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PSD2 Digital open payments
Could PSD2 catalyse a truly open, digital European payments landscape? asks Shahrokh Moinian, Global Head of Cash Management Corporates, Deutsche Bank
Services Directive introduced in 2007, provides a much- needed update of payments market regulation in Europe. This modernisation takes into account the far-reaching technological and market changes that have occurred since the first directive; however, PSD2’s introduction in January 2018 will do more than just provide an update on previous regulatory iterations. It will put the European payments market on a fast-track to an age of digital payments that has yet to be fully achieved across all member states.
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In short, PSD2 focuses on three key elements. First, it will extend the scope of PSD1 to EU payments in all currencies, and transactions where just one provider is located in the EU/European Economic Area (“one-leg-in” transactions). Second, it will increase security around electronic payments and data protection. Yet the greatest impact is likely to come from the third element: bringing under regulatory supervision the provision of certain payment-related services by Third Party Providers (TPPs) – which many TPPs are already supplying to customers – and allowing them controlled access to existing providers’ customer account data. This could be a game-changer for the payments market.
Enter the new payments players
Undoubtedly, payment channels and services have evolved significantly since PSD1, especially in the areas of internet payments and online account services. PSD2 brings regulation in line with technological changes by
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SD2, the revision of the first EU Payment
licencing three new categories of TPPs to perform certain payment-related activities.
Two of these are especially important: Account Information Service Providers (AISPs) will be allowed to provide consolidated online information on one or a number of payment accounts held by a payment service user, giving users quick and easy visibility of their financial situation as a whole. Payment Initiation Service Providers (PISPs), on the other hand, will be licenced to initiate payment orders at the request of a payment service user. This is already a widely-used mechanism
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