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• Merchants are looking for frictionless electronic collections directly from bank accounts and wish to benefit from cost, fraud and chargeback reduction.
• Fintechs seek open access to banking infrastructure on an even playing field and the removal of constraints in developing innovative financial solutions.
If PSD2 is to contribute to an efficient digital payments market in Europe then it must operate as a well-functioning, standardized market solution. This is a challenge because of the way in which PSD2 delivers RTP. Each bank must provide PSD2 access in a compliant way, but there will be no central clearing system for RTP in Europe in contrast with countries such as India.
Individual banks may be more interested in their own compliance and competitive impacts than in the overall functioning of the EU digital payments market. Banks are concerned that PSD2 will lead them to the same fate as telecommunications companies who saw their expensive infrastructures commoditized by Over the Top (OTT) service providers.
PSD2 Market Structure
These are only some of the ways in which banks can deliver not only the intended benefit to the European digital marketplace, but turn PSD2 from threat into commercial opportunity. The Minotaur’s jaws await those who approach market change with a compliance mindset. The lessons from PSD2 will also apply globally in this new era of open, real-time payments.
This article is for information purposes only and does not constitute legal or other advice. The information contained in this article is believed to be accurate, but Citi makes no representation or warranty with regard to the accuracy or completeness of any information contained herein. Citi is not liable for any consequences of any entity relying on this article.