Measures to manage the risk
The Legal & Regulatory Affairs Department regularly conducts training and awareness programs for executive management in the Group’s subsidiaries. In 2021, the Group carried out a review of the operating procedures of the national professional associations to which its subsidiaries belong. The Group also launched a new compulsory training module on compliance with competition rules, aimed at all employees.
184.108.40.206 Risk related to enhanced regulatory oversight over the Group’s activities via banking regulations
Two factors tend to increase the risk of enhanced regulatory oversight over our activities via banking regulations: (i) the increase in the number of digital solutions coupled with strong growth in the share of digital business volume, and (ii) the increasingly complex legislative and regulatory framework applicable to payment services and related solutions.
Consequently, the switch from paper vouchers to digital solutions, the launch of digital Fleet & Mobility Solutions and Corporate Payment Services together with the Group’s external growth strategy in these two markets are leading to an increase in both the number of digital solutions and their contribution to overall business volume. In line with this, digital solutions accounted for 90% of the Edenred group’s business volume in 2021.
At the same time, there are more and more laws and regulations governing payment services and/or e-money issuance, notably to promote financial inclusion and boost innovation in banking, but which nonetheless require the introduction of measures that are technically or financial onerous for payment solution providers.
In the European Union, directive (EU) 2015/2366, known as the Payment Services directive 2 (PSD2), enshrines the specific features of digital Employee Benefits, explicitly excluding most of these solutions from the scope of banking and payment regulations, but nevertheless introducing an obligation to notify the local regulator for other more limited-type solutions. Outside of the European Union, countries such as Turkey, Brazil, Uruguay, Chile, the United States, Japan, India and several Southeast Asian countries have introduced legislative and regulatory requirements that apply specifically to payment services and/or e-money issuance. In most cases, the specific nature of our businesses and the ways in which these differ from payment activities are clearly recognized. However, some of these regulations affect all or part of our businesses. These regulations could require the Group to take measures that will impact:
- our organization, for example, by making it necessary to obtain a specific type of license, possibly for a dedicated entity;
- our business model, for example, by limiting commissions billable to corporate clients or partner merchants and the repayment of unused balances on expired cards; and/or
- our operations, for example, by introducing stricter rules on claims-processing deadlines and obligations to perform due diligence on corporate clients.
These legal and regulatory obstacles may limit the Group’s ability to grow its businesses. The obstacles may be unexpected and require the deployment of resources and investments, which may have an adverse effect on the Group’s results of operations and financial position.
Measures to manage the risk
As it does for changes in the laws and regulations applicable to solutions that qualify for specific tax treatment, the Legal & Regulatory Affairs Department implements targeted measures such as:
- continuously monitoring legal, political, social and economic developments in the Group’s host countries;
- developing institutional tools that demonstrate the specific nature of Edenred’s solutions vis-à-vis e-money or payment services;
- identifying the core players that are involved at the international, the European and the national level, and developing long-term contacts with them;
- participating in public debate, in order to remain a preferred contact of international organizations, European institutions and national decision-makers, in defending Edenred’s interests and promoting its business model.
In some countries, specific organizations have also been set up to issue payment instruments and manage e-money or payment services under the oversight of the local supervisor in order to comply with legal and regulatory requirements applicable to certain solutions. This is notably the case in France, Italy, Brazil, the United Kingdom, Belgium, Turkey and Mexico.
220.127.116.11 Risks related to corruption, money laundering and/or terrorist financing schemes
As a French company employing over 500 people and generating total revenue in excess of €100 million, Edenred must comply with all provisions of France’s Sapin 2 Act concerning transparency, the fight against corruption and the modernization of the economy.
As a stakeholder in the deployment of social policies in most of the countries in which it operates, working for both businesses and local authorities, the Group may be exposed to a risk of passive or active involvement in processes of corruption.