PSD2 Regulation Will Bring Down the Walls, Not Build Them

The Payments Services Directive 2 (PSD2) is shaking up the industry, and for good reason. There is sometimes a tendency for the payments ecosystem to expect doom and gloom when it comes to new regulation; seeing it as restrictive, unnecessary interference, or costly. The reality is that PSD2, along with other regulatory changes across Europe and the world, offers a massive opportunity for all participants in the payments ecosystem to carve out new revenue streams.

Regulation is opening up payments and mandating data access and transparency, which encourages both competition and innovation. This in turn is spawning new payments players. So does this mean a smaller slice of the pie for the incumbents? Not at all. There are still plenty of areas of payments that are currently underserved, and not just in the consumer space. The SME market holds substantial revenue opportunities for those who can develop a business model for micro payments, bespoke instant payments, B2B discounts and more.

The activation of PSD2 will drive an open marketplace where digital payments thrive. And digital payments require a fast ecosystem. From customer on-boarding through payment initiation and authorization, right up to the immediate funds transfer itself—all the stages of a fast digital payment offer the opportunity to bring new services to market. Payments initiation will be a hotbed of innovation as Payment Initiation Service Providers and Account Information Service Providers spring up post-PSD2.