PSD2’s Open Banking. Who will be the winners and losers?

In any sector, regulators are viewed as the watchdogs of their respective industry. Recent regulations in the financial industry were aimed to favour consumers’ interests often to the disadvantage of businesses.

  • It addresses stronger customer security procedures by ring-fencing sensitive data from any external threat. With €1.44 billion of fraudulent card transactions in all countries of the Single Euro Payments Area only in 2013 (as revealed by Europol) the emphasis on data protection procedures was vital. In fact, Regulatory Technical Standards (RTS) is the only article of PSD2 to be published separately with extensive details.
  • Upon customers’ consent, banks will be obliged to open their systems and share customers’ data to third-party providers (TPPs) via APIs, creating new opportunities for fintechs in the payments services market. Moreover, competition between fintechs will offer consumers value for money for the services provided. In the meantime, fintechs and established banks will be imposed to “up their game” by providing more customised services to increase consumers’ loyalty. Businesses could partner with fintechs and banks to get embedded in their mobile-apps offering non-financial services.
  • Merchants will no longer be allowed to levy surcharges on the how-to-pay methods allowing consumers to use any type of card with no extra cost. Customer liability for unauthorised payments will be capped at €50 (instead of €150). In addition, the maximum time for processing customer complaints has been cut from 8 weeks to 15 business days.
  • Third parties operating in the ATM business must disclose any withdrawal charges both before and after transactions, which will directly benefit consumers and indirectly financial institutions, by reducing the number of complaints from their own consumers related to hidden fees applied in the cash withdrawal operations.
  • Opening the market will give the green light to innovative start-ups that are aimed at offering full-package services such as; building a credit history, managing personal finances and importantly having an easy access to the long-term financial products as pension funds or home mortgages.
  • PSD2 has also regulated how Personal Financial Management (PFM) solutions will be operating in the European market. Consequently, it will lead even more start- ups to create these one-stop platforms where all current accounts, credit cards and other financial products can be aggregated in just one display. Therefore, consumers will have a full picture on “who charges what” giving them the power to drop pricey products and replace them with more competitive alternatives.



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