EU Revises Payment Services Directive (XBIZ)

Read the full article by Cathy Beardsley at XBIZ.com

Europe’s latest regulation is about to take center stage.

The revised Payment Services Directive (PSD2) changes how payments will work across the EU, by opening up the financial services industry to more competition.

The regulation is built around the concept of “open banking,” where compliant businesses can access consumer bank accounts, either to process payments directly or offer other services. The goal is to provide more options for consumers.

Companies wanting to participate will have to work for it; they’ll be required to meet new guidelines for data security, customer authentication and the use of APIs to transfer data.

Under PSD2, service providers that want access to consumers’ banking data will fall under one of two categories: Payment Initiation Service Providers (PISPs) who initiate payments by transferring funds from a consumer’s bank account, eliminating the need to send a consumer through a payment processor such as Visa … and Account Information Service Providers (AISPs) who offer value-added services by leveraging customer bank accounts — for example, by offering an app that tracks your spending.

The goal is to drive innovation of new third-party products and services that use consumers’ existing banking data to help them make payments and manage their accounts. PSD2 creates the opportunity to access new markets while imposing strict regulations, ensuring anyone handling consumer information or transferring payment data is doing it safely.