What to know about API platform for payments in PSD2

January 24, 2018

Years ago, when credit and debit cards first became popular, some already heralded the end of cash. This hasn’t happened. But it is true that we tend to carry fewer and fewer bills and coins, above all the younger generations. This isn’t just a feeling: according to a recent study in Spain, which could be extrapolated to many other European countries, cash is the main form of payment for only 22.5% of the population.

Just as we’ve been progressively replacing cash with card payments, a similar process is beginning to take place with the new payment methods available. Payment platforms using APIs (application programming interfaces) and the new devices that can be used to pay for items (smartphones, smartwatches, etc.) are growing significantly in most mature markets, financially speaking, specially with the new PSD2 directive.

New payment methods for PSD2: a revolution already under way

Despite what we said in the previous paragraph, in most countries new payment methods are still far from dethroning transactions with debit and credit cards. Nevertheless, if we think about another case of exponential growth we’ve already seen, in the number of mobiles (for example, in two places as distant and different as Spain and Singapore, 92% of inhabitants have at least one smartphone), it is clear that that throne already has another serious contender: mobile payments developed and integrated with APIs.

Here are some figures to back up this thesis: an estimated 400 million users are already paying for purchases with their mobiles (either through apps, putting the device near a physical terminal or using the smartphone as you would a computer, to purchase items from e-commerce sites). And this is expected to increase seven-fold in just five years.

Trustworthy APIs for risk-free payments in PSD2

These new payment methods haven’t been around long, although they do have a successful predecessor: the well-known PayPal platform. At Unnax, we’re a FinTech start-up that offers competitive, high value-added financial tools using API technology. APIs are the base of many products that have recently made their way onto the consumer stage. For example, Amazon Payments and Apple Pay, which are among the most well-known apps, thanks to the popularity of these two companies. These mobile wallets still only see modest usage compared to, for example, traditional credit cards. Modest but growing, above all thanks to the fact that users are learning about the security of these systems.

Advances in security, above all in areas like encryption (the basis of the trendiest technology: blockchain), ensure that modern payment platforms keep details safe and ensure users’ privacy during the transactions.

Likewise, tools to detect and prevent fraud have been perfected. And, on top of all this, there is the new EU regulation for the financial sector (PSD2 directive, which goes into effect partially this year), which will help consumers trust these systems. Thus, we can conclude that payment platforms will earn their place among day-to-day financial operations much more quickly than we think. And this isn’t only due to the factors we’ve discussed, but also because security comes with advantages like the freedom to circumvent intermediaries (banks) and the option to improve user experience. Plus, the added service in making financial transactions and payments for PS2D.


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