Dear Savings Champion,
I have been trying to get my head around the implications of the Payment Services Directive II (PSD2).
I have started getting notifications from the various Banks and Building Societies that I use, telling me that they are changing their T&C’s, effective January 2018, to reflect their policy towards the Payment Services Directive.
For the most part I find their communications incomprehensible, but they seem to fall in to the category of ‘take it or leave it’
Can you help to clarify my options?
Thank you
Anna's reply
Many thanks for getting in touch.
Whilst we are still awaiting the finer details of how an ‘Open Banking’ style arrangement will work, as a result of the implementation of PSD2 in January 2018, in theory there could be a number of advantages for consumers. The ability to see your account details in one place, could represent a real leap forward for those wanting a more effective view of their finances as a whole.
Our understanding would be that you would sign up and give consent to an organisation, who will then be able to access your account details from your existing banks, building societies and so on.
In terms of the security of your personal information – existing Data Protection rules and guidelines will remain in place – a company will not have access to your personal information unless you give your consent.
So, you will be completely free to opt out, as a company will only access your details with your permission. It is important to note that PSD2 allows your information to be shared, however this will be still subject to your explicit consent.
As we approach January 2018, we will start to see more details and we will keep you informed of any key points that affect savers – so keep your eye out for follow-up features and articles going forward.
As always if you have any savings-related topics you would like us to discuss or any savings account experiences you’d like to share, please do get in touch and email [email protected], I would love to hear from you.
What is PSD2 / Open Banking?
In October 2015, the European parliament approved PSD2, with its publication in the official journal of the EU following in December 2015. Whilst PSD2 officially came into force in January 2016, member states of the EU have until the deadline of 13 January 2018 to implement the changes.
Key changes
- One of the core changes of PSD2 is the requirement for banks and building societies to allow third party providers access to a customer’s online/payment services in a regulated and secure way.
- There will be two main types of new services created by PSD2 – third-party payment initiation and third-party account data aggregation.
- Third party payment initiation means that businesses, such as Amazon, can then make payments on a customer’s behalf, rather than having to redirect you to another service – for example PayPal or VISA.
- Third party account data aggregation allows companies to get access to a customer’s account data, with the customer’s permission, including transaction history and balances. This would allow businesses to display all a customer’s account information in one place to allow for effective management of their daily finances.
- PSD2 will require stronger identity checks when making payments online, likely to take the form of additional checks to current processes. Banks and building societies will also need to facilitate secure access to customer information to third parties, through which customer identity authentication and verification will be possible.
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