The revised PSD (PSD2) came into effect on 12 January 2016. However, for most of the provisions, EU member states had until 13 January 2018 to comply. In countries including the Netherlands and Spain, full implementation is expected by the first half of 2018, while Luxembourg is awaiting legislative approval to implement the draft regulation. Two crucial aspects of PSD2 are SCA and opening up of payment related services to TPPs. The Berlin Group, in collaboration with account service PSPs, has developed an access to accounts framework along with data models and messaging formats in line with the EBA’s Regulatory Technical Standards (RTS). The provisions on SCA were applicable from 1 August 2015. The PSD2 security measures related to TPP access will enter into force 18 months after formal adoption by the European Commission, Parliament, and Council of Ministers. In consideration of tight deadlines, a detailed version 1.0 of the Next Gen PSD2 Access to Accounts Framework with operational rules and implementation guidelines was published on 8 February 2018. The Framework is a compilation of modern, open, harmonized, and interoperable APIs, designed to reduce the complexity and costs of enabling access to accounts (XS2A), address the problem of multiple competing standards in Europe and, align with the goals of the Euro Retail Payments Board. The Framework is an outcome of the views and requirements expressed in the public market consultation of October and November 2017, in which around 1,000 market comments from 59 organizations were received. The Framework also integrates applicable legislations and regulations as it is based on EBA’s RTS, which is expected to be available in H1 2019. The Framework comprises operational rules and implementation guidelines, supports the PSD2 required account information (AIS), payment issuer instrument (PIIS) and payment initiation (PIS) services. It is, among others, built on RESTful and JSON standards, relying on ISO 20022 standards for the data elements to be exchanged. The Version 1.0 Framework documents were completed in early March 2018 with OpenAPI files, a detailed FAQ document and a resolved market consultation feedback issues document.
PSD2 mandates EU banks to provide access to customer accounts to TPPs via APIs. There is no provision for fees to be applied for interchange or access to the bank’s accounts, thus PSD2 payment costs would be much lower compared to cards or other payment methods.
Corporate treasurers at companies that operate and trade across the globe face costly bank services for trade financing, FX and other bank services. The hidden fees and costs of such transactions effectively erode corporate profits, which is further magnified by the negative interest-rate environment. In such a scenario, PSD2 offers value-added financial services to corporations via highly customized and sophisticated tools to manage cash and liquidity requirements, control risks and losses when converting currencies, and invest or transfer money across the globe.
Associated PSD2 payment institutions can make it easier and faster for corporate treasurers to integrate newly acquired subsidiaries in new countries. They could also help corporate treasuries to structure and maintain effective worldwide control over bank account management, by achieving visibility over global cash flows and reducing the high risk of internal and external fraud when processing invoices and approving payments.
A corporate treasury may seek direct PSD2 access to their EU bank’s core system to establish efficient and cost-effective account information services, cash management, international payments, and supply chain finance. By reducing the number of subsidiary bank accounts, corporate treasurers can achieve better economies of scale through centralizing cash management and payments. They could also realize substantial savings on interchange fees and FX spreads, rationalize liquidity management for cross-border payments, and intercompany lending and netting.