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Plaid proposes prioritisation of TPPs for PSD2 review

Plaid proposes prioritisation of TPPs for PSD2 review

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."

Comments: (3)

Dharmesh Mistry
Dharmesh Mistry - AskHomey - Reading 07 July, 2022, 09:52Be the first to give this comment the thumbs up 0 likes

These are perspectives that foster a better relationship with Plaid's customers (TPPs and Banks), they talk nothing about enahncing the protection of the end customer and why they benefit. There is a trade off between "better customer experience" for "better consumer protection" in these proposals. To me this comes across self serving rather than for the greater good of the customer...

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 07 July, 2022, 12:23Be the first to give this comment the thumbs up 0 likes

Plaid is not a social organization. Of course, Plaid is self-serving but it's arguably better to take the advice of a company that, by hook or crook aka phishing or scraping, has acquired 80M Open Banking customers in USA, in order to drive adoption of Open Banking customers in EU from the measly 5M.

Open Banking: EU v. USA

Dian Cecht
Dian Cecht - Caspa Consulting - Madrid 08 July, 2022, 13:00Be the first to give this comment the thumbs up 0 likes

I missed the part when they say how much are willing to pay for the improvements in the service