By Michael Scanlan, Fintech PR Consultant
If you have even the faintest interest in fintech, you’ll know that the 2nd EU Payment Services Directive is going to come into force in January next year.
New entrants and established players will be coming on stream with solutions to take advantage of the PSD2 presented opportunities. And even those not directly involved in PSD2 will still want to take part in the debate about how this directive will change payments and how stakeholders can make it work.
There will be a crowded market place of ideas and products and business will struggle to make their voices heard among the roar unless they have something unique, informed and interesting to say.
Everyone with a stake in PSD2 has an opinion on it. Making sure your opinion is heard over the coming months will be a challenge. But it can be done.
What is PSD2?
In a nutshell, PSD2 is the Second EU Payment Services Directive and is designed to build upon the foundations of the First EU Payment Services Directive.
PSD1 was launched by the European Commission in 2007. It created the Single European Payments Area (SEPA) which was designed to be the euro of electronic payments. In short, just as the EU had a single currency, so it would have a single payments system.
The payments industry has developed at an almost exponential rate. Ten years ago, mobiles were for calls, texts and the occasional game of snake. Today we can run our entire lives, including our financial lives, from them.
Fintech has gone from niche to an industry that everyone wants to be a part of. It’s a landscape that’s confusing, can be biased in favour of the big banks and hard for new entrants to break into.
PSD2 is an attempt to make sense of this and rebalance the playing field. It is a stepping stone on the ultimate path to the digital single market. By helping to drive towards as more integrated and efficient European payments market which promote both competition and regulation it will lay down the road map to the DSM.
It is designed to help new market entrants, such as fintechs, increase choice, lower prices for payments and protect consumers against fraud through strong consumer authentication for payments. It won’t just affect the EU, it applies to one-leg transactions too so non-EU companies carrying out payments with EU companies will still fall under its auspices.
Key talking points.
Those are the basics of PSD2 but there are a lot of nuances and a huge variety of talking points. Here are some of the major ones:
AISPs – Account Information Service Providers will be able to extract a customer’s account information data including transaction history and balances but only with the permission of the customer. Customers will be able to aggregate all of their financial accounts onto online platform in order to better monitor and plan their financial lives. Also, when applying for financial products, consumers sometimes have to provide bank statements and other financial records. With AISPs, this would not be necessary as, with permission, the financial service providers would be able to access this information directly from the applicant’s bank account.
Key talking points:
How this will work in practice?
What are the security implications? For example, what happens in case of data breaches? How can consumers and banks be sure that third parties will keep data secure?
Is there a public appetite for this?
Will banks dominate this or will there be space for new entrants?
PISPs – Payment Initiation Service Providers will be able to initiate online payments to an e-merchant or other beneficiary directly from the payer’s bank account via an online portal. It is payment via direct bank transfer such as Faster Payments or similar. It will open up payments far beyond the scope of the traditional card scheme and will see significant competition in this market.
Key talking points:
PISPs are a direct challenge to cards and without interchange fees, how will schemes make money
MasterCard are buying Vocalink? Will other schemes follow suit and open new revenue streams? And is this smart business by MasterCard or a panic buy?
Is there appetite for this? Consumers already have choice in payments. Will PISPs just confuse matters further or are there tangible consumer benefits?
Who will win out in the PISP battle; new entrants or established players?
SCA – Strong Customer Authentication is at the heart of PSD2. Improving security and making consumers more confident in online transactions. The EBA has issued its final draft RTS on SCA but these still have to be approved by the European Commission and European Parliament and won’t be implemented until November 2018, some 11 months after PSD2 is implemented.
Key talking points:
How can businesses be ready for SCA when there cannot be certainty about what the final version will look like?
Will the 11-month gap lead to more uncertainty and fraud?
What can business do to manage this risk?
What sort of SCA solutions should business be looking for? What has got staying power and what’s a fad?
Will we be ready? – There is a lot to do between now and January 2018. Are businesses making the progress they need to be ready? Is anyone ready? Does anyone care?
Key talking points:
How can consumers be educated about PSD2?
Is there a danger that larger players will use their marketing budgets to promote their services, drowning out new entrants?
Who should new entrants be talking to to stake their claim? Business, consumer or both?
The right communications approach
With so many talking points and so many potential pitfalls, as well as opportunities, how should you get the most out of your PSD2 communications approach?
Be confident in what you say – With so many talking heads on PSD2, lots of people will be saying lots of things. Be sure that what you add to the debate is based on evidence and experience.
Stick to your area of expertise – The expert opinion is the area that is listened to. Ensure that your expert opinion is heard and don’t be side-tracked into areas where you can’t add value
Don’t be afraid to be controversial – Controversy for its own sake is not recommended. But if you have a point of view that is different from the received wisdom and can be backed up with evidence, then voice that opinion.
Don’t step on toes – PSD2 will mean that new entrants will need to work with big players as well as competing with them. Being critical of legacy banks for the sake of column inches could hamper future deals.
Think beyond words – PSD2 is complex and even experts are struggling to understand its nuances. An infographic could be the perfect vehicle to explain your thinking in a concise and coherent fashion.
Call in the experts – Communications can be confusing and there are bear traps to be avoided at every step. The right communications consultants, who understand the industry and understand your business, are critical in helping you get your own approach right.
Maximising the PR opportunities of PSD2 is more than just shouting loudest. It is about contributing to, even leading, debates through the correct deployment of evidence based expertise. By choosing talking points wisely, expressing them succinctly and by partnering with the right communications specialists to deliver, your message can stand out from the crowd.