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Apigee Announces APIs that Allow EU Financial Industries to Comply with PSD2

By Christopher Mohr
May 25, 2016

Apigee recently announced the arrival of its Open Banking APIx designed to meet the requirements of the European Commission’s (EC) latest payment services directive, PSD2. The new API will allow financial institutions to comply with the directive, which includes the requirement that they make their digital environments accessible to third-party developers.

San Jose, California-based Apigee Corporation facilitates the digitization of business through APIs for the retail, healthcare, telecom, financial, government, and entertainment sectors. It has an impressive list of customers including Adobe, AT&T, eBay, Humana, ITV, Orange, Staples, Ticketmaster, and Walgreen’s.

The EC first issued a payment services directive (PSD) back in 2007 to create a system that made payments between EU member countries as easy as payments done within an EU member’s borders. It created a uniform set of regulations that all EU payment service businesses had to follow as well as the requirement that terms and conditions be clearly defined before and after a payment is made. It was also designed to make the overall payment process more efficient.

PSD2 became necessary in part because of the expansion of payment initiation services (PIS) within the EU. Such services, according to the European Payment Institutions Federation (EPIF) can be offered by banks or by a third-party company. They allow payments to be made directly from bank accounts and give customers a convenient, yet inexpensive alternative for making payments.

This goes hand-in-hand with the concept of open banking. If you are going to make the process of electronic payments easier within the EU, then policies must support not only open source computing, but also opening up the digital banking system to third-party developers. As expected, this raised concerns about security from banks, but such concerns have done little, if anything to stop the growth of the PIS industry in Europe.

Another concern the banking industry has is that it faces competition from the PIS industry, since the barriers to entering the market have been lowered. With open banking all but fait accompli in the EU, the banking industry doesn’t have many options other than to deal with it. Fortunately, a set of APIs will allow these institutions to comply with PSD2 without the headache that comes with developing the software needed to support it in house.

Edited by Stefania Viscusi

Contributing Writer

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