The PAYTECH Book

PSD2 Open Banking: The Challenges of Third-Party Provider Identity and Regulatory Checking

By David Parker

CEO, Polymath Consulting

When considering the changes brought forward by the second Payment Services Directive (PSD2) regulatory framework, one of the first questions that needs to be addressed is: “Who has the responsibility to check on third-party providers’ identity and regulatory status?” The answer is largely: “Any company that delivers PSD2 open banking access and offering a transactional account”, as stated in PSD2. In the UK, the Financial Conduct Authority (FCA) defines a transactional account, in the FCA handbook, as a “payment account”. And the FCA Regulation 2 definition of a payment account is:

an account held in the name of one or more payment service users which is used for the execution of payment transactions.¹

The definition of a transaction account is thus far wider than just bank accounts. In fact, based on some research published by Konsentus, it is estimated that there could be around 9,000+ ASPSPs (account servicing payment service providers, often just called financial institutions or FIs) in Europe to which the regulation will apply (see Table 1 for relevant figures).

Table 1: Number of ASPSPs across the UK and the EU²

ASPSPs – types of FI	Number of institutions
Banks	4,800+ across EU Member States
Building societies	UK: 44
Credit unions	1,548 across EU Member States
Electronic money and payment institutions	UK: 5,500+/EU: 8,800+ ...