The payments landscape is characterised by profound fragmentation, getting worse everyday. In payments, especially in Europe, regulators and banks have successfully tried to prevent fragmentation for decades. But the spirit is out of the bottle, Pandora’s box has opened: fragmentation is a given, whether we on a personal basis like it or not. So lets get over it and try to establish means to help both payer and payee to mitigate fragmentation.
In this fragmented payments environment all players are trying to establish footholds and strongholds while the payments landscape it self is changing from a traditional “4 corner model” to a multi-layered constantly changing multiform which is hardly possible to graphically represent without omitting crucial aspects.
One of the side effects of the fragmentation of the payments landscape is that individual payers are forced to create little “pots” containing value all over the place (NB the term “value” is chosen deliberately at this point, forage for an other post). For the incumbent players, the banks, who are looking to establish a solid position in the new landscape the (re)use of the bank account as single “pot” for various payment products and services, including those offered by third parties, could be a strategic option to help reduce fragmentation for their clients at the “money -safe- keeping” level.
NB An other way to reduce the agony over having money and values spread over multiple pots for both payers and payees is what I would call the “melting pot” approach where a player is able to aggregate the information of the pots at various payment products and the possibility to push money back and forth between these pots. This is also forage for a future post.
How can banks open up the bank account to third parties? API’s have often been mentioned as a possibility. An very elaborate example of this approach is Mastercard’s Masterpass initiative. (See MasterCard’s MasterPass Aims To Sidestep The Mobile Payments Mess )
I was intrigued though by the possibility given by Sofort Banking to reuse iDeal. Some banks, like ING Bank, allow the Sofortuberwisung to use the iDeal interface for on-line payments via on-line banking. RABObank has blocked this route. If banks would be able to have EBA Clearing’s My Bank or iDeal’s approach to open up to third parties and if they could enhance this service with e-mandates and authentication maybe the banks could (together) build up a strong hold?
In January 2013 the ECB published a consultation paper on Payment Account Access Services as a reaction to the Sofort banking case.
Payment Account Access Services (PAAS, some write XS2A) is part of the Payment Service Directive 2 draft.