As of September 14, 2019, the new PSD2 (Payment Services Directive 2)will enter into force, whose main objective is none other than to improve security and strengthen protection against possible fraud in banking operations made over the Internet.
The new PSD2 Directive aims to consolidate a single online payments market for the European Union,faster and more secure; that allows a more agile management of personal finances. It will be especially banking users and customers of online stores who will benefit, as intermediaries in electronic payment operations will be eliminated.
What is the new PSD2 Directive?
The new PSD2 Directive is a European regulation that aims to expand competition in the electronic payments market,with the aim of strengthening the position of the consumer. This directive will be a major change in the relationship between customers, businesses and banks, making it possible to store all information in one place.
The new PSD2 Directive is a European regulation of electronic payment services, implementing a banking service adapted to new technologies.
the PSD2 replaces the first Payment Services Directive (from 2007), incorporating novelties that aim to level the playing field between countries and payment service providers, facilitating new methods of electronic payments, such as those made online or through mobile devices.
What does the new PSD2 Directive bring?
The new PSD2 aims to generate greater competition in the market for payment services, forcing banks to open their systems to third parties (Amazon, Google, Facebook, etc.). In this way, any company or business that does not have the necessary infrastructure to offer its customers payment services, can do so using the infrastructure of a bank.
The PSD2 Directive introduces two new types of entities:
- Payment Initiation Service Providers (PISP):
They offer customers the possibility of making a payment through their platforms, connecting them to a bank that will be responsible for formalizing the operation, without the need to use a credit or debit card.
- Account Information Service Providers (AISPs):
The customer’s financial information is obtained from one or more banks. AISPs are obliged to provide this information, to present it to the customer in a joint and more attractive way, than if it is offered by each bank separately.
What benefits does it have for companies and businesses?
Those companies and businesses that decide to position themselves as PISP or AISP will mainly take advantage of two great benefits:
- Better financing:The PISP will be able to know all the payments that a client makes, offering financing with better conditions than the bank itself, for transactions that exceed a certain volume.
- Advice and product placement: AISPs will be able to know the overall position of a client in all their banks, as long as the client has given prior permission. By analyzing their activity they will be able to generate very detailed profiles, anticipating their needs to offer you products.
What is the aim of the new PSD2 Directive?
The main objective pursued by the new PSD2 is to facilitate access to the online payments market for other competitors of financial institutions. In this way it is possible to generate greater competition in the market, reducing expenses for the consumer in digital payment services.
The main objective of the new PSD2 Directive is transparency
PSD2 requires banks to allow third-party payment service providers (TTPs) access to their customers’ accounts. Access may be made to consult information or to make payments, being necessary to have the prior consent of the client.
Financial institutions will provide this information to third parties through APIs,which are computer developments that allow access to account information.
The new PSD2 Directive represents a very important change for the relations between banks, customers and businesses; bringing together all the information in one place.
Main consequences of the new PSD2 Directive
The entry of the new PSD2 Directive will bring greater security and competition,as customers will be able to control at all times who has access to their payment accounts, and how they access them.
With PSD2 you have to meet a series of reinforced security requirements, being necessary the authentication of two factors between three possible, to be able to carry out a transaction:
- Credit or debit card.
- PIN or password.
- Fingerprint or iris reading.
New rights for users
PSD2 also incorporates important new rights for users of payment services:
- The prohibition of merchants making surcharges payable with any electronic payment instrument.
- Limits of liability are placed on users who have been victims of fraudulent operations. The maximum amount that will have to be borne will be 50 euros, instead of the 150 € of before.
- It is guaranteed that any claim made by users to their financial institutions will be resolved within a maximum period of 15 days.
Entry into force of the new PSD2 Directive
The new Directive was adopted in 2015, but did not enter into force in November 2018. Its implementation is already mandatory in all Member States of the European Union and for the financial institutions of these countries, as of september 2019.
The new PSD2 Directive is a European regulation that brings the online payments market into line in an efficient and integrated way, reducing barriers and increasing competitiveness in the market for electronic payment services, speeding up transactions and increasing the security and transparency of each operation. It reduces the costs of payments made by consumers through online platforms and offers them a high level of protrection and security.