Major changes to the Open Banking landscape have been undertaken since 2019 when the ERPB established the SEPA API Access Scheme to reap the benefits of PSD2.
What does the SEPA API Access Scheme set out to accomplish? What is its mission and what have been the latest developments?
With this in mind, the SEPA API Access Scheme was born out of a desire to enhance – and go beyond – the benefits of the revised Payment Services Directive (PSD2). To achieve this goal, a Working Group was set up and tasked to define the key elements for a potential scheme. This included putting together a high-level description of the scheme’s governance, a rulebook to address legal aspects, and a non-exhaustive list of business requirements.
Having been in development for several years, the Working Group recently concluded (see ‘Report from the ERPB working group on a SEPA API Access Scheme’) that the proposed scheme should focus on the exposure (via an API) of non-personal bank-owned information, customer data, and customer transaction initiation services, while fostering innovation, increasing choice for customers and scheme participants. It is hoped that the proposed framework will disrupt digitised analogue value chains and create a new, fully digital value chain (as shown by Figure 1 below) – all while helping to distribute value fairly among SEPA participants. While the scheme will initially focus on payments, it has the potential to move to finance more generally and even beyond finance.
How will the SEPA API Access Scheme impact ongoing workstreams and initiatives such as e-identity, Request-to-Pay, instant payments, and EPI?
As mentioned, the scheme will primarily further PDS2 efforts – particularly in the context of payment initiation services (PIS) and account information services (AIS) – and help create a fully integrated European payments market. In doing so, the scheme will 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.
Beyond this, the scheme will also enhance existing payments infrastructures and, ultimately, improve the entire customer journey by enabling value-added services from payment initiation right through to execution (see Figure 2).
Figure 2 - Benefits of Scheme
It will also benefit a host of other workstreams and initiatives. For Request to Pay – an umbrella term for various scenarios in which a payee takes the initiative to request a specific payment from the payer – the scheme will act as a business model for ASPSPs.
Once implemented by ASPSPs, this will also complement the European Payment Initiative (EPI), which aims to create a unified pan-European payment solution by fostering consumer reach in Europe.
What are the initiative’s next steps and the main goals to be accomplished by the SEPA API Access Scheme?
The next step will be to move from the conceptual phase to the delivery phase by implementing the scheme for payments. To do this, we will need to create a stakeholder group, codify the rules of the scheme, and, ultimately, launch the scheme itself – implementing the requirements laid out in the Working Group’s recent report and aligning with relevant actors and regulatory bodies to promote adoption.
The second step will likely begin at the end of 2021, where we will need to explore the implementation beyond payments, as well as frame the ecosystem beyond finance itself. This will involve creating a cross-industry working group and drafting an approach for an Open Data Economy in Europe. There are also calls to further identify, describe, and prioritise business requirements by asset class, as well as validate, amend and/or extend scheme requirements defined for the payments asset class to address the needs of other asset classes. Exciting times lie ahead – stay tuned!
The interview was originally published in The Paypers` Open Banking report 2021.
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