New research from Accenture suggests that retailers are positioned to benefit as banks open their network in compliance with the second Payments Services Directive (PSD2).

PSD2 requires banks to grant third-party providers – such as retail merchants – access to a consumer’s online account/payment services in a regulated and secured manner, with the consumer’s consent. The goal is to drive increased competition, innovation and transparency across the European payments market.

Accenture surveyed almost 80 payments executives at large retail companies and banks in Europe to determine how they would respond to new regulations. One third of those surveyed will be able to plug in directly to banks to obtain consumer information and initiate payments by the January 2018 PSD2 deadline requiring banks to provide access to third-party providers.

This opening up of bank networks to third parties, known as Open Banking, will enable retailers and banks to work together directly, without the need for intermediaries such as gateways and merchant acquirers.

Three quarters of surveyed retailers plan to access customers’ financial information so they can tailor personalised products. Some 53 per cent plan to initiate payments directly with banks to negotiate better transaction fees, while 53 per cent also expect to reduce fraud cases through the new regulation.

Retailers also expect Open Banking to drive significant in-store innovation. The APIs that retailers cited most often as ones they plan to imbed into their existing point-of-sale channels — enabling consumers to access information directly from the retailer — are bank-account-balance display (cited by 67 per cent of respondents), payment initiation (63 per cent) and bank-account transaction history (60 per cent).

Alan McIntyre, senior managing director at Accenture, commented: “The regulations in Europe are intended to create more competition for incumbent banks from FinTechs and retailers, and therefore more options for consumers. The big question is whether consumers will be willing to share their financial data with outside companies, which they’ve typically been hesitant to do because of privacy and security concerns.

“However, if retailers use their loyalty programs to incentivise customers to initiate payments directly through their sales channels, the first place that banks will likely feel the impact is in the decline of debit-card transaction.

“At the same time, if retailers want to truly evolve the in-store consumer experience, they will need to add innovative options, such as allowing customers to pay automatically as they leave the store using biometric authentication.”

Share Story: