In the payments industry, as in so many industries, change can be incremental, or it can be sweeping. In the case of the second Payment Services Derivative, or PSD2 for short, change with magnitude is coming to the European Union — and in less than a year’s time.
PSD2, of course, carries with it some sea change as it requires banks and other firms to invest time, money and human capital into satisfying the directive, which, in turn, means that some firms are already offering up platforms to aid firms as they tackle, and prepare to tackle, the new regulatory landscape in Europe, which is designed to open up payments and other firms, along with banks, to one another, especially in facilitating online payments and boosting the safety of cross-border transactions.
Earlier this month, Capgemini, which provides consulting and technology services, said that it was debuting its eponymous PSD2 Open Banking Solution, which it has billed as a way for banks and payments service providers to embrace new digital business models in tandem with PSD2. Taken across a number of partners, such as Amazon Web Services (where the Capgemini solution is hosted in the cloud) and Token, along with AppDynamics, the platform can be tailored to the individual compliance efforts of each member state in the EU that will be in place upon PSD2’s going live in less than a year’s time.
In an interview with PYMNTS, Jeroen Hölscher, head of the global payments and cards practice at the consulting firm, said that the movement to PSD2, and its attendant regulation, is a force that is leading banks to invest in APIs. That is “good news” as they are “exposed to and monetize” new digital business models.
Key to those initiatives is what is specifically known as an “open API program,” which is a centralized platform that allows for data sharing. It is the customer data, ranging from financial information lodged with the banks to spending habits, that are of value to the financial firms and PSPs as they introduce new products, which are of value to merchants (retailers and eCommerce plays, such as Amazon) to work with account data that has been permissioned by banks. Thus, said Hölscher, PSD2 and platforms such as Capgemini’s have allure for banks and non-banking firms alike, and payments can be made without a third party in the equation (and thus can cut down on fees tied to transactions). In addition, data can be displayed in one place, as consumers with several accounts will be allowed to interact with Account Information Service Providers.
Additional service measures offered by Capgemini include “smart tokens,” which blend tokenization with public-key cryptography (and it is worth noting here that transparencies in pricing methods, especially for those used in international debates, are still to be discussed as PSD2 moves toward implementation). Banks and PSPs are allowed to issue and redeem payments authorizations, which give, in the words of Hölscher, these firms “a better way to protect the [financial] ecosystem …and the provider a better user experience.”