2009 has seen tightening up of regulation in the financial markets globally, and the payments environment is no exception. In Europe, the EU has pioneered a number of changes with the introduction of SEPA Direct Debits and the PSD. Whilst much of this red tape has created challenges for banks and institutions the introduction of the PSD this November is a rarer breed of regulation that actually creates a window of opportunity for non-bank players through the creation of a new category of Payment Service Provider – the Payment Institution (PI).

Having personally gone through the process, Voice Commerce is now a fully authorised Payment Institution and as such will be regulated in exactly the same way as banks in relation to capital adequacy and regulatory responsibilities for payment services, and has begun processing payment transactions across Europe.

Opinion differs as to whether banks should be concerned about the threat of PIs like Voice Commerce entering the market.  According to research carried out by Finextra, 34% of banks surveyed saw a "marginal or no competitive threat" from new PIs and interestingly, 38% of banks surveyed viewed the introduction of new PIs as an "opportunity to form partnerships".

While it isn’t clear how the landscape will look in the years to come the PSD does mean that payment services to merchants and consumers can no longer be regarded as the exclusive preserve of the banks. In 2010 and beyond, we can expect to see PIs bringing out their own branded payment services. The likes of PayPal and Tesco Bank are examples of new innovative payment services entering the market and banks will need to factor this in moving forward. The PSD will result in increased fragmentation of the market as competition becomes fiercer, and as such there is opportunity for banks and PIs to form partnerships.

The PSD is by no means going to reshape the European payments market immediately, but one thing for certain is that introduction of PIs is really going to shake it up, and create a healthy level of competition that should benefit  banks, businesses and consumers alike. PIs represent a new and arguably attractive option for businesses and consumers who will benefit from more choice in payment services. And while the economic outlook is still uncertain, and consumer trust in banks is still low – the PSD presents the perfect opportunity for non-bank players to enter the market and potentially evolve the way we pay and eventually bank.

So watch this space!