Salmon, Mathilde Soetens, Mark Vincent, Victor de Vlaam, Sarah Wrage, Franck Dupret, Andreas Doser, Janelle de Ruiter, Lavan Thasarathakumar, Charles Henri-Bernard, Charlie Elliott, Charlie Middleton, and Nikki Ogun.
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