Posts

Getting automated payments under control

The digitisation of our commercial lives has brought us new levels of convenience. Banking can be done on a phone app with no need to queue in-store, credit card bills can be paid online, train tickets bought on a phone and much, much more. Yet, this convenience can also come with ongoing obligations.

Recurring payments, for example, are a source of regular frustration for many consumers. Known, technically as Continuous Payment Authorities (CPAs) these agreements allow companies to take money from you in exchange for providing a service, such as subscription to an online service.

They appear to be just like Direct Debits but while Direct Debits take money from your bank account, CPAs take money from a payment card. While they are still subject to oversight by the FCA, they do not have the same set of rigorous consumer protection guarantees that Direct Debits do, such as ease of cancellation, compensation and refund, in the case of error.

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Open Banking and PSD2 Uncertainties

The use of APIs in banking has largely been limited until recently, mainly due to regulation and security. However, European banks will soon be using APIs to provide access for third-party providers, as one of the many changes required by the upcoming the Second Payment Services Directive (PSD2).

A new report by PwC highlighted that banks are concerned that these changes will cause them to lose control of their customer interface.[1] A vast majority (88%) of the banks surveyed in the report believe that PSD2 will have an impact on their business and many see it causing them to change their strategies. Despite the uncertainty and the apparent risks, 44% are planning on providing an open bank offering, with 66% intending to integrate foreign products or functionalities into their own digital offering.

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The Importance of Security for Open Banking

The recent report by the Competition and Markets Authority’s (CMA) has announced significant reforms that are aimed at shaking up the banking industry. The Open Banking report, promises more transparency for UK banking consumers, open APIs and easier account switching.

These initiatives are welcomed by the Fintech industry, as they intend to increase competition, whilst helping customers obtain a better deal from their banks.

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Security Best Practice in Payments and Banking Outside the European Union

After much debate and campaigning over recent months, the nation went to the polls yesterday and voted in favour of the United Kingdom leaving the European Union.

The result shows that many were unconvinced of the arguments to remain, not only for the UK’s future as a whole, but also for their own personal circumstances. There has also been a lot of uncertainty about what will happen to the payments industry with the UK leaving the EU, and disagreement amongst experts continues.

However, we think one thing is for certain: the UK’s exit from the EU is unlikely to signal the widely predicted doomsday for the financial services industry, including the payments sector.

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Brexit – How might it affect payments?

On both sides of the argument there are claims and counterclaims about how Brexit – the potential occurrence of UK leaving the European Union if the referendum on the 23rd of June sees a vote in favour of leaving – will unravel pivotal social, economic and political changes.

No matter what the view on the UK’s relationship with the EU is, there is no doubt that we are closely intertwined with the organisation and its member states. Of course, whether this is a good thing is one of the many bones of contention between the Stay and Leave camps.

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Consumer convenience and strong authentication

Guest blog by Neira Jones, Advisory Board Member and Ambassador, Emerging Payments Association

With the world population now reaching 7.4 billion and Gartner predicting that there will be 6.4 billion connected “Things” in use this year[1], it is undeniable that consumers’ behaviours are changing at a staggering pace.

Whilst we all strive for innovation and consumers demand more amazing digital experiences, the world of retail is changing and recent data breaches have increasingly put the safety of the consumer and the threat and cost of data compromise on the Board agenda. This is further compounded by the explosion in FinTech, from digital challenger banks to emerging payments players, and exacerbated by recent regulations such as the EU General Data Protection Regulation to the EU Payments Services Directive 2 (PSD2), which was published in January 2016, with a deadline for implementation by January 2018.

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PSD2 driving strong authentication to the payment ecosystem

The Payment Services Directive (PSD) has been in force in the UK since November 2009 with the sole purpose of regulating the payments industry and increasing consumer protection.

However, if we think back to 2009 – the year in which satellite navigation was implemented in smartphones, when the Apple Store had only just launched and when most phones had physical keyboards – and compare it to today, where we all communicate, play, shop and, especially, pay in very different ways, it is clear that PSD needed to be updated.

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