PSD2: The European Lessons Learned and Shared
At a high level, the PSD2 regulation was put in place for the following noble objectives by the European Commission:
- Foster innovation in the payments and remittance space by allowing third party providers (TPPs) access to online payment accounts of banking customers
- Regulate those fintech companies in the market who were already provide alternate e-payment mechanisms by bringing them under the scope of PSD2
- Increase end consumer protection by introducing a number of specific and strict changes to refund policies, card stop functionality, reducing execution times on payments
- Making 2-factor authentication and dynamic payment linking mandatory across the union for enhanced security on online payments
In reality, what has transpired is a seemingly endless tug-of-war between fintechs and banks that only underscores the differences between these two “sides” in the overall PSD2 storyline. However, organizations like ECB, EBA, European Commission, EPC and ERPB are making tireless efforts to bridge this divide between these two factions by creating working groups with industry experts from both sides that produce opinion papers and guidance reports for the benefit of the industry at large.
For the rest of the world, this journey of Open Banking nudged by the PSD2 regulation may seem like a fascinating experience with a world of possibilities and collaborative win-win-win opportunities for banks, fintechs and ultimately customers! The reality is the industry has been left with a lot of anomalies to deal with for themselves. The timing of this regulation along with another major regulation in the form of GDPR has not been easy on the industry. Most organizations are reeling under pressure and are failing to cope with these myriad of changes imposed on them.
Don’t miss GPS 2018 and join this indepth track led by Karthik Jagannathan – Global Payments Director at Currency Research.