1- Hello Daniel, can you please tell us a bit about yourself?
Sure, my name is Daniel Wicharz. I am originally from Düsseldorf, Germany and nowadays I work in the payment industry. First for the likes of PayPal and Skrill (Paysafe). Currently, am with an international acquiring bank covering Sales & Key Account Management.
2- What are your focus areas and why?
I focus on E-Commerce as well as Point of Sales payments. There I am a specialist for the credit card, national debit cards and alternative payment options like for instance online bank transfers.
3- Can you explain the payment service directive 2 for the rest of us?
PSD 2 will mean further harmonization of the financial systems and also a paradigm shift in terms of data ownership. So far the bank’s control and practically own the data of their customers.
It is extremely difficult sharing your banking records with other parties and this means fewer competitions in terms of mortgages, loans, and credit. This will change because with PSD 2 the customers will receive full ownership of their data and can share it with any Third Party registered with the financial authorities. Also, the way this data gets shared will have 1 Standard across the EU. So this means more competition for the finance
sector and thinner margins. We also need to add that payments will become instant. Meaning that the times of next day settlement are over and funds move from one bank to another in the blink of an eye.
Moreover, there will be better standards in fraud protection for consumers.
4- Where do you think the PSD 2 is making an impact?
It will make cross-border banking easier. More competition will lead ultimately to thinner margins. Banks will need to make sure they will not become pure commodity providers but rather use their connection to the customers to provide them with the new service which they will request and get used to. Hereby I mean especially mobile payment, but also quick applications for loans, credits, and installments.
5- What are the main differences between PSD and PSD2?
While PSD 1 mainly focussed on SEPA and in terms of credit cards lead to reduced interchange fees the PSD 2 will mainly focus on setting a better technical framework for the players in the payment industry to connect classical banking with the new technology. This means that online bank transfers and many other E-Commerce providers will get fully regulated and have it much easier to access the customer’s data.
Moreover the customers will now own and administer the access to their data which is brand new.
6- What does it mean for the financial industry and merchants?
It means for the financial industry that small players and Fin-Tech companies have it easier to get recognized and also have a clear framework in which they can operate. All in all the banking market gets more opened across the European Union. In fact all EU transaction will
become kind of a domestic transaction, thus the borders totally disappear inside the EU.
For the merchants it means reduced cost which will happen due to more
competition. It also means more legal certainty in terms of the online
bank transfer services operating today.
7- In a global system, how the implementation of the new rules will affect non-EU members?
I am confident that PSD 2 will make the finance industry in the EU more competitive. This means that non EU countries that compete with EU will have to harmonize their systems or suffer a competitive disadvantage.
This will also impact nearby countries like Switzerland.
8- What can you tell merchants when it comes to the online payment trends?
Online payments will happen quicker than in the past. With the new instant payments, the money arrives straight away (and not next working day) in the merchant’s account. I am confident that online bank transfers will see an increased popularity due to the new standards introduced and better fraud protection provided to consumers.
9- What are you most excited about at the moment?
I am excited about the chances PSD 2 gives to payment and Fin-Tech companies. This means that you can access all customers in the EU and have 1 single technical (API) standard across the entire EU Banking world. This means larger opportunities and more rights for the customer who now has a larger choice. Certainly the consumer is the big winner in terms of the new regulation. The same is true for Fin-Techs and also banks that are among the first movers to use PSD2 as a chance to enhance their customer base and business model.
10- Last word or final thoughts?
The finance and e-commerce industry is undergoing a fundamental change over the next 2 to 3 years. In order to prevail companies need to have a certain size and need to focus on the customer. I believe that Fin-Techs and large banks can prevail working together and using the innovation that comes from Fin-Techs combined with the customer trust and loyalty which is still with banks. Any successful player in the market needs to adopt the change especially when it comes to devices. We all see a drastic trend to mobile payment. Banks and financial institutions who will sit back and do nothing will lose business to those players supplying the customer with the services they desire.