PSD2 is going to shake up ticketing – and much more besides. Not only could it be the kiss of life for carrier billing, but could change payments services for ever across Europe. Rory Maguire, managing director, Association for Interactive Media and Micropayments, explains
While every dark cloud on the horizon does not always have a silver lining, with a bit of work, creativity and a change to the ‘business as usual’ business, silver linings can be created from the highly restrictive ‘exclusion’ for telecoms networks inside PSD2 – which has now transitioned to all EU member state’s legislation and comes into force in January 2018.
For those that have followed the passage of this regulation spawned from the pen of some financial legal author tucked away in Brussells, clueless about the telecoms and Telemedia environments, the first draft potentially decimated the Telemedia industry and left more interpretation questions than answers.
The final draft after a lot of lobbying by our UK Treasury assisted and educated by a small team made up from PSA, aimm and MobileUK, was less restrictive, had new opportunities slotted in but still causes issue and is open to interpretation.
During the negotiation stages, the early morning call came to me (amongst many) from our Treasury rep: “I am off to Brussels. The Italians want transport tickets. What do you think?”. The quick response was “Agree, but delete the word Transport”, thus spawning the new opportunity: Digital Tickets.
But what about all the restrictions? Let’s recap on where it all got to…
The first area to understand is why, inside PSD2 which is designed for the payments industries, should a Telecoms exclusion exist? EU view some aspects of premium rate as a payment service just like card schemes and emoney.
Facilitating a payment transaction, i.e. taking money from your customer (payer) and passing it to another party (payee) is a payment service. If you conduct payment services as a regular part of your business activity then you need to be authorised to do so by your countries financial regulator and abide by their regulations. If you are a telecoms network or telecoms service provider, then you are excluded from the regulations up to a point but have to be authorised if you wish to go past this point. The exclusion defines this point as a series of limits.
The limits are: Only provide to your customers, digital content, digital services, voice services, charity donations and tickets. Set each transaction to maximum €50 (£42) and limit your subscribers aggregate payment service spend to €300 (£240) per month. Plus, do not allow any digital service to be converted to a physical good or service. However, “Tickets” are there to allow physical services.
The largest issues still remaining across EU telecom operators are counting and controlling on the monthly subscriber limit, the impossibility of controlling a single user on a shared telecoms subscription (e.g. the home or office phone), the interpretation of what exactly is a payment service, and the breaching of certain telecoms regulations when the consumer cannot spend beyond the €300 limit – as well as the angry complaint.
On the interpretation side, aimm is of the viewpoint that premium voice products cannot be viewed as a payment service as the telecoms provider is adding their own product (telecoms) to the service prior to delivery and retailing the bundled product. This is why they have to charge and pay VAT on the delivered service.
Direct Operator Billing, however is clearly a payment service as there is no requirement on telecoms from the network operator to facilitate the charge and in the UK, the charged amount flows through the value chain to the merchant followed by commission charges, similar to other payment services.
With premium SMS it can flip flop between these two interpretations dependent on the service delivery. A premium SMS charge for a music streaming service delivered via any comms is a payment service, but a text chat service dependent on the sms messages is not – in our view.
We are crowd funding for the cost of a full legal interpretation of these positions if any Telemedia readers are interested. In the meanwhile we are pushing on the opportunities that ticketing provides.
Ticket to ride and more
A digital ticket is defined as being a replacement for paper tickets. It’s that simple because we wrote it, not Brussels! Tickets give the holder certain rights; generally an entrance to a venue, travel or participation. Digital ticketing, up to 13th March 2018 is under the Financial Conduct Authority’s control and after that it is unfettered. You can buy a ticket and place the cost of it onto your telecoms bill.
The immediate and obvious usage is transport and parking. While services like Ringo have revolutionised car parking for the credit card enabled, try running for the train while navigating the IVR to book your day parking and worse, you STILL need to get your payment card out to tap in the three digit security code. 21st century parking is App based at best (location+ photo of car and menus to deter from default options) text message based at worst and charged to the mobile account.
Transport ticketing’s obvious usage is taking cash out of the equation (as Sweden did) and empowering the young to ride public transport. In 2018, some exiting (but secret) transport ticket launches are planned.
The less obvious but largest ticketing opportunities lie in the entertainment sectors. There are two major issues that are screaming for a mobile solution. Touts and distressed stock. There are also opportunities in improving audience engagement by mobilising their pre event and in-venue experiences.
According to the Fan Fair Alliance (http://fanfairalliance.org), touts buy up hug swathes of stock for popular events often in advance of public sales, creating an artificial “sold out” situation which increases the market value of the tickets. These tickets, acquired via hacking and bots are then sold at inflated prices on the secondary markets. The conspiracy theorist will link the fact that two of the four main secondary ticketing sites are owned by the primary ticket sellers. This activity rips off fans but does not benefit the bands or venue owners.
A digital ticket secured against a mobile number and presented through the device at the venue can eliminate touting and put the venues and artists back in control of ticket pricing. Coupled with mobile engagement, geo-fencing services inside the venue and allowing / facilitating digital (venue based) currencies can only delight the audience even more especially when your half time pre-paid beer is waiting for you at the bar.
Distressed stock is at the other end of the spectrum and has the venue manager worrying about the quantity of bums on seats. Those bums spend on periphery items such as drinks, snacks, programs, tee-shirts etc. so discounting the ticket is rewarded with additional revenue. But how to let potential audiences aware of the discounted seat is a problem needing a communications based solution coupled with payment.
Through our members, we are hearing of developments in these areas, ready for a 2018 release of the digital ticketing shackles and will showcase these services as a big win for our PSD2 lobbying.