A study by The Banking Scene (April 2019) shows that only 7% of the Belgians have already heard of PSD2. 23 of the 1,000 Belgian consumers interviewed (2.3%) could actually answer correctly that PSD2 will require banks to be more open for third parties. This shows that a lot of mist still hangs over the new European payment legislation for Belgians and probably also for a whole host of companies.
This is a guest post by Rik Coeckelbergs.
Is PSD2 a revolution?
PSD2 is not new. It has been a topic of discussion in the financial world for many years already.
PSD2 is an abbreviation that stands for “Payments Services Directive 2” and is the successor of PSD1 from 2010. The latter was intended to create a uniform payment market for the entire European Union. Cross-border payments were to be as simple, inexpensive, secure and efficient throughout Europe as a domestic transaction.
The impact thereof was and is particularly perceptible in the corporate segment, where cross-border transactions are more current and where higher amounts are involved.
PSD1 also lowered the threshold for institutions to offer payment services themselves by introducing a new permit for payment institutions. A transparent documentation of rights and obligations for Europe as a whole threw the door open for new players in this market.
PSD2 is a sequel to that. The greatest impact of PSD2 is that it will make it even easier for certain payment services to be offered by non-banking players. It essentially entails a number of rules that require banks to become digitally more open for third parties. These third parties will be given the opportunity to initiate payments or request account details in the name of their client.
The EU Member States had been given until the beginning of 2018 to implement changes in their national legislation as a result of PSD2. The PSD2 standards will apply as of 14 September 2019. These rules are defined by law and the bank has no control over them. Although this opening is limited to a certain extent (in particular to certain payment accounts), the impact for banks must not be underestimated. They are required to give access to accounts via Application Programming Interfaces (APIs).
For corporate clients of platforms such as Isabel, PSD2 is not new. Isabel has been providing multi-banking payment services for years. Isabel has made it possible to view the account details for nearly 25 years and it is possible to carry out transfers without having to log in a bank platform. Isabel has concluded bilateral agreements with her partner banks to simplify use in optimal fashion.
The experience of the financial sectors in APIs will also lead to many more creative solutions coming on the market in future. This will apply also for players such as Isabel which nowadays already provides a more extensive service than the minimum prescribed by PSD2.
Or rather an evolution?
Thanks to PSD2, new services will come on the market to make the financial management of your company easier in a safe way.
This is the aim of PSD2 in the digital world: to give clients control over their payments again with the necessary security conditions. New platforms must also gain access to accounts via APIs with the customer’s approval. This access can then lead to the sharing of digital account information, or the initiation of a payment. Authentication is nonetheless required at all times with the solution that your bank provides.
Once again, this is nothing new for Isabel. Enormous trust and confidence built up over years on cooperation between Isabel, the banks and clients constitute a sound basis for offering more than the standard PSD2 service. In this way, Isabel can focus more on user comfort: as a user, you can work in the same way in Isabel for all your banks.
The Banking Scene
Rik Coeckelbergs is the founder of The Banking Scene, a set on social media channels, and a yearly conference in Luxembourg and Belgium. He is passionate about banking and payments, conceptualizing ideas and enabling sustainable business models.
Prior to his current position, he was Payments and Management Consultant at Clear2Pay (now FIS), Business Controller at Colruyt and Senior Product Manager Daily Banking at bpost bank. In 2009, he created a Linkedin community “Innovation In Payments” which today has more than 24,000 active global members. This unique mix of multi-year experiences in Finance, Strategy and Marketing within Financial Services and Retail, has given Rik a holistic view of today’s challenging financial services market. At the same time, he has this hands-on approach that allows to tackle critical challenges and put dilemmas into the right context.