Open banking and payments innovation

Earlier in the year, the updated version of the Payment Services Directive (PSD2) entered into force. The directive was pushed by The European Union to create safer and more innovative European payments. The new rules aim to better protect consumers when they make payments, promote the development and use of innovative online and mobile payments, and make European payment services safer.

Some of the changes that the new rules introduce are: (*)

  • Introduction of strict security requirements for the initiation and processing of electronic payments and the protection of consumers' financial data;
  • Opening the EU payment market for companies offering consumer or business-oriented payment services based on the access to information about the payment account – the so called "payment initiation services providers" and "account information services providers";
  • Enhancing consumers’ rights in numerous areas, including reducing the liability for non-authorised payments, introducing an unconditional ("no questions asked") refund right for direct debits in euro;
  • Prohibition of surcharging (additional charges for the right to pay e.g. with a card) whether the payment instrument is used in shops or online.

(*) For more information on PSD2: https://ec.europa.eu/info/business-economy-euro/banking-and-finance/consumer-finance-and-payments/payment-services/payment-services_en)

The reviewed directive accelerated open banking revolution. Open banking relies on the opening of banking systems and sharing their customers’ data to third parties. APIs are at the heart of this model. This technology breakthrough allows developers to integrate third party services within their apps. Every player of the banking ecosystem is now allowed to connect to the bank services to develop their own applications. Potential benefits of open banking include new revenue streams, improved customer experience, and a sustainable business model.

In this ever-evolving ecosystem, banks are expected to open up their systems and have a new role to play: they have the opportunity to partner with third-party companies (FinTechs) by sharing their APIs and making the most of it, driving new revenues streams.

Opening up means getting FinTechs involved and together improve the services they deliver to their customers. With FinTechs, they pave the way to innovation, that will tap into new sources of income.

Besides driving innovation, FinTechs bring to the table their agility, new business models and their offering of game-changing solutions.  

On the other hand, banks provide their recognized experience on the ecosystem by sharing their regulatory expertise, their strong funding capabilities, their extensive network and customer base.

Financial institutions and FinTechs should not miss the opportunity to work together and improve overall customer experience. To do so, they need a partner that can help both of them to maximise their strengths and enhance collaboration.

To help them embrace this opportunity, HPS launched PowerCARD Connect’ APIs, a set of APIs that completely opens up PowerCARD to 3rd party systems. Any data or services at cardholder or merchant level can now be triggered by an API!

In addition, HPS launched an online platform where HPS customers have access to those APIs. They can get the list of APIs, the definition of each APIs and they can even test their systems by using the sandbox provided on the platform. A pilot version was launched in September 2017, and is already live with ICPS, which used the platform to create a mobile banking app.

PowerCARD Connect’ APIs is designed to match FinTechs creating emerging payments solutions directly with providers, enabling end users to benefit from the latest technology in the payments industry, such as mobile and contactless payments, tokenisation and biometrics, thus delivering an enhanced digital-first and secure user experience for both consumers and merchants.

To know more about HPS and PowerCARD Connect’APIs, please contact sales@hps-worldwide.com