Redefined Payment Landscape by 2025: Global Safety Regulations Set to Make a Mark
In key markets such as the UK, EU, and Canada, regulatory bodies have made significant strides in enhancing safeguarding measures for payment and e-money institutions. These updates focus on strengthening data protection, cybersecurity, and regulatory compliance frameworks, with far-reaching implications for how these institutions manage customer data and maintain operational security.
United Kingdom
The UK is implementing the UK GDPR, mirroring the EU's GDPR, requiring payment and e-money institutions to establish a lawful basis for processing transaction data. Firms must ensure transparency and fairness in data use. The Financial Conduct Authority (FCA) has set faster authorization targets for firms, aiming to balance rapid market entry with maintaining regulatory safeguards.
The UK's Financial Services and Markets Act 2000 and the forthcoming Basel 3.1 implementation (effective from January 2027) emphasize financial stability and the soundness of institutions, influencing the capital requirements and risk management for payment entities. The FCA and the Payment Systems Regulator (PSR) have updated the regulatory fees payable by payment institutions for 2025/26, impacting their operational costs and financial planning.
European Union
The EU's NIS 2 Directive imposes stronger cybersecurity requirements on payment platforms, including payment and e-money institutions. These include implementing risk management frameworks, incident reporting within 24 hours, regular security testing, continuous monitoring, and board-level responsibility for cybersecurity governance. Non-compliance can lead to fines of up to €10 million or 2% of global turnover, with a compliance deadline of October 2025. The EU’s GDPR remains central to safeguarding transaction data.
Canada
Canadian payment and e-money institutions are generally required to comply with the Personal Information Protection and Electronic Documents Act (PIPEDA), which governs data privacy akin to GDPR. Canadian regulators emphasize strong cybersecurity practices, data protection, and clear consent for data use, parallel to the intensifying EU/UK requirements.
Impact on Payment and E-Money Institutions
Stricter data protection compliance mandates careful assessment of legal bases for data processing, increasingly detailed documentation, and ongoing monitoring to meet GDPR/UK GDPR standards. Cybersecurity obligations, especially under EU NIS 2, necessitate greater investment in security infrastructure and governance, elevating operational costs and requiring board-level oversight. Regulatory fees and faster authorization processes introduce both financial and administrative impacts, requiring institutions to plan for higher recurring costs and streamlined but thorough compliance processes.
Institutions failing to comply risk substantial fines, operational restrictions, and reputational damage. In light of these regulatory updates, it is crucial for payment and e-money institutions to bolster their governance, data handling, and cybersecurity frameworks. Planning for these changes is critical as 2025 progresses, especially regarding NIS 2 compliance deadlines in the EU and upcoming Basel 3.1 capital requirements in the UK.
Vixio, a leading provider of regulatory intelligence solutions, has released its 2025 Safeguarding Outlook, offering insights for firms operating in the UK, EU, and Canadian markets. John Gidla, Head of Global Regulatory Research & Analysis at Vixio, believes the UK's plan to overhaul its payments and e-money safeguarding framework aims to create legal certainty and ensure client funds are properly protected. Proper safeguarding measures are crucial to prevent consumers from losing millions of pounds.
- As the UK implements the UK GDPR and updates its regulatory fees, payment and e-money institutions must ensure transparency in data use, establish a lawful basis for processing transaction data, and plan for higher recurring costs due to these changes.
- In the European Union, payment and e-money institutions face significant cybersecurity requirements under the NIS 2 Directive, necessitating increased investment in security infrastructure and governance, and potential fines for non-compliance.
