After acquiring the AIS (Account Information Services) and PIS (Payment Initiation Services) licences from local regulator CSSF, Luxembourg-based LUXHUB has developed several innovative products that enable all companies, no matter the industry or sector they evolve in, to finally leverage Open Banking-powered solutions. What is commonly called ‘embedded finance’, with banking-like services available within ERPs, applications, websites, etc., now enables customers to benefit from robust, flexible, and consistent payment experiences, directly from the app they are using or the website they are browsing.
One of PSD2’s main ambitions was to enable the creation of a solid and efficient payment ecosystem in Europe, that would not rely anymore on giants located overseas. After completing their compliance part, TPPs (Third Party Providers) are now looking toward the future with more concrete applications and services available to their customers. They revolve around account information and payment initiation, as defined in the 2nd Payment Services Directive. These consist, for the payments part, of direct transactions, with no intermediaries and therefore lower fees, as well as a higher conversion rate. Moreover, the potential of such account-to-account payment (A2A) solutions will be soon increased by the European Commission’s intention to make offering instant credit transfers mandatory; payments are then settled and funds credited to the merchant's bank account in a matter of seconds.
LUXHUB, as an Open Finance pioneer and connectivity/collaboration expert, is now enriching Open Banking payments initiation capability with new functionalities, to adapt it to specific use cases, making payments or collecting them. These additional features further extend the reach of PIS which will enable them to disclose their full potential.
The first key point to discuss is the fact that RTP is no payment method: it can be defined as messaging functionality, with a merchant/payee directly requesting payment from a payer, linking to a specific purchase and with all relevant details directly entered during the request creation. This also means that payers enjoy a flexible and secure way of settling a specific payment, with no possible error as no manual task is needed, except for the final validation and processing of the payment.
Available as a white-label solution, LUXHUB’s RTP requires from payees minimal technical integration while allowing the payment to be initiated from theoretically any European payment account. The RTP link can be shared with the payer via email, text message, traditional mail with a QR code to scan, or even directly within the payee’s app. On the customers’ side, this merchant-customised experience is reassuring on the one hand, and easy-to-proceed on the other as all needed information (amount, reference, recipient, etc.) is already entered and just needs to be verified.
Moreover, the RTP functionality supports additional use cases beyond the ‘classic’ online ecommerce, notably when the acts of purchasing and paying are apart, such as the trendy Buy Now, Pay Later (BNPL). It also makes perfect sense for pay-per-use (or usage-based pricing) models that are well suited for utility bills, for instance. Finally, in the case of telesales, it brings improved security and confidentiality as no account or credit card numbers are shared via the phone, with a third party.
In conclusion, RTP, combined with instant A2A payments, gives more freedom and flexibility to both payees and payers.
Just like RTP, TCP is built on LUXHUB’s ONE Pay solution and consists of the ability to initiate payments from a secure and local environment, with an authorisation exemption on the bank’s side.
Concretely, employees or civil servants (as the solution is particularly fit for public administrations and institutions) can initiate instant payments through multiple Luxembourgish bank accounts by using a single API without the need for banking Strong Customer Authentication (SCA). This task is therefore performed from a back office, ERP, or similar application, for instance, which simplifies and smoothens the payment journey, turning a redundant operation into a user-friendly and rapid command.
TCP requires no authorisation process for each transaction on the bank’s side and no additional file-based service is needed for communicating or receiving the status of initiated transactions. Moreover, it is easy to implement (via one single API) and maintain. Proof of its efficiency and success – it was notably tested and approved by a leading public administration in Luxembourg, and directly benefits the citizens – the solution was recently named Fintech Solution of the Year, back in December 2022, during the Luxembourg Finance Awards.
The advent of Open Banking and the rise of embedded finance has enabled the emergence of multiple online payments solutions, each suited for specific use cases and business/end customer’s needs. In this respect, private companies and public administrations can easily provide their customers/citizens with new payment experiences that are both flexible and secure for each stakeholder.
Ramzi Dziri is the Open Banking Product Manager at LUXHUB and has more than 10 years of experience in different startups in Berlin and Munich, with a specific focus on digital platforms and electronic payments. During these experiences, the personal silver lining was digitalisation, starting with graphic assets management, to standardising and selling market expertise, and now offering payments and account information. As a product manager, Ramzi works daily on identifying potential pain points for different profiles of organisations, from small fintechs to SMEs and big bank groups, with the mission to provide them with the right value propositions.
Open Banking Pioneer LUXHUB takes an active part in the transformation of the financial services industry, responding to customers’ evolving and digital needs while providing banks and financial institutions with new revenue streams. As a regulated AISP and PISP, the Luxembourg-based Fintech provides innovative data-driven and payments-related services: it aims to help all companies to take full advantage of Open Banking opportunities.
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