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Faster and secure payments with the new PSD2 payment initiation service

The PSD2 enables more convenient, secure, faster and more affordable account-to-account payments in e-commerce and at the checkout in shops.

One of the two new API-based PSD2 services, the Payment Initiation Service (PIS), allows the so-called Third Party Providers (TPP), among others, to access the payment facilities of an account holder’s bank to initiate a SEPA Credit Transfer (SCT), provided the TPP has obtained the account holder’s prior consent.

The consumer stays in full control

By giving this authorization for the payment initiation, the consumer retains full control over his account, which ultimately increases the level of acceptance of the service and accelerates its take-up.

In addition, to further drive the user adoption and to ensure that the user does not drop out after one use, the user experience is essential for such new payment methods with existing alternatives available on the market.

PSD 2 User Experience

After filling the shopping cart, consumers decide to pay for goods or services with their bank account in physical shops or online shops (web or app).

Below we outline two situations and the actions that need to be taken by the consumer.

Scenario 1: E-Commerce

In the e-commerce scenario (online account based payments), the consumer first selects his bank and the corresponding account (in many cases, this is part of the customer onboarding process in the merchant portal).

He then authenticates himself via the Strong Customer Authentication (SCA) means provided by his bank.

After successful authentication, he receives the confirmation of the payment initiation. The merchant receives a payment notification after the successful settlement of the payment when the funds are available on the merchant’s bank account.

In the case of Instant Payments, this happens within a few seconds.

Scenario 2: In Shop

For in-store payments, the payment details of the purchase must be transferred reliably, fast and effortlessly from the shop’s POS system to the customer’s mobile device.

The payment details can be transferred by scanning a QR code, using NFC, Bluetooth or similar technologies at the payment terminal or the merchant’s POS system.

Thus, the consumer experiences the same journey as shopping online with his mobile device, with no extra clicks.

Worldline PSD2 payment initiation service

Moreover, under the PSD2 rules, the user experience may be further enhanced (fewer clicks!) in certain situations, as some SCA exceptions described in the EBA technical standards will apply, e.g. for low-value payments, trusted merchants or recurring payments.

Above all, consumers are looking for a frictionless shopping experience, much like they are used to with traditional card payments: secure and user-friendly payment options that can be used across all sales channels and are supported by their mobile device.

The payment becomes the logical last step of the shopping experience, where they expect the merchant to mainly support with functionalities such as providing product related information or loyalty benefits.

The new account-based payment methods lead to a significant cost reduction for merchants, thanks to the absence of scheme, interchange fees, or percentages with card payments or other domestic payment systems.

With the introduction of instant payments, the settlement is much quicker, and no delays or additional resources are needed to guarantee the receipt of funds for the beneficiary.

Payment service providers can use account-based payments to reach new customer segments in new markets, such as public service payments, high-value payments or business-to-business payments.

This group of beneficiaries is mainly interested in the previously mentioned cost reduction and is willing to motivate the consumer to pay with this new payment method by offering additional benefits such as discounts or a loyalty bonus.

Worldline enables Payment Service Providers and Licensed Third-Party Providers to expand their payment portfolio with these new Payment Initiation Services to offer account based payments as a new payment method to their customers. Customers from anywhere in the EU

We offer an extensive reach to banks across Europe (already over 3,500 in 18 countries). All these banks can receive payment initiation requests from their account holders via a single API, which supports the many flavours of mandatory Strong Customer Authentication (SCA).

Besides the basic payment initiation, our solution also offers supporting functionalities such as payment notification, refunds and reconciliation to easily integrate the new payment method into the current payment options and the underlying logistics and financial administration.

Finally, besides the core payment functions, the solution also supports functionality to support legal obligations, such as merchant onboarding KYC and AML reporting.

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