I've been hearing that the EU's PSD2 will be a major disruptor to financial services when it goes into effect in 2018. In a recent issue, The Green Sheet mentioned a Juniper Research report that identifies it, along with open API legislation in Europe, as top disruptive developments in financial services this year and next. I'd like to know more. What does it change, why is it important and how might it affect payment businesses?
Caris Blevins, Merchant Level Salesperson
The Revised Payment Services Directive (PSD2) and the Payment Services Directive (PSD) that preceded it were devised by the European Commission to give consumers greater protection and build a more competitive, innovative and secure financial services market in the European Union. Regulators in the region determined that disparate banking systems and regulations in each member state make banking fragmented, costly and limited in terms of options offered to consumers.
One huge change is that PSD2 obligates banks to provide access to their customers' accounts through application programming interfaces, which will enable those parties to build financial services on top of the banks' data and infrastructures. Juniper's Top 10 Disruptive Technologies in Fintech: 2017 report findings indicated PSD2 could lead to third-party startups undercutting established players, but the company noted that "an opportunity exists for co-operation between banks and startups; institutions may leverage their established brands in partnership with agile technology startups, to press first-mover advantage."
In addition, the PSD2 clarifies issues pertaining to liability for payments, mandates full disclosure of payment charges and calls for tougher rules pertaining to customer authentication. Any business serving as a European Payment Service Provider will be impacted by these and other aspects of PSD2. The landscape in Europe is expected to continue to evolve as EU member nations finish incorporating PSD2 rules into their national laws.
Thank you for your question. We will monitor this in 2018 to see how PSD2 affects U.S. payment service providers doing global business.
What do you expect the primary factors affecting payments will be in 2018? Please email your ideas to firstname.lastname@example.org.
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