Last week, De Nederlandse Bank launched a campaign to draw attention to the new European payment directive PSD2
The directive is intended to give commercial parties access to payment data. Note: only if the consumer gives permission for this. According to the bank, it is a safe way to modernize payment transactions. Earlier I wrote about PSD2 and its consequences. Is it a way to beautiful digital payment apps and housekeeping books, or is it mainly a trap for our privacy-sensitive payment data?
Sometime next spring, banks will be legally obliged to provide payment information to third parties if the customer requests it. According to the initiators of the law, it offers opportunities for new companies in the payment market. Others fear the spread of privacy-sensitive payment data.
Those looking for it will find a long and rather technical story on the website of the European Commission. However, the Payment Services Directive 2, which will probably become law next spring, could have significant consequences for our future financial affairs. The new payment law obliges banks, among other things, to pass on payment information to other companies if the customer requests it. You will find more important information about this at Mr Bitcoin Exchange
The law, which is still a European directive, would encourage more competition and lower prices of services in the payment market. In addition, companies without a banking license can develop services related to payment transactions, such as digital household books or apps to pay your bills.
Who benefits from the new guidelines, and are they rapidly taking over the world of financial services? What does the consumer notice in the end, and who will all look into our wallets?
Fintech: threats from the “traditional” banks?
Fintech (short for financial technology) is a broad collective term for financial services that use digital technologies. It is often associated with fast-growing start-up companies, who conquer the market with innovative ideas. Think of smart ways of crowdfunding, apps that allow you to make payments quickly, or digital household books that provide savings advice. PSD2 should pave the way for more such services.
Is fintech the major threat to the “traditional world” of banks? That remains to be seen. Banks are also betting on fintech. The popular payment app Tikkie comes from ABN AMRO, and ING and Rabobank have already invested millions in fintech funds.
Although you can classify so-called cryptocurrencies such as bitcoin under the broad definition of fintech, the fintech companies mainly operate within the existing financial system. The idea behind cryptocurrency is an existence outside the financial system.
New services, more competition
As the name PSD2 suggests, it is the successor to PSD, from 2007. In 2016, the Payment Directive was introduced by the European Commission and would be transposed into national legislation of all 28 member states of the European Union on January 13, 2018. Incidentally, it appeared last January that a majority of the Member States (including the Netherlands) had not yet done so. This is likely to happen here sometime this spring.
Bernard Goldbach via CC BY 2.0
Anna Berlee is an assistant professor of private law at the Molengraaff Institute for Private Law at Utrecht University. She understands why the European Commission is issuing new guidelines. “Financial technology has potential, but under current legislation it doesn’t get the chance to develop freely,” she says. “The banks have the payment information and at most exchange it with other banks and institutions for transactions. Parties outside the banking system, with perhaps good, innovative ideas, have largely been left to the will of the banks to cooperate. Until now, that has actually been done only in small steps. ”
Berlee hopes that PSD2 will provide new services for the consumer, and that more competition and lower prices will arise in the payment market. “Banks have to scratch behind their ears and go along with these developments, otherwise they may soon have it checked,” she says. “What kind of services and companies are involved? Think of parties that arrange payments, for example accounting software that gives the bank the order to pay an account. Services that view your account information go a little further, for example a digital household booklet that oversees all your transactions and advises where you can save. I think there are beautiful products to think ofn useful to the consumer. “
Jason Howie via CC BY 2.0
According to Berlee, there was a need for new legislation, in any case from fintech companies whose products often fell outside the legal framework. The Authority for Consumers & Markets also announced in December that it supported the new legislation.
“The banks themselves may not be keen to share their data. They rightly point out the risks involved in sharing information with other parties, ”says Berlee. “But don’t forget that this can also create opportunities for the banks,” she continues. “Several Dutch banks are focusing on fintech. They can also develop successful apps themselves and become a player in that market. ”
The hot topic: privacy
There is also criticism of the introduction of PSD2, which focuses on the theme of privacy. Of course you give permission before companies receive your data, which you can also withdraw. The fact remains that various parties “watch” where someone does their shopping, which subscriptions there are and who gets money per transfer. That is very privacy sensitive data.
Who should know where you do your shopping?
What if companies soon make products more expensive when I do not provide my data? Or when large tech companies use the payment data as an addition to their already accurate user profiles? That is what professor of digital safety Bart Jacobs of Radboud University wonders in this episode of the TV program Radar.
Berlee agrees that this concerns privacy-sensitive data, and says that it is not yet clear how exactly we guarantee this privacy. “How will we give permission later? With large pieces of text with conditions where you have to put a check mark? Many people accept conditions for digital products without looking closely at them. That is not an effective way to make people aware of the risks, ”she says. “In addition, the Dutch Data Protection Authority has criticized the Dutch bill because it may appear that De Nederlandse Bank will monitor compliance with data protection regarding PSD2.”
But suppose everything is well organized and everyone adheres to the rules, then there is still a privacy issue. Transactions always go between two parties. It may therefore be the case that someone’s payment details end up with a third party via the counterparty, without permission. “That is a tricky point,” says Berlee. “You could anonymize that data, for example, but I don’t see much about that in PSD2. It is not clear how they arrange this. ”
Payment details are valuable. For example, companies can advertise with it.
What the consumer of PSD2 will notice, in the direct sense probably nothing. But it offers opportunities for companies and apps in which payments are more integrated. The success will mainly depend on the number of users of these services. And the way in which the banks will technically share their data, that is what fintechs and banks are already discussing.
Rob van Hilten is the founder of Qoin and an expert in the field of local currencies with which only certain communities or regions pay. “I don’t have a glass ball, but I think PSD2 creates opportunities for companies. It will probably also be easier for us to work with the financial sector. It also challenges the banks. They have to think carefully about what they are doing, that is only good. ”
A company like Qoin counteracts the global financial system with local coins. Van Hilten is not overflowing with enthusiasm about PSD2 either, but he hopes it will improve the collaboration of his local coins with the financial system. “Whether we like it or not, we work with the financial sector. Until now, this coupling has not always been smooth. It would be nice if our customers could link their bank account directly to our coins, without the banks being difficult about that. ”