The second Payment Services Directive (PSD2) took effect in January 2018 but was actually agreed three years before after at least three years of haggling. Most notably, PSD2 heralded the 'open banking' revolution, by creating a regulatory requirement for banks to co-operate with regulated providers of 'account information services' and 'payment initiation services'. Now the European Commission is launching two online consultations to review the effectiveness of PSD2, one from the standpoint of the general public and the other among those with specific knowledge of the payments industry. Cue another six years of regulatory negotiation... Let us know if we can help.
The European Commission has already signaled a commitment to extending the concept of 'open banking' more widely. The Digital Finance Strategy and the Retail Payments Strategy aim "to allow customer data... to be shared and re-used by financial service providers for creating new and improved services, subject to customer agreement as well as the effective application of data protection rules and security safeguards."
That would draw together information from all types of financial services - from payments to pensions to investments to insurance - enabling customers (and service providers they approve) to develop an overall picture of the their financial needs and opportunities.
Issues for Payment Services Specifically
Of concern to the payments industry will be:
- whether the various restrictions on regulated institutions are working effciently;
- whether the amounts of capital or other thresholds should be raised or lowered;
- differing interpretation of rules that are supposed to be harmonised throughout the EEA;
- the effectiveness of 'strong cusotmer authentication' (SCA) and online access to payment accounts; and
- whether certain exclusions should be narrower to bring some service providers within the regulatory sphere, including certain cryptoasset service providers.
Have your say...
The saga surrounding the formulation of PSD2 and its eventual implementation (especially relating to the impact of SCA on e-commerce and restrictions on payment surcharging) should be argument enough for actively participating in the latest review payments regulation. UK findings that card acquiring services do not work well for most merchants means that retailers in particular should make sure their voices are heard.