PSD2 is approaching soon, just a few months left. But do you know what exactly PSD2 is? And more important, what does PSD2 mean for your businesses? PSD2 enables relations of banks, to use (selected) third-party providers to manage their financial data. In the near future, you maybe will use social media to directly pay your bills, while still having your money safely placed in your own bank account(s).
With the coming of PSD2, banks are obligated to provide these (selected) third-party providers access to their customers’ accounts through open API’s. This will enable third-parties to create financial services on top of the banks relation data or banks’ infrastructure.
Banks get a different role and since these third-party companies can now be their competition, banks are working together with these FinTech companies. PSD2 will fundamentally change the order to cash value chain, what business models are profitable, and customer expectations. Through the directive, the European Commission aims to improve innovation, reinforce consumer protection and improve the security of internet payments and account access within the EU and EEA.
For banks, PSD2 might possess substantial business challenges. IT costs will increase dramatically due to new security requirements and the opening of API’s. And, as FinTech’s take over the customer interaction, banks may find it increasingly difficult to differentiate themselves in the market for offering loans. The first business cases show us successful new products for renewed loan offerings based on actual data, PSD2 will boost product development, end-users will take advance of new market propositions.
What exactly will PSD2 bring?
- The introduction and regulation of third-party payment service providers
- 2 types of providers will be selected, those that offer:
- Payment Initiation Services Providers – PISP
- Account Information Service Providers – AISP
- The unconditional right of refund for direct debits under the SEPA CORE scheme
- A two-factor authentication check out system
- Ban on additional costs for card payments
- Better consumer protection against fraud, capping any potential payments if an unauthorized payment is made up to €50
- Improved consumer protection for payments made outside of the EU or in non-EU currencies
Mark van de Griendt – Cash Management Expert at PowertoPay
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