RemitONE wants to help Money Service Businesses (MSBs) within the EU/UK get re-authorised with their regulators under the second Payment Services Directive (PSD2). This document provides you with the IT related answers to the questions in the MSB application form relevant to our platform.
What is the second Payment Services Directive (PSD2)?
PSD2 is the second Payment Services Directive, designed by the members of the European Union to revolutionise the payments industry, affecting everything from the way we pay online, to what information we see when making a payment.
It is a technology and data driven directive that is designed to increase transparency, innovation and competition in a changing payments world.
What does it mean to you as a UK/EU based Money Service Business (MSB)?
With the arrival of PSD2, all UK and EU authorised firms must re-apply to their financial regulator in order to retain their license. Payment Institutions (PIs) and Electronic Money Institutions (EMIs) are tasked to ensure that they have implemented new IT rules, security protocols and further enhanced compliance if they wish to be able to continue to provide their services. A brief example of some of the IT rules are:
- Procedures for monitoring security incidents
- Handling security related customer complaints
- Implementing incident reporting systems
- Managing the data for sensitive payments
- Detailed Business Continuity Planning
- Risk assessments
- Identification of fraud risks
- Management of personal data
NOTE: The UK’s plans to leave the European Union (Brexit) is not expected to have any material effect on its adoption of PSD2.
Overview of why the need for PSD2
- The new rules are designed to make Payment Institutions enhance and review business performance
- The new requirements could work to improve the security of your business and so in turn improve the attractiveness of your business to customers, thus making the sector more viable and safer amidst the current market climate
- You can make online payments to merchants without going through PayPal or Visa
- Stronger ID checks on your customers to ensure security and fraud prevention
- Breaking down the monopoly of the banks who will have to share customer data with merchants
- Banks should share their API with licensed firms to facilitate payments and other functions
What does PSD2 say about hidden fees?
- In the spring of next year, the UK Parliament will debate the Payment Services Regulations. These regulations will write PSD2 into UK law, but the Government can decide what is (and isn’t) upheld
- PSD2 prohibits the use of ambiguous pricing methods for international payments. What this means is that banks and brokers cannot hide costs in the form of poor exchange rates which are much lower than the market rate seen on Google
Timescales
- Small Payment Institutions (SPIs) must register before 13 October 2018
- Authorised Payment Institutions (APIs) must register before 13 April 2018
- Small E-Money Institutions (SEMIs) must register before 13 April 2018
- Authorised E-Money Institutions (AEMIs) must register before 13 April 2018
Useful Links
We have prepared a detailed document related to PSD2 which provides MSBs with information to be compliant with the directive. Simply get in touch with us for more information.