Nowadays, most of the people affected in anyway by the payment sector have probably heard about PSD2 but, what is it exactly? Where and why does it emerge? How and from when will it affect?
The Second Payment Services Directive, known as PSD2, is preceded by the Payment Services Directive, published in 2007 by the European Union, whose goal was to create a single payment market. In November, 2015, the European Commision proposed the review of this first regulation, that gave rise to the PSD2. Later, this should be transposed to each country and, in the spanish case, this transposition took place on november, 23th 2018 with the Real Decreto – Ley 19/2018, de servicios de pago y otras medidas urgentes en materias financieras. After the regulation and the discussion of the stakeholders, the European Banking Authority (EBA) published the Regullatory Technical Standards (RTS), that define the cooperation frame and the information exchange through the competent authorities.
This updating and renewal of the regulation try to give answer to a context of great evolution and innovation that requires a regulation for the new business models that spring in the financial and payments ecosystem. Thus, the changes introduced with the directive will create an homogeneous framework of action for the different players, both traditional and new, and between the different regions of the European Economic Area. At the same time, these changes will benefit the consumer thanks to greater competition and boost of innovation, as well as more protection afforded by the new security requirements for transactions.
But, which are this changes?
The two updates that will probably have the greatest impact and generate the most important changes are those relating to security and the opening of banks’ API´s. About the first one, the regulations stablish Strong Customer Authentication (SCA) as mandatory, which is based on user authentication using a minimum of two factors and which will mainly affect online payments.
About the bank API’s opening, traditional players will have a main role, as they will be in charge of developing specific communication interfaces that allow an easy and safe transmission of customer data with third parties, when authorized by the user. This opening will drive the emergence of two new players: Payment Initiation Service Providers (PISP) and Account Information Service Providers (AISP).
Additionally, PSD2 will also introduce changes to the management of marketplaces’ funds and the prohibition of surcharges for the use of a certain payment method.
So who will be affected by the regulation?
PSD2 will mean a change for traditional banking, as well as for the new Fintech within the financial sector and for the big technological companies (such as GAFA) that have already begun to show their interest in the sector. In addition, its scope will reach to the user experience, so merchants should remain attentive to turn the changes into an opportunity to increase sales, specially in the online environment. Thus, it is precisely the end consumer who will receive the greatest changes in its favor, with increased protection and security, as well as greater decision-making power over its financial data. Therefore, the different players are facing a big challenge of adaptation to the regulations before their final implementation deadline, which will end on September 14th and will open up many challenges and opportunities for innovation.