This document discusses future digital payments in the EU under PSD2 regulation and XS2A standards. It introduces new players like AISPs and PISPs that will have access to bank payment accounts. It suggests payment initiation and information will become more open through APIs. Incumbents are threatened but also trying to diversify and absorb other players. The document proposes startups partner with existing players or focus on niche services leveraging open APIs. Compliance with regulations like KYC/AML is also important. Examples are provided of potential new payment focused companies and business models.

1. Future Digital Payments in the EU -
PSD2 & XS2A
Esteban Díaz Asúa
CryptoFintech

2. PSD2 Directive in 2 mins
 Adopted on 8/10/2015 (~2 years to be enforced in member states).
 Regulatory efforts have focused in increasing competition, eliminate
borders and get rid of intermediaries. Security is also of great concern
(2FA). Even limiting kickbacks (interchange fees).
 Everything is
here:http://ec.europa.eu/finance/payments/framework/index_en.htm
 XS2A also pushes incumbents to allow access to Third Parties (Access to
the Account, Articles 58 y 59).

3. We introduce different players
 AISP (Account Information Service Providers), e.g. Fintonic.
 PISP (Payment Initiation Service Provider), e.g. Bankast.
 ASPSPs (Account Servicing Payment Service Provider) e.g. your bank.

4. How are we paying today

5. How will we pay

6. Remember
Payment IS DIFFERENT FROM Settlement

7. How do we access PFI
*PFI = Personal
Financial
Information

8. How will we access PFI
*PFI = Personal
Financial
Information

9. But not everyone uses the Cards network
now

10. And did we need to wait for
regulation to innovate?
 Some Startups have surfaced prior to deregulation.
 PFMs and Payment initiators, using brokerage services (Yodlee,
ewise).
 Moving funds can be achieved using parallel networks (Bitcoin) as an
alternative to SWIFT.
 SEPA has made things easier in Europe in any case (borderless).

11. Push the boundaries

12. So what now?
 What do acquirers do?
 What do the PSPs do
 What do card networks do?
 What do the issuers do?
 What do interbank networks do?
 What do YOU do?

13. Networks (the incumbent) are getting
nervous

14. Gaining size

15. Diversifying

16. Absorbing other players in the value chain

17. Rallying the community

18. Copying each other

19. But the early new entrants enable others, so the community is
up for grabs

20. They solve many problems, like PCI-DSS
Compliancy

21. And they give access to other Payment
Networks with Value Add

22. Niche playing is fine, they are humongous
in size

23. As a Startup or Intrapreneur, what do I do? Can I
leverage Open APIs and specialist Platform Providers?
 You can fix your target in niche services and “go solo”.
 You can try and partner with existing actors enabling new revenue
sources NOT ONLY PAYMENTS letting them cross the fence.
In both cases, leveraging Open APIs is a safe bet, remember the
mashups.
Remember, the interchange fees for issuers have been limited, the value
chain is broken.

24. But you cannot forget that the value is in
servicing the edges
 The Consumers
 The Merchants
We focus on one or the other with
B2B or B2C offerings.

25. And that there is compliancy to think about
 Payments License
 KYC (Know Your Customer)
 AML (Anti Money Laundering)
Can we outsource some of this?

26. Regulators want to help

27. Payments are interesting 

28. Oh, wait, this is only in Europe
Yes, but it shows trends, and you can adapt to other markets, in any
case Asia is now all about AliPay and Tencent (WeChat) leveraging it’s
wallets, Africa is the land of m-pesa, etc. But Europe is leading where it
can lead, deregulation, OpenAPIs, etc.

29. Now the workshop… (1)
New Startup focused on creating a PISP (Remember) for Merchants
that are located outside the home market.
 We are the guarantors, consumers trust us.
 We have to make DCC and settlement seamless.

30. Helping the Big Boys (2)
A Bank with a huge issuing business (interchange fees disappearing)
located in Spain needs to start creating new sources of revenue
without increasing fees much.
 Thinking of a Wallet Business that enables Merchants and offers
them targeted marketing.
 It has the problem of customer adoption and choosing payment
options.

31. The Elephant in the room (3)
A Messaging Network opens APIs to allow third party apps, we create a
platform to quickly enable this Bots.
 We have to take care of compliancy for Payments (or not?).
 What do we add? Maybe XS2A is the answer, how do we get
access?

32. The pipes… (4)
Any ideas? Acquirers were also removed from direct contact with both
Customers and Merchants…
 Are the pipes just going to remain like that?
 They will always be needed and they can help in other types of
networks or settlements… maybe... Can we help?

33. Thank You
Questions ?
@esteban27