Spain’s most important banks have united to create Bizum, a payment platform which responds to the pressure of FinTech and the new European financial regulations.
20 july 2016
The project has been brewing for months, getting retouched, discussed, advancing carefully. Reaching such a gargantuan agreement is, in many ways, unheard of. There are so many interests in play. But one common to all: facing all the technological developments that caught banks unprepared, as well as the group of innovators (FinTech, phone manufacturers...) starting to rise.
Under increasing pressure, Spain’s main financial firms – they represent 95% of the Spanish national market, with just one question mark, ING Spain – have joined to launch the Bizum platform: a system for instant transfers and payments. SPP (Society for Payment Procedures) is responsible for the management of Bizum and will have the 27 entities who participate in the project as shareholders. Those with the highest participation (Caixabank, Santander, BBVA and Sabadell hold 63% of the total capital) will also have two councillors each while the others have at most one.
The highest amount that can be transferred in one go is, for now, €500.
Bizum’s key lies, naturally, on the use of mobile phones as payment tools. Each bank client will be able to link their current account with a mobile phone and, from the application, make payments or transfers of up to €500 to other individuals (using also their phone as a reference).
The system allows any action to be carried out near-instantly: between 1.5 and 10 seconds. This spec is essential for Bizum’s functioning and has a very simple explanation: the European Union is piling on the pressure to reduce the times of international transfers for 2017 (they currently take between 24 and 48 hours).
At launch, scheduled for September, Bizum will be limited to transactions between individuals, but it will gradually open its functions to online shopping and traditional commerce.
Although the project has been approved by the Bank of Spain, the CNMV remains vigilant over how the project unfolds.
Is it a safe system? Those backing the project are sure of it. The exact security measures for each transference will be specified by each financial institution and a password will be required to access the app each time. If the phone is lost, the process will be exactly the same as cancelling a credit card.
Another issue is if it complies with regulations and, here, competent authorities are giving it a good look. The CNMV (National Committee of the Stock Market) is going to closely evaluate the project in its first months in order to ensure it does not violate any principle of free competition. In particular, they will be paying attention to articles 1 and 2 of the Law of Competition Defence (1. Collusive behaviour and 2. Abuse of a dominant position). Particularly, they will keep an eye on the commissions applied and on the access of other banks who are not stockholders to the Bizum technology.
