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Given the current circumstances, we are all eager for certainty and safety. Nevertheless, which are the alternatives at hand to limit physical interaction, but, in the same time, to enable us to continue making payments, as well as, if needed, to access new financing?
Contactless and online payments
In line with the recommendations of local authorities, payers will need to turn, as much as practicable, to online apps and mobile banking, cards and other contactless means of payment, when purchasing goods or services.
The persons that do not benefit – yet - from distance payment solutions (such as internet and mobile banking, cards – even virtual cards), can opt for contacting their banks or payment institutions, so as to identify the necessary steps and conditions for acquiring such services. The underlying agreements can be concluded at distance, without excessive formalities.
Given the growing stream of online payments, it is important to carefully observe the security requirements related to the authentication of the payer, as well as the authorisation of the payment. As these aspects are particular for each bank (payment institution), the payer should ensure that it observes the relevant conditions for payment authorisation - either by using a token, certain codes or applications, in line with the provisions of the underlying internet and mobile banking agreements, or, as the case, (debit or credit) card agreements.
COVID-19 impact on financing
At a (Pan-)European scale, the authorities have also turned their attention towards the economic impact of the new coronavirus: the European Central Bank encourages banks to grant financing to the companies affected by COVID-19 and the European Bank for Reconstruction and Development has already set a framework for financial support of certain impacted clients.
Implicitly, at a local level, affected individuals or companies may seek access to new financing.
With respect to retail clients, the conclusion of consumer loan agreements (similarly to payment services agreements) may take place at distance, with the observance of enhanced pre-contractual information requirements – the client needs to be duly informed about its rights and obligations (such as costs, fees, interest, etc.), in order to make an appropriate decision.
While the conclusion of loan agreements with corporate debtors does not benefit from a specific legal framework, such as that protecting consumers, certain aspects must, nevertheless, be taken into consideration – e.g. negotiating with good faith – ensuring that the lender is provided with accurate information about the financial status of the debtor in the actual context, the accommodation (or carving-out) of the existing circumstances from a hardship perspective, the use of electronic means for signing.
Nevertheless, companies could also consider intra-group financing schemes, in line with the applicable regulations. By way of example, cash pooling mechanisms could be implemented, allowing, where needed and available, a recurrent distribution of liquidity between the members of the same group.