The Single Euro Payments Area (SEPA) is a collection of 34 countries in Europe with over half a billion customers and 23 million businesses. As far as markets go, this one is one of the biggest and most lucrative for financial services firms of all sizes. European, American and Asian firms are all competing for a slice of the pie and winners are the ones who are willing to innovate.

2018 was the year when BigTech companies like Google, Apple and Amazon made deep inroads into traditional banking domains. Additionally, a lot of newer FinTech start-up companies also joined the fray and expanded heavily across Europe, Asia, Africa and North America.  It was also the year when blockchain tech began to be adopted by mainstream companies who realised its potential outside of its previous exclusive use in cryptocurrencies.

In December 2018, Google received an e-money license from the Central Bank of Lithuania. This will allow Google to process payments and issue e-money throughout the EU. Prior to this, Google Pay had limited authority and used to save customer card details in a digital wallet and use that for payments. Now, they can store and transfer funds directly.

Supply chain optimization has been one of the primary ways to squeeze a bit more efficiency out of a business process for some time now. Over time, companies have perfected various such strategies like Just in time inventory management and co-locating vendors in the same industrial park as themselves. However, an excessive push towards supply chain and vendor optimization has increased risks as the logical conclusion of such unabated cost optimization is often a single sourcing strategy.

The Payment Card Industry’s Data Security Standards (PCI DSS) mandate that all entities transmitting, storing or processing cardholder data must meet certain security criteria to ensure compliance. Noncompliance with these standards can lead to a fine or even a termination of service for the offending organization. These is plenty of information in the public domain on how to ensure compliance. However, for many FinTech start-ups, the real challenge is to ensure compliance while minimizing the cost of compliance.

This series on PSD2 and HSM as a Service explores the endless possibilities created by a level playing field in the payments industry in the EU. Part 1 explored how PSD2 and HSM as a Service enable this level playing field while Part 2  looked at just a few of the truly endless possibilities that exist for FinTech firms and other third-party entities that can act as AISPs and PISPs.

In Part 1  of our series on PSD2 and HSM as a Service, we had a brief look at how these tools can together create a more level playing field in the payment services sector. While PSD2 entitles third party entities access to certain data from banks, HSM as a Service can allow companies to offer industry leading security solutions at a reasonable cost.
In this article, we look at the potential opportunities that this creates for FinTech companies and other Third-Party Partners (TPPs).

Certain events can drastically change an industry forever. The Revised Payment Services Directive (PSD2) mandates certain changes that has the potential to significantly alter how the payments industry operates in the EU. For commercial banks, the run up to PSD2 has meant hectic activity and restructuring of their technical processes.

“Disruption” is usually the first thing that comes to mind whenever the relationship between the established financial service behemoths/ banks and new-age FinTech firms is discussed. After all, FinTech firms have already made deep inroads into areas like payment processing, digital wallets and other tech heavy applications. However, banks and FinTech/ BigTech firms don’t really have to be on a head-on collision course.