PSD2: Key facts for European treasurers
PwC Italy has published an interactive webpage explaining the Payment Services Directive (PSD2) 'in a nutshell'. It covers:
- market environment and implementation timeline;
- communication between third party providers and banks; and
- the main regulatory changes.
The aim of the directive is to harmonise a fragmented European regulatory framework and to regulate a market characterised by an increased complexity in terms of player and digital evolution. It is also intended to continue the development of an integrated single market by standardising the rules of Payment Services Providers (PSP) and the new market players, as well as improving payments security, competition and transparency for consumers.
So how will PSD2 affect companies and what are the key facts that corporate treasurers need to know?
- EU member states will have to implement PSD2 (Directive 2015/2366/EU) into the national regulations by 13 January 2018.
- The need for the EU's payments legislation stems from the wave of technology and digitisation that has swept through Europe, with more consumers now using tablets and phones to make payments. This is shown by the growth of non-cash transactions worldwide, which increased by 9 per cent in number in 2014, compared to 2013.
- In the coming year, the greatest impact of PSD2 will be a document called 'Strong Customer Authentication and Secure Communication' (SCA), which will direct customer authentication requirements and common communication standards. The final version will be released in January 2017 and the first draft was released on 12 August 2016.
- PSD2 introduces the possibility of online banking through authorised third parties, which opens up the possibility that banks no longer have direct contact with their clients. The directive also introduces secure standards for dialogue between third party providers and banks and stronger authentication processes. Nonetheless, it is still a new model for the bank-client relationship, as shown in the graphic below:
PwC also summarised the main impact of PSD2 from the perspectives of legal & compliance, technology, processes and economics:
The PwC webpage focuses on the Italian payments market, a market that is still very much cash-based (89 per cent in 2010 and 86 per cent in 2014). However, the number of non-cash transactions in Italy has been increasing since 2013.
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