In less than a year the revised Payment Services Directive ( ) will be implemented in European Union ( ) Member States, and the acronym ‘ ’ is on the minds of Payment Service Provider ( ) professionals. Application Programming Interfaces ( ) are considered key to the implementation of , the main goal of which is to create a more uniform, transparent and open payment market that keeps innovation, competition and security to the fore. If you need a reminder of what will change and who the new players are, this EPC infographic explains everything.
As all prepare for the implementation of , how can interoperability between be achieved to optimise investment costs for all stakeholders ( , e-merchants, Third party Payment Providers or ), and ensure a smooth implementation of ?
Opportunities raised by
To understand why are such a hot topic in the payment industry, we need to briefly assess the new framework that will create. will increase payment innovation and competition partly by enabling individuals and businesses to give access to their payment accounts. These players will facilitate internet and mobile payments by accessing the customer’s payment account (with their prior consent) and initiating credit transfers in their name to complete an online purchase. may also propose other services, such as aggregating information from all of the customer’s payment accounts in one place to help them better manage their finances.
has many benefits including the regulation of ’ access to customers’ payment accounts – a feature that lies beyond the scope of the first Payment Services Directive (PSD). will therefore unify the rules for in Europe, and in doing so, will increase the security of customer data and payments, and give a broader European reach. It means increased innovation, competition and security that should ultimately benefit the customer.
E-retailers, just like any other corporate organisation, can also take advantage of : using an from their Account Information Service Provider (AISP) will make it easier for them to reconcile payments. E-retailers can more directly benefit from as it will facilitate an additional payment method.
But what about , which will experience the most significant impact from ? could not only be seen as a challenge requiring significant IT investments, but also a requirement that might transfer an element of customer relationships from to . However, should be seen as an opportunity for to propose new, convenient, and digital-oriented services to their customers. For example, can themselves become AISPs, access their customers’ other payment account information and aggregate it in order to propose innovative solutions that give customers an overview of their finances.
What are ?
enable information exchanges between two programs without requiring developers on both sides to share their complete software code. Technically speaking, they are sets of protocols that define how one application interacts with another. They can be viewed as messengers taking a request and returning the response. Very common examples of include the ‘share buttons’ of major social media sites, which are found on practically all content pages on the web.
With , can develop an that gives access to their customers’ payment accounts (with the customer’s consent). This type of will be transparent for the customer. When they make an online payment, they will be asked to choose their method: in addition to the existing payment options, customers will have the possibility to pay directly from their payment account via a .
How to achieve standardisation?
The standardisation of is essential to the smooth implementation of . All stakeholders have an interest in standardisation. will benefit from the use of an open standard as it will lower their IT investment costs for . will also save money if they can use interoperable , with e-retailers benefiting from more choice as well as greater reach and efficiency.
Several European initiatives are developing ‘open banking ’ that will be open to any . They do not require massive investment costs but do maximise standardisation.
One of the most advanced of these initiatives is ‘UK Open Banking’. Part of it is specifically dedicated to . Following an Order from the UK Competition and Market Authority ( ), the nine largest UK banks were tasked to “adopt and maintain common standards through which they will share data with other providers and third parties.”* By January 2018 an ‘Implementation Entity’ will deliver several standards (one for each scenario: payment, aggregation, etc.) for use by on the British market.
And what about standardisation in a broader European context? The Euro Retail Payments Board ( ) recently set up a working group on Payment Initiation Services ( ) co-chaired by the and Ecommerce Europe. It will define a common set of technical, operational and business requirements for the development of an integrated market for while considering possible implications and synergies for other new services regulated by (i.e. account information services and confirmation of availability of funds). As it seeks to maximise the interoperability of throughout Europe, this working group will most likely take into account the set of standards being created in the UK.
Customer education is central to acceptance of
One step is crucial to ensuring the smooth implementation of : educating customers. The public is increasingly wary of how commercial organisations use their data. was created with customers’ security at its core, and clearly defines what use can be made of their data. The payment industry will, however, need to provide comprehensive information that allows customers to know and understand precisely what entails when they give their consent to access their payment accounts on their behalf.
* https://www.paymentsuk.org.uk/policy/payments-CMA-remedy-phase1/temporary/timetable-and-delivery
This article gathers ideas expressed during a lively debate held at the latest General Assembly in December 2016. Our warmest thanks to our six speakers for their insightful views on and !
From left to right: Jeremy Light, Managing Director at Accenture; Dennis Van Allemeersch, COO and Member of Executive Board at Beate Uhse AG and member representing Ecommerce Europe; Rita Wezenbeek, Head of Unit at European Commission – DG Competition; Tanya Juul Kjaer, Payment Manager at Klarna; Adam Shapiro, Open Platform Global Chief Control Officer at BBVA; James Whittle, Director of Industry Policy at Payments UK.
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