Using digital technologies, they try to redefine the provision of financial services to improve customer experience and to find their place on this highly competitive market. These new players position themselves mostly in market niches with a potential for further development. Such niches are, for example, the digital wallets, person-to-person (P2P) and business-to-business (B2B) payments, as well as value added services offered on the basis of existing traditional payment services. With the Second Payment Services Directive (PSD 2), two new types of electronic payment services were regulated in the European Union – payment initiation services and account information services. These new services are already offered in Bulgaria and provide technological basis for the implementation of the so-called ‘open banking’. It enables FinTech companies to enter the payment market more easily by introducing new business models, services and solutions. Examples for such services are aggregation of payment account data from different payment service providers, carrying out financial analysis, initiating payments from accounts held with other payment service providers, etc. Security of electronic payments remains in the focus of the European and Bulgarian regulators. Increased use of electronic payments and the recent boom in e-commerce pose new challenges with respect to protecting security of payments and electronic identity of customers. The most significant progress here was made in 2019 when the Europe-wide obligation for strong customer authentication was introduced. For this purpose, at least two independent elements of different categories must be used (knowledge, possession and inherence) when processing electronically initiated payments.

In case of remote payments, such as Internet payments, an additional requirement has been introduced for the so-called dynamic linking. It requires linking each transaction to a specific amount and a particular payee by sending one-time code messages by the payment service providers. The forthcoming review of the PSD 2 will provide a comprehensive assessment of the strong customer authentication impact on the level of payment fraud. New requirements are considered in order to reduce ‘social engineering’ and ‘phishing’ types of fraud, including a requirement to 1/2  BIS central bankers' speeches  match the payee’s name in the payment order with that of the account holder. Special emphasis will be placed on the prevention of instant payment fraud. Electronic identification and certificatebased solutions are explored as means of strong customer authentication. Recently, a special focus has been placed on re-defining and strengthening the oversight of the wider payment ecosystem. Specific steps in this aspect have been taken by the ECB with the draft of a single Eurosystem oversight framework for electronic payment instruments, schemes and arrangements (PISA framework), published last year. PISA framework aims to cover not only the traditional payment schemes and instruments (e.g. payment cards), but also innovative instruments, such as digital payment tokens backed by assets (e.g. stablecoins). Last September the European Commission published a Proposal for a Regulation on Markets in Crypto-assets (MiCA), which is currently under discussion.