PSD2

(Payment Services Directive)

& RTS

(Regulatory Technical Standards)

Begoña Blanco Sánchez

Head of Payments -Product management Daily Banking

ING Belgium

Creobis 16/5/2017

Agenda

• PSD2 Objectives

• RTS objectives

• PSD2 content

Scope extension (currencies, fees, value dating)

Strong Customer Authentication

TPPs

• PSD2 will change banking landscape

• Pending questions

• Opportunities and points of attention

• Conclusion

• Questions ?

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Source: Comeos - E-commerce - Belgium 20153

Evolution of online payments &PSD2

In 2015, 4% more Belgians made an online purchase. That’s 440.000 new customers.

Share of e-buyers in the EU Member States, 2015

4Source: Eurostat

• Highest proportion of e-buyers in the United Kingdom (81%), Denmark (79%) and Luxembourg (78%) followed by Germany (73%) and the

Netherlands (71%).

• In Belgium, 64% of the population aged 16 to 74 purchased online.

• In the EU the proportion is 53%.

Evolution of online payments & PSD2

64% of Belgians buy online, placing Belgium in the top e-commerce country in the EU

RTS Objectives

Apply Strong Customer Authentication ( SCA)

Apply Secure communication between parties (banks & TPPs)

(management of the APIs ( Application Programming Interfaces))

Implementation in Europe: April, 2019 ?

(Adoption by EC in October, 2017 ? + 18 months)

5

Bank = ASPSP (Account Servicing

Payment Services Provider)

PSD2 content

1. Scope extension/ Execution time & value date

International Payments

non EU currencies are in scope

2 leg payments non EU currencies

1 leg payments are in scope

Examples:

• a payment in USD with debit & credit in Europe ( 2 legs) : fees will be “shared”

• For one leg in/out: transactions BEN or OUR are still possible

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PSD2 content

2. Strong customer authentication (SCA)

something you have

something you know

something you are

What does it mean for you ?

a. Contactless payments in POS

No SCA requested for consecutive 5 payments or < 150 euro

SCA applied for the 6th transaction or above of 150 euro

b. Online payments

5 payments or < 100 euro

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When the exact amount is not known in advance…

“reservation mechanism” applied for card based payment transactions

An amount is reserved ( depending of the type of card)

Payer has to give consent to the exact amount blocked

When amount is paid, reservation is unblocked

ex: booking an hotel, car rental, get some fuel…

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Status today ?

Coins brought to the bank branchat D: value date of the credit = D

Other examples …transparency of information & value dating

PSD2 content

3. New regulation for Third Party Providers (TPP’s): who are they ?

TPP is a Legal entity performing activities of

• Payment Initiation Services (PISP)

• Account Information Services (AISP)

• Card-based Payments Instruments Issuers (CISP) – confirmation of availability of funds -> yes/no

9

How ?

via access to bank accounts -> using the online open banking infrastructure (via APIs)

The account owner has to be informed & give explicit consent

NB: no obligation to enter in a framework contract with the bank

PSD2 content

Payment account

account held in the name of one or more payments service users which is used for the

execution of payment transaction

Depending of the country, Payment account can cover more than the simple Current account

Consent

No data will be shared without Customer consent

Archiving ?

Consent management ?

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Obligations of a Third Party Provider

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Register its business with the competent authority (depending of the country, in Belgium: the National bank)

Payment Institution licence to operate

Register at European Banking Authority (EBA)

TPP is not allowed to store any data for purposes other than for providing the account information service

TPP is not allowed to request any data other than the one necessary to provide the paymentinitiation service

TPP is not allowed to hold at any time the client funds

ASPSP cannot discriminate TPPs only if objectively justified and evidenced reasons

…

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PSD2 will change banking landscape

AISP / PISP

Consumers & Businesses

Bank channels internet / Mobile

banking

Payment accounts

APIs

API = Application Programming Interface

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PSD2 will change banking landscape

Cross border banks

Exposure of data Payment accounts

APIs gateway ?

Other Providers ?

TPPsBanks ?

?

Priority focus of PSD2 is on smaller businesses…

Bank channels Invoicing for SME Reporting players

“Sector-driven”

solutions”

Accountancy players

Banks could play a role for each segment of customers

consumers

Businesses

Pending questions ?

15

Screen scraping ?

Payment accounts ? More ?

Sensitive data ? Focus on Fraud, quid GDPR ?

Sensitive transactions ?

…

Opportunities & points of attention

• Reduce the vulnerability post PSD2 to remain in competition

• Evaluate the opportunities we can extract from the new regulation

• Do what we do best: bring easy & efficient solutions to our customers

• Benefit from PSD2 to create value added services, products & link them to other initiatives ( Instant payments…)

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PSD2 will impact the activities of each player on the market

PSD2 will impact our clients

PSD2 will change the Payments world …it is an evolution not a revolution…

Innovation is key !

Time to get ready !

Conclusion

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Questions ?