Recent revisions to the European Parliament's payment services directive 2, or PSD2, have businesspeople wondering what this means for the fintech (financial technology) industry. One of the most important changes is that it opens up new markets to companies that were previously excluded. In particular, it forces banks to make their accounts accessible to third parties such as payment initiation service providers.
This accessibility comes in the form of an API for payments. By using this, mobile payment providers can connect to bank accounts to process payments in a streamlined fashion. Such a method allows them to work with customers outside of the typical credit card acceptance networks.
How This Directive Can Affect People Outside of Europe
The PSD2 directive is unlike its predecessor because it activates even if just one of the involved parties has a European presence. Since many banks are multinational and have such a presence, they will be held to the new rules. While they may not be forced to offer the service in the United States, there is a good chance that some will go ahead and do so. Later, as with any technology that turns out to be a true upgrade, the practice will spread until it becomes ubiquitous.
How Can My Company Make Use of This Change?
One of the best ways is to get set up is to start with hardware meant to use the new system. Our Netclearance mBeaconPay hardware makes it easy to connect to a variety of alternative payment methods. Of course, our systems will also work with MasterCard and Visa if you choose to integrate with them, but such integration is not a technological requirement. Instead, you'll be able to hook into any institution that offers API access. Through this, you can set up your own payment acceptance network or join an existing one - all without paying the high costs associated with the big credit card networks.