The 14th of September is the date that has been chosen for the measures in the new payment services directive, PSD2, to come into force all across the European Union.
The new banking directive seeks to promote the Open Banking paradigm, which allows third parties to access bank account data as a means to provide new products and services in the online payments space.
The new payment services regulation 2015/2366 was passed by the European Parliament in November 2015, followed by a nearly two-year period during which stakeholders debated and decided on the Regulatory Technical Standards (RTS) for the directive. These standards were approved on 13 March 2018 and a transitional period of 18 months was granted for them to be implemented.
One of the requirements of the RTS was for European banks to publish their API interfaces and test environments by 14 March 2019, so that third-party developers would have time to develop new services. However, many banks are running behind schedule and haven’t yet made their APIs available to developers.
Member states have also published the national adaptations of the new EU regulation in their respective official gazettes.
Current status of PSD2 in Europe
- PSD2 in Germany
On 21 July 2017, the German government published the specific regulation to make the Second Payment Services Directive applicable across Germany.
- PSD2 in France
On 10 August 2017, the first transposition of the Payment Services Directive 2015/2366 from the European Parliament was published in the Journal Officiel of the French Republic. The French government updated the regulations in September of the same year and added various laws to help towards its application.
- PSD2 in the United Kingdom
On 18 July 2017, the United Kingdom published the corresponding legislation to make PSD2 applicable across the United Kingdom. Furthermore, the UK is a pioneer in this area and has a dedicated Open Banking authority. What will happen if the UK finally leaves the European Union remains to be seen.
- PSD2 in Italy
On 15 December 2017, Italy published the decree to apply the European payment services directive across Italy in the Gazetta Ufficiale.
- PSD2 in Spain
Spain was one of the last member states to transpose PSD2 into national law. This didn’t take place until 24 November 2018, when the Royal Decree of 23 November on payment services and other urgent financial measures was published in the Boletín Oficial del Estado.
- PSD2 in the Nordics
Nordic countries such as Estonia, Slovenia and Sweden passed regulations in their respective states at the beginning of 2018 in order to apply PSD2 with full legal guarantees.
- PSD2 in Eastern European countries
y mid-2018, most Eastern European countries such as Bulgaria, Croatia and Poland, had already published the guidelines for implementing PSD2 in their respective official gazettes.
PSD2 awareness in e-commerce is low
Online commerce is one of the sectors that will be most affected by the changes brought about by the new directive, but as of now the e-commerce sector is still not ready for PSD2 despite the deadline for compliance being only a few months away, in September of 2019.
According to a survey by Mastercard, 75% of online businesses are unaware of the new digital payments regulation. Furthermore, of those that are aware, only 14% support Strong Customer Authentication (SCA), one of the most important measures introduced in the new directive. PSD2 makes it obligatory to implement SCA starting from September, but as of now European e-commerce isn’t ready. What’s more, 51% of those surveyed in the report stated that they will be ready after September, or they have yet to plan when they will be.
At this point, we can look into the status of how banks are adapting in the main countries in Europe: Germany, France, Spain, the UK, Italy, the Nordic countries and Eastern Europe.
How ready are European banks for PSD2 to come into force?
According to a 2018 report by Deloitte which surveyed over 90 banks, European banks are not adapting equally from country to country. Of all the banking institutions that participated in the survey, those in Western Europe (Belgium, Germany, Ireland, Italy, Spain, Switzerland, Sweden and the UK) were ahead of their Eastern European counterparts (Bulgaria, Croatia, the Czech Republic, Hungary, Latvia, Poland, Romania, Slovakia and Slovenia) in terms of preparation for and adaptation to PSD2.
However, beyond differences in adaptation, the study also revealed differences in focus, as only one in four banks had approached PSD2 as a strategic value with an impact on their business model, whereas most planned to go no further than strict compliance to fulfill the regulation’s requirements. These two different approaches roughly mirrored the geographic divide described above, with Western European banks adopting the more forward-looking, progressive stance in their approach to PSD2 compliance.
In numerical terms, only 4% of Western European banks were still assessing how to adapt to the new directive, while this percentage rose to 29% in the case of Eastern European countries.
However, most banks that were yet to adapt to the new directive were sure that they would be able to do so before it came into force.
Moreover, the banking sector is aware of how much is at stake with the new market conditions for payment services created by the directive. The opening up of customer banking data challenges the banks’ monopoly position in the consumer banking and payments space, with new fintech providers able to replicate and improve on the value propositions banks have been offering consumers for years.
Open Banking makes it possible for non-banking actors, from small Fintech companies to large non-endemic players like the GAFAs (Google, Amazon, Facebook, Apple…) to enter the market, making this a critical period for banks to navigate if they want to remain in control.
Unnax‘s core products are built around the PSD2 directive and designed to help businesses develop better products and services using account aggregation and payment initiation technologies. Unnax provides services in Spain, Portugal, Poland and Italy, so that users can benefit from all the advantages that Open Banking has brought on to the European market.