On Saturday, January the 13th, 2018, the Second Payment Services Directive (PSD2) came into force and it will give the consumer greater control of their financial data, forcing banks to share their customer information with third parties, always with the consumer`s authorization. This directive replaces the First Payment Directive (PSD) that came into effect in 2007. This change is a very good news for companies in the fintech sector which for a long time have been negotiating with the European Union to make the financial system more transparent.
An arduous and long negotiation
Eurobits CEO Arturo González Mac Dowell, an AEFI member, has been one of the architects to make that the Technical Regulation Standards emanating from this second European Payments Directive have ended up being faithful to the needs of consumers. His work has been important to negotiate in collaboration with other European players such as Klarna, Trustly, Bankin, and Paypro, in addition to doing the same with AEFI and its associates. Also to make understood, in a simple and clear way, the importance for individuals and companies to have access, without any type of restrictions, to their banking information and be able to share it with third parties. In this sense, Arturo González has ensured the improvement of competitiveness and the transfer of payment services within the European Union for the benefit of the consumer. To this end, in addition to collaborating with the aforementioned companies, the President and CEO of Eurobits has worked closely with the Directorate General of the Treasury, the Bank of Spain and the European Commission (DG-Finance and DG-Competition). For this, he has had to meet regularly in Brussels with personalities such as Valdis Dombrovskis, the European Commission vice-president.
As Arturo González had anticipated last September in an interview published in El País, “PSD2 is the biggest change for commercial banks in its history. The directive says that the credentials and all the information that an entity has belong to the users and the users have the right to assign it to a third party”.
This directive corrects and modifies details and introduces two new figures from the regulatory point of view since these services have been provided for many years in the European Union:
With the initiation of payment services, money movements can be made from one account to another, buyer-seller, for example, without having a credit card. It is also possible to make a transfer between individuals in a different interface from that of originated in the bank.
On the other hand, the Information Services on Accounts allows a third party to have access to the account of a private individual (previous authorization of the client) to offer a variety of services based on said information.
This great financial transformation will be carried out in two phases:
1.- The first, which began on January the 13th, will oblige the PIS and AIS to obtain a certificate issued by the Bank of Spain. The certificate authorizes the TTP (third party access on behalf of the client) to operate in a completely secure manner. In this sense, the certificate given by the Bank of Spain guarantees total confidence and security. On the other hand, the banks will no longer be able to put obstacles to the access of the TTP to the information of their common clients. For the banks it supposes two things:
A possible threat due to the possible disintermediation of its clients by new companies offering new services.
A possible opportunity allowing them to launch new products and services more quickly improving the perception and confidence of the client with their bank.
2.- The second phase starts at the moment in which the technical norms of regulation of safe authentication of users and secure communication come into force. These rules are still pending approval by the European Parliament, which will probably happen in the coming weeks. The period that mediates between both phases is known as the transitory period. Once the aforementioned rules come into force, third parties must authenticate themselves to the banks in a secure manner, and these choose the path on which the former access the data of common clients. Well either through an API (known in the regulations as a dedicated interface) or through electronic banking as it has been done so far. In case a bank chooses the path of the APIs, this will be the preferred path. However, for those cases in which the API does not work properly, third parties may temporarily access through electronic banking. This is what is known as the “fallback mechanism”.
“This debate can be understood very well with the analogy and the comparison between an elevator and a staircase.”
This last aspect is the one that has generated more debate and has delayed the approval of the corresponding technical standards. This debate can be understood very well with the analogy and the comparison between an elevator and a staircase. When the elevator works properly, it will be the preferred mechanism for climbing in a building. However, if the elevator fails, we always have the option of using the stairs.
Clients are the winners
In an interview granted to Intereconomía this week, Arturo González has stated that “PSD2 places a lot of focus on access to the accounts in a secure manner. As a client, I can see my accounts in a different site from the bank that hosts them and I can access a series of services that the bank did not provide me, such as duplicate movements, excessive commissions, or facilities to change the account. “
For now, from Eurobits, we celebrate this great step that has taken place in the transformation of the financial sector. The main beneficiary is the consumer who has increased their rights. For the financial sector, it means having a legal certainty, with an explicit regulation.
Our most sincere congratulations!