PSD2 Access to account (XS2A) Game changing accelerator in financial services

Transcription

1 PSD2 Access to account (XS2A) Game changing accelerator in financial services Douwe Lycklama - 22 March 2016 Tomorrow s transactions today

2 Introduction Innopay: innovation experts since 2002 >25 consultants Offices in Amsterdam and Frankfurt Practices: Payments, Digital Identity, e-business Services: Strategy, Co-creation, Transformation Member of EBA, EPCA and ECP Founding member of HollandFintech 2 PSD2 Access to Account (XS2A) - Game changing accelerator in financial services. Douwe Lycklama. March Innopay BV. All rights reserved.

3 Successful payment solutions provide Reach and Conversion against fair Cost CONSUMER MERCHANT CONVERSION REACH 1. COST Source: Innopay analysis 3 PSD2 Access to Account (XS2A) - Game changing accelerator in financial services. Douwe Lycklama. March Innopay BV. All rights reserved.

4 Payer account Beneficiary account Payment infrastructure: over the past decades, a stacked ecosystem emerged Customer Traditional four corner model Merchant The payment infrastructure consists of: - Instruments - Processing - Settlement SEPA regulation harmonised the payment infrastructure layer Debtor SCT, SDD Cards Instruments SEPA ACH Visanet, Processing Banknet Creditor Real Time Gross Settlement Settlement Information Funds Source: Innopay analysis, Euro Banking Association (EBA), European Central Bank (ECB) 4 PSD2 Access to Account (XS2A) November 2015 Innopay BV. All rights reserved.

5 Payer account Beneficiary account Growth in e/m-commerce sparked alternative services on top of the payment infrastructure Customer e.g. Browser Online ing Traditional four corner model Merchant e.g. Webshop Online pymnt provider Routing service Especially innovative payment initiation sevices emerged: - Focus on information messaging rather than funds transfer ( decoupling ) - Not regulated under PSD1 - Have primarily local reach (limited geographically or platform wise) Also emergence of account information services Non- service providers play an important role in this services layer Debtor Instruments SCT, SDD Cards, Cheques SEPA ACH Visanet, Processing Banknet Creditor Some regulated as Payment Institution (PI) under PSD1 (2009) Real Time Gross Settlement Settlement Information Funds Source: Innopay analysis, Euro Banking Association (EBA) 5 PSD2 Access to Account (XS2A) November 2015 Innopay BV. All rights reserved.

6 Payer account Beneficiary account Result: fragmented and inefficient landscape with regulatory challenges Customer e.g. Browser Traditional four corner model Merchant e.g. Webshop Inconsistent application of PSD across member states resulted in regulatory gaps : Uncertainty regarding liability Potential security risks in the payment chain Lacking consumer protection in certain areas Competitive distortions Online pymnt provider Online ing Routing service Services Poor reach Good conversion Debtor Instruments SCT, SDD Cards, Cheques SEPA ACH Visanet, Processing Banknet Real Time Gross Settlement Settlement Creditor Infrastructure Good reach Poor conversion Information Funds Source: Innopay analysis, Euro Banking Association (EBA) 6 PSD2 Access to Account (XS2A) November 2015 Innopay BV. All rights reserved.

7 Payer account Beneficiary account Payer account Beneficiary account New model emerging under PSD2 providing third party access to account (XS2A), thereby disrupting existing value chains Customer Online ing Traditional four corner model Merchant Online pymnt provider Routing service Customer Standardized interface Emerging XS2A model under PSD2 Challenges customer relation Adds to competition in acquiring business Merchant e.g. Browser e.g. Webshop e.g. Browser Payment e.g. Webshop Initiation Services (PIS) Account Information Services (AIS) Challenges customer relation Online pymnt provider Routing service Debtor Instruments SCT, SDD Cards, Cheques SEPA ACH Visanet, Processing Banknet Creditor Debtor Instruments SCT, SDD Cards, Cheques SEPA ACH Visanet, Processing Banknet Creditor Real Time Gross Settlement Settlement Real Time Gross Settlement Settlement Information Funds Source: Innopay analysis, Euro Banking Association (EBA), Innopay blog XS2A redefining the acquiring domain 7 PSD2 Access to Account (XS2A) November 2015 Innopay BV. All rights reserved.

8 PSD2 XS2A will enable customers more options to interact with s through TPPs, potentially causing fragmentation in services Pre PSD2 XS2A era Customers (Post) PSD2 XS2A era Customers Entrance of TPPs (incumbent, fintech, bigtech) Collec ng PSP Cash Management e-wallets Bank Aggrega on Deferred Payments Online Banking and Cards Internet ing and mobile app Internet ing and mobile app TPP Online Banking e-payments Banks ID XS2A Payment pla orm Data providers Bank account Bank account Payment account Peer-2-Peer Third Party Iden ty Bank domain Bank domain Cryptotechnology Merchants Lending & Finance Foreign Exchange Invoicing Source: Innopay analysis 8 PSD2 Access to Account (XS2A) - Game changing accelerator in financial services. Douwe Lycklama. March Innopay BV. All rights reserved.

9 This does NOT mean, however, that a merchant s payment page will look like this in the PSD2 era Please select your payment method Your order Please make sure that you select the correct payment method PSD2 XS2A myth buster: Merchants will only require 1 Payment initiation service provider to establish pan-eu reach Merchants can consider adding an additional payment initiation service provider if it offers value added services (e.g. services based on account information) 9 PSD2 Access to Account (XS2A) - Game changing accelerator in financial services. Douwe Lycklama. March Innopay BV. All rights reserved.

10 Fragmentation will trigger different behaviours of actors involved Consumer Merchant ASPSP Acquirer Only one payment account to shop online across Europe Keep check-out simple and maximize conversion XS2A compliance with minimal effort/impact Safeguard market share and merchant relationships XS2A concerns Goal Reach Trust (privacy) Ease of use Costs ( side charges, merchant surcharge) Reach Conversion Costs XS2A Compliance Securing consumer funds Liability partition vis-à-vis TPPs Dispute resolution Profitability: revenue model vs fee structure Communication Reach offered no longer exclusively More competition on Merchant Acquiring Loss of market share Increasing price pressure Source: Innopay analysis 10 PSD2 Access to Account (XS2A) - Game changing accelerator in financial services. Douwe Lycklama. March Innopay BV. All rights reserved.

11 Important questions from a merchant perspective? 1. (Too) many payment initiation options make it difficult for consumers to distinguish good from bad? 2. More stringent PSD2 security requirements ( strong customer authentication ) could negatively impact convenience and UX? 3. Potentially changing payment mix (shift to pay afterwards ) with consumer s payment account information being available (better insight in credit risk)? 4. Less dependency on cards-based payments? 5. Redefine the relation with PSPs by becoming TPP? 6. Options for great customer experience and intimacy (reduce friction)? PSD2 Access to Account (XS2A) - Game changing accelerator in financial services. Douwe Lycklama. March Innopay BV. All rights reserved.

12 Topics for the Panel The EU Payments Business is undergoing significant change. Players and stakeholders are struggling to keep up and adjust their strategies and business models. New cards Regulation has radically changed the terms of the cards business. Non- competitors are eroding traditional players in a consumer landscape that is rapidly changing as new payment technology implementation accelerates. This session will debate these changes from the perspectives of the two major international card schemes (Visa and MasterCard) and how they see their products and services will change and innovate over the next 3-5 years. The scheme views will be contrasted with the visions of the two non- panel members who will provide their perceptions on how the FinTech sector may innovate over the same time period Payment Systems Europe Limited 22/3/2016 PSE FROB Conference Warsaw

13 Panellists Moderator: Douwe Lycklama, Chief Executive Officer Innopay Amsterdam Gosia O Shaughnessy, Regional Managing Director - Visa Europe - Central Eastern Europe Adrian Field, Digital Strategy Senior Manager Visa Europe - London Brian Morris, Emergent Payments Product Manager Brussels Georg Schardt, Chief Executive Officer - Sofort - München Eric de Putter, Executive Advisor Paymint Frankfurt 2015 Payment Systems Europe Limited 22/3/2016 PSE FROB Conference Warsaw

14 Regulation Changing the Balance between Banks and Non Banks Consumer Initiation Changing Habits Merchant Acceptance Payment Intermediaries Account Access/ API Omni-Channel Gateways Regulators Degree of Change Issuer Processors Issuers Interchange Scheme Separation Network Interoperability Card/ACH Schemes & Networks Interchange Acquirers Acquirer Processors L 2015 Payment Systems Europe Limited M H 22/3/2016 PSE FROB Conference Warsaw

15 Five Key Questions To Debate Question 1: What is the most important change in consumer behaviour that now influences payments design? Question 2: Thinking about the future, what will be the new payments model beyond 2020? Question 3: How can merchants contribute towards payments innovation? Are they equipped to keep pace with change? Question 4: Key stakeholders such as the ECB, EBA are setting the payments innovation agenda for new products and security. Is this a healthy practice? Question 5: If you were asked to advise merchants on their strategy for innovation in payments what would be the three most important recommendations? 2015 Payment Systems Europe Limited 22/3/2016 PSE FROB Conference Warsaw

16 Contact us We look forward to it Douwe Lycklama Tomorrow s transactions today