From January 2018, the EU regulation, Payment Services Directive 2 (PSD2), is set to change the payment services landscape for established banks, new entrants and FinTech companies alike.
Aiming to drive innovation, transparency and competition for the benefit of consumers, the directive requires European banks to open their infrastructures to third-party providers while ensuring adequate security.
The first Payment Services Directive was introduced in 2007 to create a single market for payments within the European Union. In response to evolving customer demands and the rise of new payment-related FinTech companies, the revised directive aims to create a level playing field for all payment services providers.
PSD2 requires banks to open their payments infrastructure and customer data assets to new forms of payment organisations. It mandates the opening of banks’ application programming interfaces (APIs) to third parties, while ensuring enhanced security and strong customer protection.
All EU member states must implement PSD2 into their national regulations by 13 January 2018, which poses strategic, technological and operational challenges for retail banking. There will also be opportunities for banks that can implement a timely strategic response to the new directive.
By lowering the barriers for entry to third-party providers and FinTechs, PSD2 is set to disrupt the payment industry and will impact across all stakeholder groups. Find out what this will mean for:
As the implementation date for PSD2 swiftly approaches, our advice to Irish banks is to act now. Steps to take include: