Sage: Payment Services Directive 2 (PSD2) and Open Banking Modernize Business Payments
Sage explains how the EU's Payment Services Directive 2 (PSD2) and Open Banking are reshaping business payment solutions. These updates aim to increase the speed and efficiency of financial transactions.
Financial technology firm Sage is detailing how the European Union's Payment Services Directive 2 (PSD2) and the concept of Open Banking are transforming business payment solutions and financial management. These evolutions are accelerating transactions and fostering new use cases for treasurers.
The PSD2 directive, transposed into French law in summer 2019, aims to modernize payment services across Europe for both consumers and businesses. Key aspects include enhanced security through strong customer authentication (SCA) for online payments, improved consumer protection against fraud, and mandating banks to open their systems to authorized third-party providers (TPPs) via APIs.
Sage highlights Open Banking as a crucial component of PSD2. This framework obliges banks to securely share customer data and payment initiation services with licensed TPPs, driving innovation in fintech. Businesses can leverage this to access integrated services, enabling streamlined payment initiation and account aggregation for better cash flow management.
Furthermore, the directive promotes real-time payment solutions. The EU's new Instant Payments Regulation, adopted in March 2024, requires all SEPA countries to offer and accept instant payments by the end of 2025. These transactions settle in under 10 seconds, 24/7, significantly speeding up inter-business financial flows and improving liquidity management.
Sage emphasizes that these technological advancements and regulatory changes provide businesses with tools to optimize their financial operations and remain competitive in an evolving financial landscape. Understanding and adapting to these new systems is key to leveraging their full potential.