PSD2 introduces a new convenient, secure, fast and cheap account-toaccount payment method facilitating API-based Payment Initiation Service.

One of the European Union’s objectives with the second directive on payment services is to open up the financial market to new players with innovative and competitive services. Such Third-Party Providers (TPPs) can access the consumers’ bank accounts based on a consent granted by the account owner. TPPs can offer new account information and payment services by making use of the Application Programming Interfaces (APIs) provided by all European banks. To ensure the necessary security standards, the TPP must apply for a dedicated PSD2 license and is supervised by the responsible National Authorities.

The so-called Payment Initiation Service (PIS) enables a TPP to initiate a payment request based on SEPA credit transfer, with the account holder’s explicit consent (payer), from their online bank account to pay for goods or services in physical stores or online shops. The required consent is authorized by the twofactor authentication means provided by the account holder’s bank. Due to the easy and comfortable API access, service providers can add this new payment method to their portfolio as a cheap and secure alternative to the traditional payment methods such as direct debit or credit card payment.

Such a new payment method depends on the acceptance of users, who needs a seamless and secure shopping experience based on the mobile usage.

The consumer is looking mainly for a frictionless shopping experience with secure and user-friendly payment options usable through all sales channels and supported by his mobile device. He expects to receive additional benefits from the merchant like product-related information or loyalty benefits through the smartphone.

For merchants, the new account-based payment methods lead to a considerable reduction of costs thanks to the absence of classical schemes involved (no scheme fees). With the introduction of instant payments, the settlement is done faster, and no additional services are required to guarantee the funds.

Payment Service Providers can use account-based payments to reach new customer segments in new markets like payment of government services, high-value payments or corporate payments Business-to-Business payments).

The comparison between account-based payments and card payments shows that consumers can benefit from using their mobile phones, the higher level of security, and the possibility of paying higher amounts. The merchants will eliminate the costs for the interchange and scheme fees and have the funds available at an early stage. Compared with SEPA Direct Debit, the consumer does not have to sign any mandate and keeps full control over the payment initiation. Merchants will benefit from the better irrevocability of the payment transaction.

Worldline supports Payment Service Providers to enhance their payment portfolio with these new Payment Initiation Services to offer account-based payments to their customers.

We offer comprehensive reach to a vast number of banks (more than 3,000 in many European countries 18 countries) and provide a single API connection to send the payment initiation request to the payers’ bank and facilitate the mandatory Strong Customer Authentication SCA.

Besides the basic payment initiation, our solution also offers supporting functionalities like merchant onboarding, refund, reconciliation and regulatory reporting to easily integrate the new payment method into the existing payment offering for merchants.