PAY.ON, First Annapolis publish white paper on PSD2 and MIF

The white paper Driving change with PSD2 and the MIF Regulation: Creating opportunities in Europe explores the implications surrounding – and the opportunities arising from – the revised Payment Services Directive (PSD2) and the Regulation on Multilateral Interchange Fees (MIF). PSD2 is part of the European Commission`s efforts to strengthen the internal EU market, and has implications for card issuers, acquirers, PSPs, and merchants. Access to the account is one area in particular where innovators are set to disrupt the status quo, although incumbents also have the opportunity to solidify their position by creating new consumer services.

Requirements for two-factor authentication will also cause tension. Those PSPs, acquirers, and other players that can combine and balance security with payment experience stand to gain the most, according to the new paper. Interchange fee caps will have the largest impact out of those areas covered by the MIF Regulation. Acquirers and PSPs already benefit from the lower credit and debit rates, but face technical and operational challenges due to new requirements regarding transparency and customer choice at the POS. Issuers, meanwhile, will lose revenue, often significantly.

Merchants will benefit from the lower rates, although the trickle down for smaller merchants may take some time. “MIF Regulation redistributes the economics of the card ecosystem, while PSD2 will motivate innovators and disruptors to enter the market. As the long-term trajectory of the industry shifts, all players in the payment chain must adjust to ensure they are well positioned for the future”, Markus Rinderer, CEO & Founder of PAY.ON said.

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