First things first - what is a scheme?
Prior to starting the scheme-building process, the parties involved must define the following: the value proposition, standard ideation and creation, certifications and specs development, the technology behind, who governs the project, the branding and the network that will accept the scheme.
All schemes have members, a rulebook to address legal aspects, a scheme manager, and a high-level description of the scheme’s governance, and a non-exhaustive list of business requirements.
There are a few initiatives for new schemes that will be closely watched in 2022. One of them is SEPA Payment Account Access (SPAA).
How it all started – SEPA API Access Scheme
Reaping the full benefits of PSD2 and beyond. The past few years have shown the industry pouring large amounts of time and money in making payment infrastructures better and since then we see great progress made in instant payments and Open Banking, among others. Yet, we are still only guessing the true benefits of these strives.
To fully benefit from the innovation and competition that rose in the market as a result of PSD2, market participants should look to become more cooperative and demand standardisation. Also, PSD2 must become a thing of the past, because its current logic has banks provide account information and infrastructure to third parties without any compensation. The market of the future must allow all players to benefit mutually through monetisation of the services they offer. Regions outside Europe have done this by going beyond regulation and opting for a market-driven coordinated mindset.
As a result, the Euro Retail Payments Board (ERPB), a stakeholder panel chaired by the The European Central Bank, created, in 2018, a SEPA API Access Scheme working group. On 13th June 2019, this group published a Report from the ERPB WG on a SEPA API Access Scheme.
The Working Group was put on hold for a while but was picked up again after the implementation of the revised Payment Services Directive (PSD2) and after agreement was reached on the commercial baseline.
The ERPB Working Group’s next phase on a SEPA API Access scheme started in December 2020. The goal was to determine how to reap the full benefits of PSD2 and beyond through a scheme-based approach, by defining the key elements of such a scheme.
According to Arturo González Mac Dowell (Tink), it included business requirements, governance arrangements, and a standardised API interface, whilst taking into account that:
It seems that the idea behind it all was that this scheme should take a different approach to PSD2. The SEPA API Access Scheme was born out of a desire to go beyond the benefits of the revised Payment Services Directive (PSD2) and create incentives for Account Servicing Payment Service Providers (ASPSPs), which are traditional banks and other financial institutions, to align their service development with the market needs of third-party providers, according to Deutsche Bank’s Christian Schäfer. The reason behind being that a successful data-driven market must allow all market participants to encounter mutual benefits and the potential to monetise on their services and infrastructure.
The full benefits of open payments beyond PSD2 and further expansion of data sharing can only be reaped if done on the basis of mutual benefits and a fair distribution of value across market players, according to The World Savings and Retail Banking Institute. It is important that financial services are not considered in isolation and that data sharing is not limited to financial services.
Thus incentivising data holders to develop well performing APIs is key. If we learned something from PSD2 is that when banks have to build and maintain APIs for compliance reasons, APIs can prove to be less reliable and qualitative. Right now, PSD2 mandates APIs to be free but even if Open Finance needs APIs to exist, they don’t have to be free. Data holders must understand that APIs go beyond the compliance spectrum so that they can build API infrastructures of high quality and capable of generating revenue. It is equally important that said data holders are incentivised to keep APIs at high standards so the third parties that are using these services can build quality products on their own.
June 2021
The final report was submitted to the June 2021 ERPB meeting and contained key recommendations. In line with the first recommendation and the requirements outlined in the report, the ERPB invited the European Payments Council (EPC) to take up the role of Scheme manager in relation to payment accounts.
Annother recommendation consists of:
The ERPB also noted that the EPC would need to inter alia ensure there is adequate stakeholder involvement and alignment with the relevant actors (eg standardisation initiatives and directory service providers) and regulatory bodies in the ecosystem and to promote the scheme’s adoption.
SEPA Payment Account Access Multi-Stakeholder Group (SPAA MSG)
As shown in a SPAA Scheme Status Update, during a meeting on 29 September 2021 meeting, the EPC Board decided to establish the SEPA Payment Account Access Multi-Stakeholder Group (SPAA MSG) in order to launch the preparatory ‘phase 0’ related to the development of the SPAA scheme and approved its terms of reference, as well as its composition resulting from a call for candidates that was launched on the EPC website on 30 August 2021.
The SEPA Payment Account Access Multi-Stakeholder Group is co-chaired by Arturo González Mac Dowell (Tink) and Christian Schäfer (Deutsche Bank).
The SPAA MSG is established by the Board following an invitation from the ERPB at its 28 June 2021 meeting for the EPC to take up the role of manager of a pan-European scheme in relation to access to payment accounts – with the legal and regulatory requirements of PSD2 constituting the "baseline", but also going beyond such baseline to encompass value-added (premium) services that may be provided in the context of Open Banking as a natural evolution of PSD2, within the contractual framework of a scheme – in line with the requirements defined in the June 2021 report of the ERPB Working Group on a SEPA API Access Scheme.
First, we anticipate that the SPAA scheme will facilitate the move in Europe towards an ‘open data society’. If implemented the right way, this move can create a wealth of innovation opportunities that feature a whole set of completely new client experiences accompanied by new revenue streams for market actors.
Arturo González Mac Dowell (Tink)
The ERPS’s invitation had to wait for the EPC Board’s final response until the latter’s November 2021 meeting. However, back then, the EPC agreed that the invitation’s acceptance was linked to the result of the SPAA MSG’s work beforehand. The Board deemed it necessary to have clarity when it came to the future SPAA scheme’s scope.
Finally, during its 24 November 2021 meeting, the EPC Board accepted the invitation to become the Scheme Manager for the new SPAA scheme.
The MSG will be responsible for the development of a SPAA scheme. In line with the requirements defined in the June 2021 ERPB Working Group report on a SEPA API Access scheme, the MSG will operate with the legal and regulatory requirements of PSD2 constituting its ‘baseline’.However, it will also go beyond this baseline to encompass value-added services that may be provided in the context of ‘open banking’ as a natural evolution of PSD2.
Christian Schäfer (Deutsche Bank)
Work in progress
The MSG is currently preparing the first draft version of the SPAA scheme rulebook. The goal is to launch a 90-day public consultation by the end of May 2022 (subject to EPC Board approval) to give the wider market an opportunity to share their views on this first draft version.
The final version of the SPAA scheme rulebook’s first release is aimed at being published on the EPC website by 30 November 2022 (subject to EPC Board approval).
The EPC has also established a dedicated SPAA scheme interest group, consisting of volunteering non-EPC members not represented in the SPAA MSG but interested in participating in the work on the development of a SPAA scheme. This interest group will not meet but will at regular intervals receive the unpublished draft deliverables of the SPAA MSG for input with such contributions to be fed into the work of the SPAA MSG.
What`s next?
As a next step, a dedicated Work Block will be created which operates under the authority of the SPAA MSG with the objective of developing "minimum API requirements" that ensure pan-European harmonisation and interoperability as well as the integrity of the scheme. The Work Block will be chaired by SPAA MSG co-chair A. González Mac Dowell and consist of ten experts nominated by SPAA MSG members as well as representatives of interested European standardisation initiatives in the field of PSD2 API.
The membership list of the Payment Account Access Multi-Stakeholder Group (SPAA MSG) can be downloaded here.
Call for participation
The EPC now invites interested European standardisation initiatives in the field of PSD2 API to send their application by email to spaa@epc-cep.eu by 15 February 2022.
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