Revisions to the PSD2 regulations, or Payment Services Directive, went into effect recently on 14th September 2019, but are you aware of how it will affect you? Let’s look at its impact on e-commerce business owners and what you need to know.
HMRC announced in February that revisions were coming to the PSD2 regulations, but the changes are now in full swing. While any alterations to your systems are likely to be phased in gradually, you need to understand what is changing and why.
What are the PSD2 regulations?
The PSD2 Regulations are a set of rules that affect all banks and similar institutes throughout the whole EU. Like EORI numbers, PSD2 regulations may be revisited in the event of a no-deal Brexit, but for now, they are in force.
The regulations require all banks and Payment Service Providers (PSPs) to securely share your information with other bodies if you permit them to do so. You may have seen mention through your own bank of Application Program Interfaces or API technology, which specify how two apps interact, open banking and various other terms that they have been updating their architecture to accommodate in recent months.
Not all banks met the deadline for the new regulations, and they have been granted a leeway period. To date, 36 UK banks have successfully introduced PSD2 regulations. If your bank is one of the few who haven’t introduced the new functionality yet, the updates should be made before March 2020.
Why do we need PSD2 regulations?
As an e-commerce entrepreneur, you know better than most that in this increasingly digital age, information sharing between apps is a vital step to seamless accounting and financial processing. The PSD2 regulations allow your apps to speak to each other without needless bridging software or manual porting of data while maintaining a top level of security. Over the last few years, more and more apps have been allowing integration to automate processes – the new regulations merely ensure that it is done safely and securely.
What you need to know about the PSD2 regulations
First and foremost, the increased competition and innovation between the banks should result in more varied and more favourable banking services for small business owners. More functionality that makes the most of easy integrations will occur, alongside more competitive pricing for business banking.
The foremost purpose of the PSD2 regulations is security. You no longer need to give your accounting software your banking login, for example, as with consent, your bank can send the data directly to the app. You can revoke consent at any time and view a list of connected apps via your banking portal.
Not only will your data be more secure, but your integrations will also be more stable and lag times removed.
E-commerce accounting and the Payment Services Directive
While you may have seen the upside of the PSD2 regulations hit already with open banking, you may also have been caught on the hop. The API technology required to create the connection is costly and as such, some apps are not introducing it.
As an e-commerce business owner, the most likely one you could run into is Wave, who have chosen to remove the transaction feed facility to remain legal. If this has affected you, we can move you to Xero without you lifting a finger. Xero is fully PSD2 compliant, so you can make the most of the new functionality straight away.
Guidance for your business
Whether you need help moving to Xero, streamlining your accounting workflow or you are wondering how a new regulation affects your business, we are here to help. As e-commerce specialists, we offer guidance to help scale your business and make the most of the technology available. If you want to discuss how your business to maximise the impact of its technology, get in touch today.
The best time to start is now.