PSD2 is the second Payment Services Directive, enabling bank customers to use third-party providers to manage their finances. This applies to both consumers and businesses, with the idea behind it being safer, easier payments for those in the Single Euro Payments Area. The Financial Conduct Authority (FCA) enforces the directive in the UK and it applies to Account Information Service Providers (AISPs) and Payment Initiation Service Providers (PISPs). So what does this mean for these providers and their compliance with the FCA?
Account Information Service Providers
With the customer’s consent, AISPs can access ‘read-only’ bank account payment information in real time and analyse the customer’s transactions. This information could help both the AISP and their customers in many ways including:
The ability to offer customers relevant and personalised products and services such as money management tools and price comparisons.
Providing customers with faster and more accurate access to mortgages and loans, tailored to their financial circumstances.
Payment Initiation Service Providers
PSD2 gives PISPs the ability to initiate e-commerce payments from a customer’s account on their behalf. Examples of where these services can be applied include:
Money management applications that help customers by transferring money between accounts in order to avoid overdraft fees.
Customers can provide permission to a company they regularly shop online with to connect to their bank account, providing instant checkout services which in turn avoids the need to re-enter card details for each subsequent transaction.
Due to the sensitive nature of transaction data, the PSD2 has a focus on the strength of communication security and customer authentication requirements. As requirement for authorisation, the FCA stipulates that both AISPs and PISPs must hold professional indemnity insurance to cover the potential liabilities faced in the various EU countries in which they operate.
The professional indemnity insurance for PISPS must also cover the potential liability for unauthorised payment transactions, non-execution, defective, or late execution of transactions, and their potential liability for any associated charges and interest that may be incurred as a result.
How we can help
At Richdale, we’re here to assist you in complying with the regulations and requirements set down by the FCA and remaining compliant in the fact of an everchanging regulatory landscape. If you are an AISP or PISP that needs guidance on the correct processes and insurances needed to be compliant with the FCA’s PSD2 stipulations, get in touch with us today to book a complementary one hour consultation. We’re happy to be contacted via email, over the phone, or face to face.