How global players can take advantage of fintech services for new Payment Services Directive II (PSDII) agreements and automate their payment flows
Noel Hillmann: What are the unique challenges you see global companies face that make their challenges distinct from that of single country operators, and how does this effect their payment flows?
John Byrne: The Payment Services Directive II (PSDII) is a European Union (EU) directive, which means that all banks have to make account balances and transactional data available to their clients through the Application Programming Interface (API). They are obliged to facilitate the ability of corporates to make payments directly through the same API.
The challenges are not that great for the global companies as many of them are already doing this through other third party providers such as existing bank portals, Service Bureau, SWIFT, etc. Smaller corporates operating within their own country, i.e. single country operators, have tended not to use these facilities because of the expense of doing so. This directive spectacularly reduces the cost of making payments directly through the same API. The large corporates can reduce the costs they currently have to bear, and the single country operators or smaller corporates are very likely to start using this capability for cash management and automated electronic payments. These are functions that smaller corporates have historically carried out manually because the cost of doing it otherwise was too prohibitive.
The real challenge under this directive is for the banks themselves. Many have the capability already but are charging for it. Now, they must provide these services for free. Other banks, who don’t have this capability, have to offer it. So, they have two challenges, one to update their systems to provide the services and two, to do so free of charge. This directive makes it an obligation on the banks to facilitate third party players, such as Salmon Software, to collect balances and transactions and to deliver payments on behalf of our clients through this API.