Companies like Google, Apple and Facebook could gain access to consumers' payment information soon, as a consequence of a new European directive designed to increase competition.
Europe prepares directive
Nowadays, banks are still necessary for any payment, but plenty of other parties want to get in on that action, like Google with its Wallet. Facebook, Apple and several other companies are also working on similar functionality or even have it already. The information about payments and therefore consumer purchase behaviour is worth a lot, and Europe is now working on an arrangement for these third party payment service suppliers in a so-called PSD2 (Payment Service Directive II) reform.
The new directive will give third party payment service suppliers, if the account holder agrees, the right to initiate payments through an internet application - while banks will be forced to support this application. Third party payment service suppliers will also have an option to use account information if the account holder agrees to sharing that and similarly, banks will have to allow such access.
As this is part of a European directive, governments will have to turn this into national legislation, but that will only happen once the European Parliament and the Council have both approved the Directive.
More far-reaching impact than ING proposal
Dutch bank ING received far more backlash when it proposed using its clients' bank account information to send them commercial offers if the client agrees. If this directive is approved, it will enable far more than what ING had proposed. "The European Commission has said the consumer is in control and if he wants his information shared with third parties, then the bank simply has to do so", Betaalverening Nederland's Piet Mallekoote said in an interview with Het Financieele Dagblad. Betaalvereniging Nederland defends the interests of all group's with a payment license.
Mallekoote has also immediately warned banks: "If the banking branch sits still and does not strive for innovation, it will become a back office while other companies will control the payment service industry in 10 years' time. You will have multiple parties vying for this market, which will change the existing business models and banks will have to consider that."