What is the real purpose of PSD2? Here is our viewpoint

Martin Schneider and Esra Kummer in October 2018

  1. PSD2 regulates payment transactions via Internet and mobile phones in the EWR (not in Switzerland)
  2. PSD2 enforces strict security requirements for payment transactions
  3. PSD2 increases consumer protection by reducing liability for unauthorised payments and the unconditional right to reimbursement for direct debits
  4. Most important: PSD2 opens the market for new payment service providers, subject to authorisation

How does this translate to the consumer?

The current monopoly on consumer banking data/information will be broken.

AISPs (Account Information Service Provider) can now access consumers' data via public interfaces with their consent. This change enables the consumer to manage their accounts directly via an app provided by the bank.

The European Economic Area (EEA) is the area of jurisdiction for the new laws of PSD2.

Advantages of PSD2:

  • FINTECH companies can advance new innovative solutions which may have not been feasible before
  • The consumer becomes the director of his own solutions and can choose between a variety of options best suited to him/her
  • Reduction of e-banking logins (for people who maintain several banks and accounts)

Questions:

  • What about data protection (GDPR) on service provider's side (especially AISP's)?
    What are the consequences if a service provider sees bank accounts in addition to the checking account (e.g. shares, mortgages,  investments and/or savings accounts)?
  • How is the market developing? Will banks become AISP's and PISP's? Will we risk being monopolized by large internet/digital retailers and/or companies?
  • How and how deeply does the customer control the exchange of information between the bank and the AISP?
  • Will PSD2 be implemented successfully in Switzerland?
  • Could Switzerland miss out on this development?

The process of a payment order, e.g. for a purchase in an online shop, is simplified. Again, there are opportunities for new market participants. Via public interfaces, a seller can directly instruct a payment for the customer via a PISP (Payment Initiation Service Provider).

How will the customer authorize the payment order in the future? Will the consumer use an app to authorize payment, or possibly electronic signature? How can fraud be minimized?