Impact of the PSD2 Directive on Mobile Payments

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The Revised Payment Service Directive, set to begin commission in the year 2018, breaks the monopoly that banks have over their customer information and payment details, significantly changing the face of retail banking.

The directive simply invites third parties to manage the finances of consumers and businesses by accessing their account information and payment details in bank files. Furthermore, the directive requires banks to provide these third- party financial managers full access to their costumer's account information through open application program interfaces. In the future managing, your finances could be a mere click away. This directive affects two major facets of individuals: the consumer and the stakeholders in the retail industry.

The PSD2 directive will make banks incur costs during the implementation of this directive. The costs include IT costs of expansion and installation of API systems. Third-party financial providers will access customer information through API systems that banks need to incorporate into their operations to streamline processes. Furthermore, additional IT personnel and new staff training are paramount during this transition.

On the contrary, the directive encourages banks to modernize and couple their operations with technology. Banks will extend an olive branch to fin-tech companies who have the expertise to implement API systems that are pivotal for mobile payment platforms. This merger will introduce simpler and better mobile payment platforms.

The PSD2 directive will lead to customer centricity. As banks struggle to break even and compete for customers, they will align their strategies to capture and maintain consumers. Customer centricity translates to better and more products and services for the client. Moreover, fintech companies (financial technology companies) offer payment services at a lower cost, and thus this reduces costs for a consumer. Mobile Payment Technology such as mBeaconPay provides new payment methods that will greatly benefit consumers and merchants.

The PSD2 directive truly opens doors for fintech companies and secondary financial service providers.