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Although digital payment methods have long been part of everyday life, a real revolution is taking place in the background – or is about to. Between regulatory adaptations, technological quantum leaps and strategic realignments, payment transactions are becoming a key discipline for banks, companies and FinTechs alike.
The desire for faster payments is nothing new. However, what is new is that the EU is now making this a requirement: instant payments are set to become the new standard, available around the clock and without any additional fees. Achieving this will involve overcoming technological challenges, meeting regulatory requirements and dealing with questions regarding market acceptance.
The EU believes that the increased use of instant payments will strengthen the strategic autonomy of the European economic and financial sector. This – and here’s where it gets interesting – will pave the way for new, innovative payment solutions outside the offerings of the all-powerful non-European payment service providers. However, it also poses corresponding risks that need to be mitigated as far as possible.
The introduction of ISO 20022, a globally recognised standard for the exchange of financial data primarily used in payment transactions, marks the dawn of a new era for payment transactions. It brings structured information, improved transparency and automated processing. ISO 20022 supports the standardised, efficient and secure exchange of information between financial institutions and their customers. However, this level of potential also introduces a high degree of complexity, particularly for institutions that still heavily rely on older systems.
PSD2 laid the foundations in the past, and now PSD3 is ready to take off. The European financial landscape is undergoing a profound change with the PSD2 and the upcoming PSD3 directive, which support security, competition and innovation in payment transactions. PSD2 has already set new standards through open banking and strong customer authentication, and PSD3 will further drive forward the prevention of fraud, the protection of consumers as well as harmonisation. The new directive will also promote fair competition and improve cash availability, thereby supporting the development of a more dynamic and secure financial ecosystem. Thus, PSD3 paves the way for a modern, integrated and trustworthy European payments market. While it will bring more security and control, it will also result in new requirements for interfaces, identification procedures and customer protection.
This is complemented by DORA – the Digital Operational Resilience Act – an EU regulation designed to improve the digital resilience of financial companies. The aim is to better protect these companies against digital threats such as cyber-attacks or IT disruptions. The regulation establishes a consistent legal framework for managing information and communication technology (ICT) risks within the financial sector. For banks, payment service providers and cloud providers, this means more obligations, assessments and responsibility.
In addition to regulatory requirements, technological advances are shaping the future of payment transactions. EBICS 3.0, the latest version of the Electronic Banking Internet Communication Standard, enables the secure electronic exchange of data between companies and banks during transactions. This version standardises the process across Europe, replacing national variants. Offering enhanced functions and improved security mechanisms, it is now much more than just a niche topic. It focuses on stronger authentication and facilitates new application scenarios.
Meanwhile, artificial intelligence (AI) is advancing into an increasing number of areas, ranging from fraud prevention to payment stream optimisation. AI-supported systems analyse patterns, forecast failures and automate decisions. While the potential applications are very promising, the legally compliant framework is often still in development.
Those who believe that payment transactions are purely a banking issue are mistaken. New market players, changing consumer behaviour and digital ecosystems are turning them into a strategic platform.
The strongest drivers currently include
Payment transactions are more strategically relevant than ever before. A system that has long been considered set in stone is being impacted by regulatory requirements, technology and market trends. Those who understand these changes and are willing to help shape them will have a clear advantage, whether they are financial institutions, technology providers or companies.
The future of payment transactions is fast, digital and secure – and, above all, exciting! Bring your knowledge up to date with our seminar, Update Zahlungsverkehr: Regulierungen, Herausforderungen und Trends (in German – “Update Payment Transactions, Regulations, Challenges and Trends”)!
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