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EBA bends under weight of PSD2 mandates

07 December 2016  |  15233 views  |  2 euro

The European Banking Authority is struggling to keep pace with the timetable for the delivery of Regulatory Technical Standards (RTS) for the revised Payments Services Directive (PSD2), after being overwhelmed by the large volume of responses to market consultations.

The regulatory body has been charged with pushing through 11 mandates covering regulatory convergence in retail payments across the EU. The Authority has so far published consultation papers on four of these mandates with a further two in the pipeline for early next year.

In a prepared statement for a scrutiny hearing for the Committee on Economic and Monetary Affairs at the European Parliament, EBA chair Andrea Enria, says: "There is considerable uncertainty as to whether we are able to maintain this speed until the transposition date of the PSD2 on 13 January 2018, given that the EBA has been allocated no additional resources to develop the PSD2 mandates."

Particular bugbears concern the drafting of Regulatory Technical Standards for strong customer authentication on the one hand, and common open communications between banks and third parties for account access on the other, which Enria says are fostering difficult trade-offs between competing demands.

"The challenges for the EBA and the ECB, who is fulfilling this mandate in close cooperation with us, are...formidable," she says.

This has been reflected by the market response to consultation papers issued by the EBA regarding its thinking on the issues, engendering 226 responses, which fill more than 2000 pages in total, "a new record for and EBA consultation", observes Enria.

One of the most contentious aspects of the RTS regarding the imposition of a EUR10 threshold for online authentication has generated a hostile response from industry participants, who claim that such strict rules will lead to more declined transactions and abandoned purchases as customers are forced to conduct additional security checks at the checkout.

Enria says the EBA acknowledges the concerns and offers hope for a compromise: "We are in the process of assessing the comments received on this point to assess whether we found the right trade-off between security and customer convenience, and will seriously consider whether we need to make changes to these thresholds."

Tricky issues surrounding the provision of interfaces for direct access to bank accounts to third party providers are also being debated, with a lack of clarity around the language used and exemption clauses raising concerns.

Enria says the EBA is working full-tilt to address these major concerns as well as "257 other distinct points that we have received".

The burden of dealing with all the issues raised is being to have a knock on effect to the current deadlines, she says.

"In terms of timing, we are anticipating to remain on track to submit the RTS at the beginning of 2017. However, due to the large number of responses that we have to assess with limited resources, it is likely that we will submit the RTS a month or so later than the deadline of 13 January 2017 stipulated in the PSD2.

"Given that the PSD2 provides that the RTS apply only 18 months after entry into force anyway, we believe that such a delay is acceptable to ensure that the RTS are fit for purpose, support the objectives of the PSD2 and ensure that the EBA delivers its mandate."

Comments: (2)

A Finextra member
A Finextra member | 07 December, 2016, 12:59

Nice to see some common sense being applied and a 'better late and get it right' approach being taken. I just hope they do 'get it right' once published.

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Riten Gohil
Riten Gohil - Sphonic - London | 07 December, 2016, 13:29

Finally, common sense prevails. The digital payments environment has move on signficantly since the EBA started this exercise all those moons ago, it is also like to move even further over the coming years and therefore requirements under SCA need to stand the test of time. Foremost, ensuring the vast majority of 'good' payments aren't subjected to undue friction, and any additional step up is proportianate to the risk. Payments has been saved.

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