Webinar: Part of Europe’s PSD2 Promises to Change the Handling of Payment Data
A payment data component of Europe’s revised Payment Services Directive (PSD2) promises business opportunities and technical challenges, according to experts on a recent Webinar from the London office of global payments law firm Bryan Cave and London-based Polymath Consulting.
The presentation, “How will PSD2 Provisions–Especially the XS2A– Impact Banks, Fintech & Emerging Payments in the UK and EU?”, focused on the directive’s Access to Accounts provisions (XS2A). Those provisions enable the creation of a whole new genre of what people can do with (payment data), said Judith Rinearson, partner at Bryan Cave and a Top 10 Payments Lawyer. XS2A will allow, for instance, customers to give permission to payment providers to use data kept for those customers’ accounts with other financial institutions. As well, the program is designed to encourage the aggregation of payment data by third parties, which could lead to more efficient loan applications or new payment services based on customer behavior, among other tasks, according to experts on the Webinar.
XS2A likely will spark the launch of new payment and fintech firms to handle the new data demands from consumers and to create new products, according to the presenters; that anticipation comes amid a report from Accenture that says UK banks could lose 43 percent of revenue from retail payments by 2020 in the wake of PSD2, thanks in large part to the competition it will create. Those products stemming from PSD2 and XS2A might facilitate payments from consumers who don’t want to use credit cards to shop online, for example, and otherwise encourage payments innovation outside the scope of the largest financial institutions. And it will mean that companies will have to build and maintain application programming interfaces, or APIs, which are a set of digital instructions that guide how software applications interact.
“We are moving toward an API economy with payments and banking,” said Brendan Jones of Polymath Consulting, which took part in the Webinar and produced an associated PSD2 white paper with Bryan Cave. “We are playing catch-up with other industries.”
Still unclear are detailed technical requirements to implement XS2A and how it will be regulated specifically. A full view of how XS2A will work will not come until after the PSD2 goes into effect on Jan. 13, 2018, after which authorities will release more of those technical details.