It’s been fairly obvious for the past few years thank banking in Ireland has been undergoing significant change. There’s barely a sinner left in physical banks these days and you don’t even need to use banks to transfer money to friends. Even with these changes, you’ve seen nothing yet with PSD2 set to be the biggest shakeup Irish banks have ever seen.
Happy new #PSD2! 🎆 Remember those annoying fees when booking a ticket online? Starting tomorrow they will be gone on most card payments.
Better consumer protection, higher security and much more, thanks to the new #PSDII.
— EU Finance 🇪🇺 (@EU_Finance) January 12, 2018
What is PSD2: Explained in plain English
First of all, PSD2 stands for Payment Services Directive 2 and has been designed by the European Union. Financial regulation is a boring and often difficult topic to simplify, but I’ll try. Banks don’t like external parties accessing your data, to which you might say, ‘fair enough’. PSD2 paves the way for third-parties and online stores to access your details. Obviously, access is only granted with your permission and will remove the reliance on Visa and PayPal for online payment. There’s also an immediate impact for online shoppers.
PSD2 Means No Annoying PayPal or Card Fees
If you’re normally conscious of cost you’ll be aware of the additional fees you pay online for goods and services. Ordering a takeaway on Just Eat or booking flights through Ryanair will include a processing fee which you pay to cover costs to the business. Here’s how you’ve been charged these fees so far on Just Eat, visible in this order for a healthy salad I totally ate.From today, thanks to PSD2, that card fee for €0.50 is no longer allowed under EU regulations. While you can expect that to disappear in the coming days, don’t be surprised if, like has happened in the UK, online services like Just Eat introduce blanket €0.50 fees on all orders.
PSD2 Will Make Managing Finances Easier
For me, the most exciting innovation which will accompany PSD2 is how you manage your finances. If you have two bank accounts, you’ll be able to manage these accounts in a central third-party account, like popular service Mint in the US. You’ll also be able to plug your finances into budgeting apps like Wallet from Budget Bakers. This already works with N26 and makes saving and budgeting easier as everything is automated and updated live based on your own data.
You’ll also be able to share your banking financial data with businesses under PSD2. This means you can open your information up to third parties who can then advise you on products which better suits your needs.
The Second Payment Services Directive Also Means More Security
Another element of the Payment Services Directive is added security for the accounts of EU citizens. This will likely come in the form of two-factor authentication. This is actually extremely practical and won’t be too mad a notion for security-aware Gmail customers. In practice, two-factor authentication might mean real-time identity verification through your smartphone when transferring money. This may require security levels including voice or fingerprint recognition, but the full security spec for this will be released later this year.
What is the PSD2 Timeline?
There are plenty in the financial services none too pleased about PSD2, as it’s quite expensive to implement. Still, there’s pretty much feck all they can do about it and they must make tracks into implementing the new directive. To soften the blow, the EU has given those affected until 2018 to make the necessary changes. That’s still a fairly ambitious deadline if you ask me, but it’s good to know there’s a date on the table.
If you’re looking for a detailed look at PSD2 but aren’t looking for jargon, check out PSD2 in Plain English.