SMFSC Proposes Stronger Safeguards for Payment Users

SMFSC Strengthens Safeguards for Payment Service Users

The San Marino Financial Standard Council (SMFSC) has proposed a new set of rules designed to enhance customer protection within the payments industry, aiming to strengthen trust, accountability, and financial resilience across this rapidly expanding sector.

The proposals, published as part of the council’s ongoing review of payment services regulation, come in response to the growing scale and complexity of digital payments and the need for clearer safeguards for consumers and small businesses that rely on these firms for everyday financial transactions.

Addressing Emerging Risks in a Digital Payments Landscape

With digital payment platforms increasingly serving as the backbone of both retail and commercial finance, SMFSC identified several areas where existing protections may be insufficient—particularly around customer fund safeguarding, dispute resolution, and corporate governance.

The proposed rules aim to:

• Ensure full segregation of customer funds, preventing misuse or commingling with company operating accounts.
  
• Mandate faster reimbursement procedures in the event of payment failures or unauthorized transactions.
  
• Strengthen oversight of safeguarding arrangements, including independent audits and periodic compliance reports.
  
• Introduce clearer standards for communication and disclosure, ensuring customers understand their rights and risks.
  

“Innovation in payments must go hand in hand with protection,” said an SMFSC spokesperson.
“Our proposals are designed to ensure that firms operating in this space maintain the highest standards of integrity and consumer care.”

Learning from International Experience

SMFSC’s initiative builds on lessons from global developments, such as the EU Payment Services Directive (PSD2) and the UK Financial Conduct Authority’s safeguarding reviews, adapting them to San Marino’s regulatory context.

The council emphasized that payment firms play a critical role in financial inclusion and digital transformation, but rapid innovation can also amplify risks of fraud, insolvency, or operational disruption.
The proposed framework seeks to create a balanced environment—supporting innovation while ensuring that customers’ funds and data remain fully protected.

Enhancing Corporate Responsibility and Supervision

Under the new proposals, SMFSC would require payment firms to:

• Maintain robust risk management systems to prevent fraud and operational failures.
  
• Implement board-level accountability for safeguarding obligations.
  
• Report significant incidents or security breaches promptly to the council.
  
• Participate in industry-wide self-regulatory programs promoting best practices in compliance and ethics.
  

These measures are intended to create a culture of proactive responsibility rather than reactive enforcement, aligning with SMFSC’s broader philosophy of self-regulation supported by oversight.

Consultation and Next Steps

SMFSC has opened a public consultation period, inviting feedback from payment firms, consumer organizations, and financial technology stakeholders.
The consultation will remain open until early 2026, after which the council plans to finalize and implement the new rules in phases.

Training sessions and compliance workshops will be introduced to help firms adapt smoothly to the new standards, particularly smaller operators transitioning from legacy frameworks.

A Step Toward a Safer, Smarter Payments Ecosystem

The proposed rules represent an important milestone in SMFSC’s mission to build a transparent and accountable financial system in San Marino.
By reinforcing consumer protection while encouraging technological advancement, the council seeks to ensure that trust remains at the core of digital finance.

“The payments industry is evolving faster than ever,” SMFSC concluded.
“Our role is to make sure progress does not come at the expense of protection.”