Beat and Facebook (freepik, pixabay)
The entry of digital wallets into the field of payments in businesses has raised questions regarding the structure of the future payments market and the services that will develop in its wake, along with the use of information accumulated about customers and the transactions they have made. About a year ago, the Bank of Israel published a position regarding the use of digital wallets for the purpose of making payments in businesses, according to which some of the new ventures encourage competition, and their essence is to develop the world of payments and bring value to the Israeli consumer. This statement came with a slight caveat that the activity would be subject to a number of restrictions, including that information collected under a digital wallet would not be used to provide financial services or sell other financial products to customers until this issue was examined in all its aspects.
To examine the issue, the Governor of the Bank of Israel established an internal committee for mobile payments, headed by the Deputy Governor, Andrew Avir. Now, despite opposition to information transfer, published a year ago, the Bank of Israel is changing its approach and announcing that due to the strong players in the market, Beat for example, which has 2.5 million users, will allow information transfer between the various applications, subject to an agreement with customers.
The Bank of Israel believes that the market and its players should be encouraged to establish an infrastructure in the form of a database that will allow money transfers and payments between applications and payment accounts of various types, with the database linking the mobile phone number (or other ID such as email address) to credit details. .
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According to the bank’s announcement, the database will contribute to the development of the market in general and competition in particular, and will simplify the ability of existing players to offer additional services to their customers as well as new players to integrate into the market and offer innovative and advanced customer experiences relatively easily.
There are examples in the world of different types of infrastructure for the interface between payment applications. These infrastructures may be based on a central database, connection between existing databases or a type of link service or interface, where the identification of the customers is always by a single value such as a unique identification number such as ID number or telephone number.
The goal here is to dismantle the unofficial monopoly that dominates the market with the powerful players, so that in terms of convenience there will be no advantage to having a particular payment app because of the volume of customers it serves.
The use of the information accumulated from this activity will be subject, in addition to the customer’s consent, also to an agreement to be signed between the body offering the digital wallet and the card issuer. At this stage, the Bank of Israel does not intend to intervene in this market due to the marginal activity of the banks operating such wallets.
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