Baker McKenzie has been recognized in the FT Innovative Lawyers Europe Rankings 2017 and was ‘Highly Commended’ in three categories. This included the New markets and capital category for Project Bizum, an influential project for Spain’s e-payments industry; the Data knowledge and intelligence category for the BMK Digital project which combines legal and technology expertise to help clients identify, map and analyse large sets of data, and in the New business and service delivery models category for Baker McKenzie’s complex project management in more than 100 jurisdictions for Emerson, the US multinational.

The second edition of the Expansion Legal Awards highlighted the Project Bizum too, as a finalist in the category of Most Innovative Project conducted in Spain, which addresses new initiatives, disruptive solutions and internal management processes.

Innovativeness and implementation

The FinTech revolution has brought along a process of deep transformation in the financial services industry. The Spanish banking sector has come together and got underway t an absolutely groundbreaking, unique and disruptive project in Spain, that will substantially change payment methods as we know them today. 21 groups and 27 banking agencies, that add up to 95% of the market share of the sector, have been collaborating over the past months in Project Bizum, a complex innovation that allows banking institutions to create and implement a system of immediate payments -less than 2 seconds- from account to account between individuals and both in physical and online stores, available 24 hours a day and 365 days a year.

*law firms Baker McKenzie and Baño Leon advised on this project as well as a leading technology consultancy company. The system implements an agile multichannel service to send and receive immediate money transfers just by knowing the phone number of the other individual involved in the transaction. The platform for payments between individuals is already operating, and everything is ready for Bizum to launch its new system for making payments in physical and online stores in 2018.

Since the service roll-out - between individuals - in October of 2016, the growth of the project has been an absolute success in terms of users (recently reached half a million), transactions (more than 800.000) and the aggregate value of transfers (more than 40 million euros). Bizum hopes to reach one million users before the year end.

Market research conducted in relation to Bizum indicates the following relevant facts:

  • 47% of the registered users have used Bizum in the past week and 70% would surely recommend it
  • 60% use Bizum for split payments and 21% to pay for joint gifts
  • 79% finds immediateness to be Bizum's main advantage and the rest value its safety and convenience

The Spanish system Bizum entails an added value service, developed over the so-called iSCT (Immediate SEPA Credit Transfer) in the context of SEPA (Single European Payment Area), which represents the basic service. Baker Mckenzie has worked on this initiative for more than 2.400 hours,with a team of 4 partners and 14 lawyers specialized in the areas of law of financial services regulatory, tax, corporate governance, intellectual property and new technologies, while legal firm Baño Leon, has provided legal assistance in the area of competition, with one of counsel and one lawyer.

The design, development and implementation of the system and, therefore, its legal counselling, has focused mainly on two areas. On the one hand, from a consumer and B2C relationship perspective, the architects of the project had to negotiate, define and structure the strategic and legal aspects related to the use of the system, its relationship with users, etc. On the other hand, from the company's perspective, work has focused on designing the structure of, the internal relationships between partners, capital and financing structures, defining the systems and norms of corporate governance, economic rights, etc. Therefore, it has been a thorough legal assessment that has counted with the support of financial and technologic advisers and national and international regulatory bodies.

Internal and external repercussion of the project

Today, the National System of Electronic Compensation solely allows to execute ordinary transfers which take - except for those cases where the issuer/beneficiary are from the same bank- up to three days from the emission to the reception of the money. From now on, thanks to the efforts of the banking industry and other firms participating in project Bizum, it all is changing, to reduce the lapse to less than 2 seconds, with direct deposit into the users account and immediate availability of funds. Additionally, from a C2C perspective, the added value comes from the ability to instantly transfer money without the need of knowing the bank account number (IBAN) of the beneficiary. The user of Bizum only needs the phone number of the counterpart to send or solicit money. Bizum also enables of using transfer systems to make individual and collective transfer requests, a feature that was unheard of until now. In the C2R and C2eR relationships (between consumers and physical and online retailers) the main value added is the quickness, safety, and convenience of the service that helps businesses to increase their sales, whose amounts will be instantly reflected in their bank accounts.

Bizum comes during complex times for traditional banking in Spain and it will position it on the cutting edge of the financial digitalization area worldwide. This is a very ambitious project: according to the people in charge, Bizum aspires to manage 7% of all electronic bank transactions in 5 years, which accounts for 1 billion operations with a value of 30 billion euro. At the moment, more than 10 million people in Spain use their bank's mobile app at least once a month and 35% of the individuals that make electronic payments are already doing so through their phones, while 58% consider paying with their smartphones in the near future.

The system of instant payments is groundbreaking both from a domestic and international perspective; with this project, Spain becomes a leading player in this field in the Eurozone as currently, less than a dozen of European countries count with similar mechanisms.

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