EBA published clarifications of its Working Group on APIs under PSD2, which met for the first time on 21 February 2019.

The European Banking Authority (EBA) published clarifications to the first set of issues that had been raised and discussed by participants of its Working Group (WG) on APIs under PSD2, which met for the first time on 21 February 2019.

The issues relate the practical aspects regarding the reliability of testing platforms, the alignment of functionalities between API schemes, and the identification for testing purposes of entities that have not been authorised yet.

Background and next steps

In January this year, the EBA established a Working Group (WG) on APIs under PSD2, consisting of 30 individuals representing account servicing payment service providers (ASPSPs), third party providers (TPPs), API schemes, and others market participants. The aim of the group is to facilitate industry preparedness for the Regulatory Technical Standard (RTS) on Strong Customer Authentication and Common and Secure Communication and to support the development of high-performing and customer-focused APIs under PSD2.

The group is tasked with identifying issues and challenges that market participants face during the testing and use of API interfaces in the period leading up to the application date of the RTS on 14 September 2019. The group is also asked to propose solutions on how to the identified issues could addressed, which the EBA and national authorities will then consider.

In the weeks and months to come, the EBA will add clarifications to a number of additional issues raised by the WG.

Revised Directive on Payment Services (PSD2)

On October 8, 2015, the European Parliament adopted the European Commission proposal to create safer and more innovative European payments (PSD2, Directive (EU) 2015/2366). The new rules aim to better protect consumers when they pay online, promote the development and use of innovative online and mobile payments such as through open banking, and make cross-border European payment services safer.

Commissioner Jonathan Hill, responsible for Financial Stability, Financial Services and Capital Markets Union, said, “This legislation is a step towards a digital single market; it will benefit consumers and businesses, and help the economy grow.”

On November 16, 2015, the Council of the European Union passed PSD2. Member states will have two years to incorporate the directive into their national laws and regulations.

The EU and many banks are pushing this development with the new Payments Service Directive 2 (PSD2), which has come into force on 13 January 2018. Banks need to adapt to these changes that open many technical challenges, but also many strategic opportunities, such as collaborating with fintech providers, for the future.