The way consumers and businesses bank has experienced a major change with the introduction of the new Second Payment Services Directive regulations, also known as PSD2, ushering in a new age of what has been called 'Open Banking'.
But how will PSD2 actually affect you? ITProPortal takes a look at what the new rulings could mean for you and your business.
What is PSD2?
Simply put, PSD2 looks to offer consumers and businesses a simpler way to look after their money, whilst also addressing the growing trend for mobile and online payments.
The rules, which replace the original Payment Services Directive issued in 2008, will allow users to grant access to their banking and financial information to third parties aside from traditional banking institutions.
These third parties could include price comparison apps or websites, credit check agencies, or other providers looking to offer consumers a better deal to tempt them away from their current provider.
The rules, which cover the whole of Europe, not just the UK, also look to better protect consumers making online payments, helping to protect them from fraud, and allow payments across borders within Europe without the need for complicated regulatory issues and processes.
What does PSD2 change?
As mentioned, the new rules look to offer consumers an easier and more flexible way to access their financial information, and more freedom concerning who they can share this information with.
The changes should give users the ability to find better deals in areas such as credit cards or mortgages without lengthy delays. This could include using online apps or services to analyse their spending habits.
Users will also now be able to switch account providers at banks or building societies far quicker than previously, allowing them more freedom to change deals if they find something better. Businesses and start-ups could be set to benefit from the changes, with the ability to offer a whole new range of services to consumers looking for the best deals and advice.
PSD2 would allow for services such as money management apps to track a user's spending habits, a tool that warns if a customer is set to go overdrawn, or wider price comparison services.
Under the new regulations, retailers and service providers will no longer be able to charge additional fees for paying via a credit or debit card, or an online service such as PayPal, providing extra flexibility to how you pay for goods and services online.
The European Union says that the changes will help encourage competition among service providers when it comes to financial offerings, meaning that customers should be able to always get a better deal for their money.