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One of the EU’s key infrastructure providers has completed its acquisition of French payment fraud prevention service SEPAmail.eu, in a sign of clearing houses bringing on value-added services for customers.
STET, the French payments infrastructure provider, announced on January 23 that it had completed its acquisition of SEPAmail.eu, which provides a secure messaging service for payments.
“The acquisition of SEPAmail.eu contributes to the diversification of STET and consolidates its role as a European player at the forefront in the context of new European regulations around instant payments and IBAN name check,” said Pierre-Antoine Vacheron, chair of the board of directors at STET.
“I am sure that STET and SEPAmail.eu will be able to find the commercial and technical opportunities capable of accelerating their developments respectively,” Vacheron continued.
According to a statement from STET, the operation allows STET and SEPAmail.eu to combine a “perfect mastery” of the exchange protocols associated with IBAN verifications against proven mass payment processing infrastructures and instant payments.
This should give way to new fraud-fighting tools.
The acquisition could be seen through the lens of a Europe that is facing up to increased regulation in this space.
For example, confirmation of payee (CoP) rules are set to be introduced at EU-level as a result of the Instant Payments Regulation, which means new compliance requirements for payment service providers (PSPs).
Other infrastructure providers have launched similar initiatives. For example, in October 2023, Spain’s Iberpay opened up its Account Ownership Confirmation Service to bank clients
Kjeld Herreman, head of strategic advisory at RedCompass Labs, commented that this is part of a “wider trend” for clearing services.
This may be due to the European Central Bank (ECB) launching its TARGET Instant Payment Settlement in 2018, which has offered a cheaper infrastructure solution.
“Those services have emerged as a fierce competitor to commercial clearing,” he said. “Now, you have the ECB acting as both a competitor and regulator, and without the same profitability requirements faced by commercial clearing associations.”
“In short, a force to be reckoned with in retail payments.”
Herreman explained that ever since the ECB has entered the world of retail payments, clearing houses in Europe have begun to introduce value-added services. “This is so that they can justify their existence beyond the pricing advantage they had as a primary existential purpose in the past.”
He continued to point out that a big constraint that banks need to address is fraud prevention.
“CoP is being introduced via the Instant Payments Regulation, and the EU is going to go further too with liability rules set out in the Payment Services Regulation,” he said. “These are timely value-added services that clearing houses can provide to banks.”
Herreman added that it also makes sense for a clearing house to provide this kind of service.
“They can detect fraud patterns with the larger data sets afforded to them by their communities, and can leverage this to complement banks' internal fraud prevention systems."
