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The European Third Party Providers Association (ETPPA) has published a new EU-wide registry of obstacles compiled by third party providers (TPPs), which highlights the many problems experienced with application programming interfaces (APIs).
The registry documents issues relating to so-called dedicated interfaces, which were already recognised as obstacles by the European Banking Authority (EBA) in June 2020.
The idea behind this public registry is to increase awareness of obstacles and ultimately lead to their resolution and proper implementation of APIs under the revised Payment Services Directive (PSD2) by banks across Europe.
“Following more than three years since the introduction of PSD2 APIs, we still don’t see a successful and coherent implementation of PSD2 that fintechs can succeed on and that payment service users can rely on,” the trade association complained.
The public registry aims to contribute to the fruition and full implementation of PSD2 by disclosing these obstacles, while putting additional pressure for their much needed removal, said the ETPPA.
"We want to give banks the opportunity to solve this without any naming and shaming. But we have been waiting for years already, so if we can’t see any progress, we will not hold back for much longer and publish who the main culprits are," Ralf Ohlhausen, chair of the ETPPA, told VIXIO.
The hope now is that banks consult the registry, acknowledging and address these obstacles, while national competent authorities consult the registry and request evidence of non-compliance that can form the basis for investigating a bank's dedicated interface.
It is also hoped that the EBA will use the registry to see where national competent authorities are failing to achieve compliance.
"We've collected this data for some time now,” said Ohlhausen. “Many of our member TPPs have had similar, private lists for a while and shared them with the banks concerned and their regulators, but not with other competing TPPs.”
Yet, by coming together, he said, the ETPPA is now orchestrating a joint list. “We would like to show the overall extent of the problem and disclose that to all the relevant authorities."
Complaints in the registry vary. For example, one entry from a Polish TPP says that payments were processed even when there were insufficient funds in the account. Instead of being rejected, transactions were being marked successful. This means a sufficiency of funds check is not being immediately done on payments affected by cut-off times.
Other obstacles that come up relate to needing more than one form of strong customer authentication, with users being redirected first to the web-browser, despite the bank having an authentication app in their own channel.
API problems are nothing new to the EU. The EBA, European Commission and national regulators have all expressed concerns about the status quo, and the EBA has been one of the most vocal in expressing regret that it did not work on an API standard when the PSD2 and its regulatory technical standards were developed.
"Even though the EBA has been warning about obstacles since June 2020, not much work has been done to take action,” said Ohlhausen. “National competent authorities aren't bringing about change, and the EBA can't force them to be tough.”
Meanwhile, he warned that the banks are not fixing these problems of their own volition. “By making this information more public, we hope to increase the pressure, and hopefully regulators will start to enforce compliance."
