Having a Payment Service Directive (PSD2) is now mandatory. Still don’t have it? If no, there is some bad news for you!
From the running month, you won’t be able to make any payments via your card if you do not have PSD2. It is as per the revised Payment Service Directive by the European Union (EU). Hence, having this method incorporated in your bank card is obligatory no matter the industry you operate in. This also includes high-risk industries such as cannabis, CBD, adult, and crypto.
What is PSD2?
It is a fundamental piece of payments-related legislation in Europe, which entered into force in January 2016.
Retail banking has been a game-changing year since 2018. With PSD2 in effect, banks’ dominance on their customer’s account information and payment services will disappear.
Thus, PSD2 is a requirement for strong customer authentication. It is applicable on majority of electronic payment system within European Economic Area (EEA).
How Does It Work?
PSD2 enables both consumers and businesses to use third-party providers to manage their finances in the bank. In the near future, you may be using Facebook or Google to pay your bills, make P2P transfers and analyze your spending. And still, have your money safely placed in your current bank account.
However, Banks are obligated to provide these third-party providers access to their customers’ accounts through open APIs (application program interfaces). This will enable third parties to build financial services on top of banks’ data and infrastructure. This means any company has open doors to eat bank’s lunch.
PSD2 poses substantial economic challenges for banks. New security requirements and the opening of APIs will possibly lead to an increase in IT costs. On top of that, PISP services are predicted to take over 9% of retail payments revenues by 2020. And, as non-banks take over customer interaction, banks may find it increasingly difficult to differentiate themselves in the market.
As the Directive states, “Significant areas of the payments market, in particular card, internet, and mobile payments, remain fragmented along national borders. Many innovative payment products or services do not fall, entirely or in large part, within the scope of Directive 2007/64/EC.”
In other words, the regulatory framework that was brought in for the single euro payments area (SEPA) needed to evolve further.
Innovations such as digital payments and cloud-based applications are lifting customer expectations for both convenience and security.
Upgrades in infrastructures are making faster payments an increasingly common offering, while also facilitating the convergence of cards, e-wallets, and other payments types.
Attacks from fintechs and digital-ecosystem owners are exerting additional downward pressure on pricing. And due in part to persistently low-interest rates and the cap on interchange fees, challenging payments economics are thus combining with other disruptive forces to reshape the global payments industry.
Benefits of PSD2
The benefits of this new obligation are very wide. The following are the most prominent ones:
- Contribute to a more integrated and efficient European payments market.
- Improve the level playing field for payment service providers.
- Uniformity across EU.
- Make payments safer and more secure.
- Faster payments.
- Protect consumers.
- Wider choice of payments systems.
Hence, the benefits clearly reflect how PSD2 will make your business more financially independent. So, your bank will have lesser power to drive your financials, regarding payment systems.
Especially, if you are a high risk merchant and availing services of PayFasto, your life will become super easy.
Starting off with PSD2
Therefore, with obligations being in action from this month, this will become an integral part of your life. So, PSD2 will make your payments faster, easier, safer with wider option and PayFasto will make your business easier through high risk merchant account.
So, doing business across borders is getting easier. It starting with unifying borders in Europe, but sooner or later, PSD2 will become most vital part of global payment system.
The future of PSD2
The benefits of it range from integrated and efficient European payments market to wider choice of payment systems. Thus, the future and sustainability of it lies in the benefits you can reap from it.
Although, currently there are authentication delays but the benefits are there for the taking in the long run. Also, having a uniform payment system across EU nations was always necessary.
How can PayFasto help?
PayFasto offers services for wide range of high-risk industries. For high risk merchant who are availing services of PayFasto, life will become super easy. PSD2 is mandatory and will soon become integral part of your life.
So, it will make your payments faster, easier, safer with wider option and PayFasto will make your business easier through high risk merchant account. Come onboard with PayFasto, who knows how much the future of PSD2 will drive us forward.