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Boosting the deployment of Open Banking payments in Europe: assessment and recommendations

As discussions get underway in the European Parliament on the 3rd Payment Services Directive (PSD3) and the Payment Services Regulation (PSR), Fintecture has joined forces with France Fintech and other Open Banking players in France to formulate recommendations aimed at making payment initiation (PIS) and access to bank data (AIS) processes more fluid and secure.

Assessment: technical transposition still uneven

Fintecture is a pioneer in payment initiation in France, recording volumes equivalent to 2% of French ecommerce in almost 3 years, on behalf of leading merchants in their sector. With its in-depth knowledge of banks' APIs and payment infrastructures, Fintecture contributed to a study carried out by independent consultancy Frame. 

While the operational transposition of PSD2 has been long and complex for banks, it has now reached a certain maturity, enabling payment initiation to be deployed as a genuine payment method. 

However, the study still highlights disparities in the quality of APIs made available by banks, whether for payment initiation (PIS) or access to bank data (AIS). It points to heterogeneous customer journeys, particularly in terms of strong authentication. The technical statuses returned by banks to the regulated players authorized to use their APIs, such as Fintecture, are also disparate, and can be of little use to merchants if not correctly interpreted. 

This is what Fintecture does for its customers, having developed strong expertise in interpreting and harmonizing this technical framework to offer a high-performance immediate transfer product based on PIS. 

"Raw" payment initiation clearly has its limitations. We have always considered it to be an essential technical building block, but insufficient to make it a true payment method for merchants," testifies Faysal Oudmine, CEO of Fintecture. "Our R&D efforts have enabled us to eliminate many of these irregularities; our solutions integrate complementary components capable of doubling the conversion rates usually seen on the market. Nevertheless, it is clear that better collaboration between banks, regulators and payment institutions will enable accelerated deployment via harmonized payer paths across Europe."

Collective recommendations to boost adoption

Based on these findings, concrete recommendations have been formulated with the aim of sharing best practices, perfecting the efficiency of banking APIs, and improving their routing. This is a sine qua non for aligning Europe's payment sovereignty ambitions with their operational implementation. 

  •  Reinforce the regulator's monitoring of the functional paths set up by ASPSPs (Payment Service Provider Account Managers) in order to detect any potential problems; 
  • Strengthen the exchange of information between market players to combat fraud more effectively; 
  • Optimize and harmonize strong authentication paths (SCA); 
  • Introduce error messages on the main banking interface when strong authentication fails; 
  • Improve communications on PLCs and their operating states.

Going beyond Open Banking to maximize conversion

Payment initiation has many advantages, particularly for large-value purchases that are blocked by card limits. Fintecture takes advantage of this major technical innovation in payment, and enriches it with functionalities that go beyond open banking to guarantee maximum conversion. 

Our solution for Immediate Transfer solution includes a complex algorithm, called "smart routing", capable of intelligently routing the payment rails to guarantee reliable and secure transfer execution. We pay constant attention to the payer's journey, boosting adoption, as demonstrated by Bricoman As Bricoman explains: " It enables us to catch up on sales that we couldn't make with the CB". 

In addition, Fintecture has developed a Intelligent TransferThis solution is systematically offered as a "fall back", enabling secure conversion via a more "traditional" bank transfer for the payer, but guaranteeing the same advantages of automated reconciliation.

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