IBS Journal February 2017
45
“UNDERLYING TECHNOLOGICAL CHANGE IS BEING HELPED ALONG HERE BY THE REGULATOR, AND THE ADVANCE IS TO BE WELCOMED”
to oil the wheels of e-commerce, giving comfort to and incentivising a payee to release goods or deliver a service without further delay.
To allow this, PSD2 will require all banks and other “account information service providers” who give customers online payment accounts to offer licenced TPPs an online interface so that they can – with customer consent – access the account information required to carry out their permitted functions. The extent of the change that this could provoke should not be underestimated. Into a well-established market will now enter organisations with business models and channels of customer communication that are vastly different from the traditional banking modus operandi. The presence of these new entrants, and the customer experience they offer, has the potential to trigger a real revolution in the structure and practices of the payments market.
A welcome change
So while on the face of it, PSD2 simply acknowledges changes that have already occurred in the market, it may actually drive further change in its own right: underlying technological change is being helped along here by the regulator, and the advance is to be welcomed.
The industry will have to adapt. For financial service providers, process and IT system adjustments will have to be made, to comply with various rule changes in consequence of PSD2’s scope extension and to roll-out 2-factor customer authentication. PSD2 also
places welcome pressure on existing industry players to collaborate if they wish to operate a common third- party interface, and obligates both incumbents and third-parties to cooperate in order to ensure the smooth running of new third-party functions. These burdens are nonetheless a relatively minor price to pay for a more digitalised open payments market across the EU/EEA.
For corporates, PSD2 should not mean much in the way of direct changes. They may, however, consider adapting their set-ups to make use of new third-party services in order to enhance their account information and payment operations, in which case they should understand how these providers are now regulated. Otherwise, unlike when SEPA was introduced, there is no major compliance burden – only the benefits of a payments market newly galvanised by regulation.
As to what shape the market will assume, the operation of the TPPs is predicted to prompt some existing providers to revise their business models and extend their offerings – to focus on more convenient channels of customer communication, greater visibility over payments and accounts, targeted and added-value information, and faster payments. In some cases, this may occur through collaboration between incumbents and new players. Finally, some also see PSD2 as pushing the market in the direction of Open Banking, as open APIs are adopted to facilitate communication between existing and new third- party providers.
www.ibsintelligence.com
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