About Me

Daniel Berger

psd2 sucess or failure?

What is PSD2?

According with the European commission of banking and financial affairs is defined as: "The Directive on Payment Services (PSD) provides the legal foundation for the creation of an EU-wide single market for payments. The PSD aims at establishing a modern and comprehensive set of rules applicable to all payment services in the European Union. The target is to make cross-border payments as easy, efficient and secure as ’national’ payments within a Member State. The PSD also seeks to improve competition by opening up payment markets to new entrants, thus fostering greater efficiency and cost-reduction. At the same time the Directive provides the necessary legal platform for the Single Euro Payments Area "

In simple words is a combination of guidelines, rules and mandates on how to set the next generation of payments across the continent, the particular improvement to the previous version was to adapt the regulation to new technological realities, such as mobile, biometrics, and unlocking stiffness and friction within the system.

On her article PSD2: A broken promise Already, payments lawyer Nadja van der Veer, posses in part the disappointment of the implementation of the directive and what institutions have been left behind. whereas i do agree the Directive was never perfect nor was intended to be perfect, it was designed to re-open the conversassion on payments across the board, and to that effect i applaud its success, the methodic included major players, and the process (as much a political process can be) was open to commentary and different points of view and structural acknowledgement for inclusive technologies that will arise in the future.

So why the disappointment? 

I think the major issue lies in the perception of the implementation. we ought to remember that Europe is not a complete Federation, where law can be implemented at a bloc level, but rather are recommendation, highly recommended suggestions and exceptions and waivers on practically every mandate, the reason is the diversity and still difference of opinions between its members and its interest.

The directive provided a sprout of innovation and provided the channels to pilot and implement across the board, however let us remember that PSD2 is just the adjustment of PSD 1, let us acknowledge that many of these innovative methods of payments, define a reality in a banking/financial structure in a country and not necessarily across the board (not compliant with local law), or simply posses a higher than desired risk to local authorities, many of these projects simply do not have the financial backing, the full tenure of experience to become regional players, seems that lack of patience and competition has gotten out its rails. It seems the new market is pushing for borderline prohibited advertising to grab user base consumers, and as stated before, most of these institutions are not even close to have the financial reserves to survive a small crisis.

Innovation or technological addictiveness?  

the next question we need to ask ourselves is; what type of innovation is really out there? most of the new market players are mere piggyback riders of existing card networks and bank transfers, the real conceptual innovation is coming from Block Chain, and yet the decentralized ledger is still a concept that needs to be effectively implemented, whether is fully public evolution of a bitcoin or a more complex hybrid coin like ethereum, and while mentioning the latest, the smart contract coin has already seen two major attacks and bugs (one resulting in a forking, the other on a DDOS). Still i am advocate and optimist that eventually block chain will provide a sophisticated solution to many of the problems facing the payments industry of the XXI century.

 

Concluding

my simple take is that the financial market along with the implemented technologies is undergoing a significant and structural change, this change is still undefined as to become an evolution or a revolution, and none of the participants has a significant take on a predictable outcome. While strong advocacy from frictionless payments are being promoted, we are still to implement and or define FAIRNESS in the marketplace (consumers, merchant, institutions, governments) 

 

 

 

 

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