With the EU’s Payment Service Directive (PSD2) going into effect in January 2018, banks have no time to waste in preparing for the changes it will bring.
The revised Payment Service Directive (PSD2) is on its way, bringing fundamental changes to the finance industry in the EU. With new and updated details released, it is time for banks to act to ensure they are ready when the PSD2 becomes effective.
Among the changes are new requirements for strong customer authentication (SCA), including support for two-factor authentication (2FA) for most payments, as well as the need to provide interfaces to so-called third-party providers (TPPs). Such TPPs can be payment initiation service providers (PISPs), but also account information service providers (AISPs) or a combination of the two.
A PISP initiates payments, while an AISP provides access to bank account information. Both can thus become competitors to banks, acting as the interface for the customer to access all banks and accounts. Notably, one of the declared targets of PSD2 is fostering competition and innovation, so this change in the competitive landscape is not by accident, but by design.
For traditional banks, this change has two consequences.
