Shikko Nijland, Managing Partner, Innopay: "PSD2 on XS2A: Business as usual or opportunity?"

What does XS2A actually mean?
Shikko Nijland: XS2A is an abbreviation for access to the account. In the context of PSD2 it means that third-party payment service providers can access the bank account information of consumers who have given their consent to this third party to do this.

So what does XS2A implicate?
Shikko Nijland: Well, it could mean a lot, although nobody is very sure of all the implications yet. Depending on how market parties will react to PSD2, it could mean that an entire new class of payment service providers will emerge, or it could mean that existing service providers will be able to streamline their current services. So, one extreme could be that new service providers will come into existence that invent innovative services using the information connected to your bank accounts. The opposite extreme could be that business continues as usual: instead of identifying yourself by doing a micro-transaction (like you do now with for instance PayPal), it might be enough that you login to your banking environment and thereby identify yourself.

It seems that between the two extremes you mention, there is a lot of bandwidth. You also mentioned that it is mainly dependent on how market parties will react to PSD2. Which parties or factors are most important in determining what effects PSD2 will have?
Shikko Nijland: I think that it will be important to see how both EU regulators and national regulators/authorities will frame XS2A. If, for instance, they explain XS2A not only as something that is allowed but as something that banks need to enable, it will certainly change the dynamic of how current payment services operate. As you can see, I also think the stance of banks towards XS2A will be essential in determining how PSD2 and XS2A works out. Banks could decide to incorporate XS2A services into their current products, or decide to leave it to third-party service providers. Lastly I think it is important to look at what new innovative third party services pop-up. Depending on how regulators, authorities and banks act, current service providers and new ones might find an attractive market gap based on the XS2A clauses in PSD2.

What should happen next?
Shikko Nijland: There is a lot of uncertainty at this stage. Most organisations will be analysing and interpreting the PSD2 in the coming months and will then determine their position and strategy. At the same time we need to take some time in order to understand what the implications are on an industry level and jointly discuss how XS2A can be leveraged to help progress the payment market as a whole. What part is ‘competitive’ and what part is ‘cooperative’? In the end, it is the payments business we are talking about, where a clear distinction between those two domains is crucial for a well-functioning product and market. We do not see this highlighted enough in the current PSD proposal.

You are organizing an XS2A day at the 29th of August in Brussels: What do you expect to happen on this day?
Shikko Nijland: We have been asked by multiple stakeholders to facilitate a discussion on the implications for the industry. Therefore we decided to organize a one-day session around this topic and we have invited various stakeholders that in one way or another will be influenced by PSD2 and especially XS2A. The goal of this day is to develop a shared understanding of the implications and explore some of our options. The session will provide a platform for open discussion, learning, inspiration and to basically stay on top of this subject. Im very much looking forward to this day!