From January 2018, the “European Directive on Payment Services in the Internal Market”, commonly known as PSD2, comes into force with the aim of ensuring that the European payments market remains transparent and secure. In a feature for Bobsguide, Deutsche Bank’s Head of Payments, Cash Management Corporates, Christian Schaefer, joins other experts to explain how PSD2 represents a landmark industry development.
PSD2 builds upon its preceding framework to reflect the ways the payments environment has evolved during the past decade. Among the developments are the extension of its regulatory scope and the strengthening of customer authentication protocols. But, most notably, the update will foster industry competition by opening up the payment market to Third Party Providers (TPPs) – thereby creating a more efficient, innovative and secure payments ecosystem.
With this in mind, Schaefer believes PSD2 could be considered more than a regulatory update and may also represent an industry-wide opportunity to disrupt the European payments infrastructure. When discussing the risks of treating PSD2 solely as a compliance exercise, Schaefer says: “PSD2 will likely be a catalyst to innovation in the European Payment market and lead to further progress; banks across Europe can choose to either be at the forefront of that progress, or, perhaps, left behind by it.”
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