What is Open Banking? – ALTCOIN MAGAZINE

Open Banking: New Map for the Banking Territory

PSD2 came into force on 13 January 2016, from which date member states had two years to transpose it into national law.

According to the European Commission, PSD2’s main aims are to:

• contribute to a more integrated and efficient European payments market

• level the playing field for payment service providers (including new players)

• make payments safer and more secure

• protect consumers

• encourage lower prices for payments.

Under PSD2, institutions wishing to act as Payment Initiation Service Providers (PISPs) or Account Information Service Providers (AISPs) must be authorized payment service providers (PSPs).

Key Aspects:

• Extension of regulated transactions: Scope of regulated transactions has been extended to transactions in any currency and ‘one leg out’ transactions.

• Stricter customer authentication: Payment Service Provider (PSP) are obliged to ensure stricter customer authentication every time the payer accesses his payment account online, initiates electronic remote payment transactions or performs any other action through remote channels.

• Internal dispute resolution: Execution and application of adequate and effective complaint resolution procedures setting out maximum processing time for the resolution of customers’ complaints.

• Payment initiation services: PSD2 regulates payment initiation service providers (PISPs) and the initiation of payments. In this context, PSPs domiciled in the

EU states are obliged to provide secure communication facilities, inform PISPs about payment initiation, and treat all initiated payments equally.

• Account information services: The access to the payment service user’s account has to be granted to third-party providers for account information aggregation services. PSD2 regulates the duties of the account information service providers and those of the PSPs.

The revised Payment Services Directive (PSD2) improves the level of customer protection and increase competition in the EU payments market.