Open banking platform Plaid has made clear their position around PSD2 in a blog outlining their proposal to the Payments Service Directive (PSD2) review.
Earlier this year, the European Commission requested feedback on how effective the PSD2 regulation is in practice, and how it can be amended according to the changes in the market and the emergence of big tech in the financial industry.
Plaid’s article, penned by Kimberley Moran, a policy research advisor for the company, focuses on how the needs of third-party providers (TPPs) should be incorporated into the reform, detailing how they are challenged and what solutions can be offered.
Essentially, Plaid argues, the issues that TPPs are faced with are problems concerning the limitations and quality of APIs that require redirection of the customer back to the ASPSP to authenticate, issues around Strong Customer Authentication (SCA) requirements including having to re-consent, the clash of regulatory requirements in analysing data, and uneven PSD2 enforcements across single markets in multiple countries.
To solve this problems, Plaid proposes boosting customer experience by permitting flexible TPP-led authentication methods, less limitations on TPPs, and enforcing compliance of regulation for Account Servicing Payment Service Providers (ASPSPs).
Overall, Plaid emphasises the significance of TPPs to achieve the full potential of open banking.
The blog concludes with a definitive statement on the future of payments: “Most importantly, the Commission should broaden the scope of open banking to open finance. It will enable consumers to better understand their full financial lives beyond payment transactions, create new financial services and products that meet consumer needs, lower costs for consumers and businesses alike, as well as foster more competition in the market."