The PSD2 directive establishes new financial entities – TPP. How can they revolutionize the payments market?
PSD2 introduces TPP entities – what are their rights?
One of the assumptions of the PSD2 directive is to enable the development of innovative technologies in the payment market. New financial entities, which could not function before, are to contribute significantly to this. These are the so-called Third Party Providers (TPP). They are divided into two groups with different powers. Each of them may provide slightly different services using the payment information provided by banks. PSD2 distinguishes the following types of TPP:
According to the PSD2 guidelines, each of these institutions will have to be registered. PISPs are also required to have a permit to provide payment services.
Increased competition, or new opportunities
The introduction of new players to the payment services market by PSD2 can significantly facilitate financial management. Competitiveness will make each entity strive to make its offer more attractive to users. As a result, account holders will be able to choose from services that previously could not be offered due to legal restrictions.
There are many possibilities. There are proposals to create an application that would calculate creditworthiness. It would allow you to find the best offer without leaving your home and consulting various banks. There will probably also be many solutions that will facilitate budget management. This is good news for bank customers who want more control over their payments. The new systems will certainly meet their needs.
TPP and the issue of security
The entity’s competitiveness will also be affected by security, and more specifically – authentication methods. Each institution has to use two independent methods of identity checking. The more modern, fast and reliable they are, the greater the chances of increasing the number of customers. Currently, the most trusted are biometric methods, which are not widely used yet. Perhaps the PSD2 directive will change this state of affairs.
Detailed information on TPP and methods of securing payment accounts can be found in the article on the website. There are also detailed descriptions of the most important provisions of the PSD2 directive. It is worth reading them to better understand what changes will take place on the financial market in the near future.