Since PSD2 went ‘live’ in September 2019, third parties providers (TPPs) and merchants have been able to support online bank transfers and a variety of other services by leveraging PSD2 APIs. Unfortunately, many of these APIs are not yet at the point of delivering a simple user experience. This has led to consumers facing unnecessary friction when making a bank transfer payment.
Now, The European Banking Authority (EBA) has weighed in and offered some guidance on some of the key user experience challenges.
APIs have a way to go
The points of friction consumers face when making a bank transfer includes manual data input, redirects and excessive security measures. Some banks require customers using a PISP to go through two or more Strong Customer Authentication (SCA) processes in order to make a payment. Other banks have claimed that allowing third parties to access their apps was too complex and have instead relied upon mobile websites and other authentication routes that offer a more stilted user experience.
A major friction point in a bank’s redirection flow is requiring users to enter their IBAN number, which in some cases could be up to 32 digits. Of course, very few people know this information off the top of their heads.
Simple. Easy. Safe.
Clearly, these obstacles prevent TPPs from delivering on the very intentions of PSD2. Thus, the EBA has declared that the checkout process “cannot have unnecessary steps or friction”. This will help PISPS to leverage simpler authentication flows without being hindered by excessive or convoluted processes. Users won’t have to enter additional information, complete multiple SCAs (except in rare circumstances) or be shown unnecessary confirmation or warning messages. Users also won’t be subjected to being redirected to multiple pages between the PISP and the bank - app redirection must be immediate and automatic, with a seamless return back to the PISP.
Moreover, banks must allow TPPs to use their biometrics-supported app for authentication purposes. A huge advantage for users looking to pay safely and easily with a simple fingerprint or quick face scan. The EBA has also clarified that the account selection process must be simplified.
The right call, but that’s not all.
The EBA’s response is a big step forward for improving the payments experience for end users. But, not all PISPs offer a full range of benefits and these changes will neither be immediate, nor will they turn PSD2 APIs into a complete payment solution. Merchants will still need a refund (or payout) solution, reconciliation services and fast transaction processing abilities. When choosing a payments provider, it’s important to choose one who offers all the benefits both you and your customers are looking for.
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