The Financial Conduct Authority is looking to foster innovation in the UK financial services industry by setting up a policy hub to provide guidance to firms on new products and technology developments and an 'incubator' to fast-track startup businesses for regulatory authorisation.
A great initiative by the FCA - opening up the market to innovators in the payments space is long overdue. In order to effectively support innovation, the barriers currently facing emerging fintech firms - notably lack of ready access to the banking infrastructure
needed to realise their innovative ideas – must be addressed. Regulators here in the UK and wider EU are already starting to do this, with the proposed update to the Payments Services Directive (PSD) aiming to increase participation in the payments industry
from non-banks to so called third-party providers and grant them access to this infrastructure. Gartner and other analysts are recommending it. And yes, APIs will play an increasingly important role in helping third-party developers access these financial
But APIs are a technical tool and so powerful that they can only be given to trusted parties. In practical terms that will mean keeping development in the bank/FI. For wider innovation in payments and digital banking we will need something else. That’s why
Ixaris are introducing PayML. We are believers in ‘open’ payments but also appreciate the challenges banks face when it comes to opening up their systems while maintaining the highest levels of security we all want them to maintain.
PayML is a simple extension to HTML that enables web developers/enthusiasts (not IT programmers) to work with payment solutions, selecting the function they want to make available, modifying to modern standard the form/layout of the user interface and the
flow of the whole process for the target user – all without compromising security. Using PayML a web developer cannot access sensitive payment data but works with ‘placeholder’ tags only and therefore needs no access to the secure bank/FI environment on which
the target payment solution will run. (Another technical approach is ‘tokenisation’ but it is not useful where interaction between a customer, a payment app/application and the relevant banking/payment system is required. It’s good for the most basic interactions
like posting card details to the banking network, but no good for more complex interaction such as a consumer being able to act on real-time information like an account balance for example, and hence is
quite limited. )
PayML will help take development of payment solutions closer to the user and alleviate some of the burden on and costs associated with the necessity of using IT to build, develop and deploy payment solutions or the current mainstream and alternative of inspecting
the coding of all apps to ensure they are safe before use (difficult and expensive).
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