Reconnecting the Dots for the Payment Service Directive 2 - Compatible Asian Financial Network

Fintech Innovations in the Financial Service Industry

“…Kang (2018) reported that the fintech mobile payment services are exposed to various risks and certain requirements are needed to fulfill to maintain integrity and privacy. In addition, Choi and Park (2019) stated that the level of uncertainties in mobile payments can be reduced by abiding by the stringent framework of Payment Directive Service, which results in decentralization in the payment network. Customer data is very sensitive to any hackers in the transaction system who indulge in unethical practices (Lu 2018).…”

PSD2 influence on digital banking transformation: Banks' perspective

“…The overriding goal of PSD2 is to remove the legal monopoly of banks to access their clients' accounts (Wolters &Jakobs, 2019), as FinTechs and other new entrants can survive in this new environment only through banking data they can access through the API, due to high capital requirements and other costs which represent huge barriers to entry and starting a business (Choi & Park, 2019). The exact design of this approach depends on common and secure open standards of communication as well as Regulatory Technical Standards (RTS) for strong customer authentication (Wolters &Jakobs, 2019), which are legal documents for specifying certain aspects of EU directives and regulations (Saarnilehto, 2018) and impose stricter security measures than PSD2 (Wolters &Jakobs, 2019).…”

“…Due to changes in the financial services industry and the payments sector, most notably in the area of new electronic payment services and their providers, as well as in the wants and needs of technology-savvy consumers (Forester, Rolfe & Brown, 2017), PSD1 had to be updated, thus incorporating technological innovations as well as further clarification, enhancement and protection (Noctor, 2018) to better regulate the legal framework for payment and banking services across the EU (Forester, Rolfe & Brown, 2017). For these reasons, the European authorities have adopted a revised Payment Services Directive (PSD2) (Choi & Park, 2019), which, inter alia, extends the framework to all foreign currencies across the EU / EEA, as well as to payment transactions in all currencies in which only one participant in EU / EEA territory (Deutsche Bank AG, 2017).…”

“…PSD2 entered into force on 13 January 2016, with an obligation for all EU Member States and European Economic Area (EEA) countries to implement it in their national laws by 12 January 2018 (Forester, Rolfe & Brown, 2017). The real challenges raised by the implementation of PSD2 concern how the region will overcome an overly fragmented, centralized hierarchically inherited framework to allow for the necessary changes to respond to digital market initiatives (Choi & Park, 2019).…”