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Payments players believe the European Payments Council’s (EPC) SEPA Payment Account Access (SPAA) scheme should be viewed as a ramp-up towards compliance with the proposed Financial Data Access (FiDA) framework.
Speaking during a panel at the Open Banking Expo (OBE) 2024, Louise Beaumont, who leads Mastercard’s global open banking and open finance engagement, said: “We’re on the path to FiDA, we’re on the path to open finance and getting open banking to be commercially viable is a key step in that path.”
Beaumont was speaking on the "SPAA: Unlocking commercial Open Banking within European payments" panel, and continued that she sees the scheme as “pre-compliance ahead of FiDA”.
SPAA is a scheme that covers the set of rules, practices and standards that will allow the exchange of payment accounts-related data and facilitates the initiation of payment transactions in the context of "value-added" services provided by asset holders.
In this context, asset holders are account servicing payment service providers (ASPSPs) to asset brokers, which are third-party providers such as payment initiation service providers (PISPs) and account information service providers (AISPs).
The adherence process for SPAA opened in December 2023 and the scheme builds on investments made under the revised Payment Services Directive (PSD2) and is collaboratively developed by the retail payment industry, end-users and EU institutions, having first been conceptualised in 2022.
It enables premium payment services with harmonisation, interoperability and broad reach across Europe, and asset holders can share information and transactions with asset brokers for a fee, with the asset owner's consent.
Incorporating input from European standardisation initiatives, the EPC and stakeholders involved hope that it could serve as a stepping stone toward open finance and open data beyond the financial sector.
According to Beaumont, there are a couple of imperatives to be considered with SPAA, such as the competitive angle, rather than simply being told what to do via regulation. “We are all in this to make money, and we have to learn how to make money in the open environment.”
She said that payments players need to accept fundamental issues, such as consumers having a right to get hold of their data and use it in ways that they want to use it. “If you accept that, you’ve also got to accept that a data sharing economy is a building block for our commercial future profitability.
“If consumers are going to get what they need and want from this, we need to find a way to commercialise it in a way that works for our businesses.”
In this regard, she said that SPAA provides a way for firms to learn, and can build on the SPAA model, rather than having multiple bilateral agreements.
“There is a baseline to work from that is really strong,” she said.
Building on PSD2
Ultimately, SPAA exists to yield commercial success from what PSD2 laid the foundation for.
PSD2 has not been a cash-in for banks, which largely see it as a compliance requirement they have to adhere to.
SPAA is supposed to create opportunities and incentivise displeased banks that have been reluctant to get on board with the open banking requirements set out in PSD2.
According to Giorgio Andreoli, director general at the EPC, despite the investments made by banks, the return on investment for PSD2 has been “very miserable”.
This was the trigger point for SPAA’s creation, which Andreoli said came from the “clear need for a scheme”.
“This was needed to secure a fair distribution of value and risk, and why is that? Because there is no such thing as a free lunch,” he said. “If you ask the banks to realise something for free, you probably get something proportionate to that,” he said.
Robert Sullivan, public policy and strategy director at Token.io, expressed enthusiasm for the scheme, noting that “in the time the UK has been talking about a premium VRPs [variable recurring payments] scheme, Europe has gone ahead and built a premium open banking scheme”.
Sullivan said that the SPAA scheme has “cracked the problem” regarding commercial viability due to its “pragmatic approach”, which is compliant with competition law, and because it has ensured both sides of the market are on side to provide a “very competitive set of tariffs for open banking”.
He added that SPAA shows a way forward to the long-term regulatory framework, noting again that the EU has “pulled ahead” of the UK with its PSD3 proposal, which was released at the same time as the FiDA proposal.
“PSD3 has been clear that they will maintain a mandatory free baseline of open banking functionalities, but SPAA has shown a way that you can have premium functionality that sits alongside that and compliments that functionality.”
Success remains to be seen…
Despite the hype surrounding SPAA, from both fintechs and banks, there is still a wait for it to actually take off.
The scheme has been written up and agreed by various stakeholders in the ecosystem, but the jump is yet to be made, despite firms such as TrueLayer, Token and Tink having signed up.
Andreoli was wary of criticising asset holders or banks for their lack of participation in the scheme officially. Rather, he said that lower uptake should be expected, at least for now.
“Banks are typically much bigger than TPPs [third-party providers], and their budgeting process is much more cumbersome,” he said. “It takes more time and the cycle is slower.”
He said that EPC is expecting “much more action next year”, due to the budgeting cycle, with many more banks planning for implementation by 2026.
When asked by the moderator about the timeline, Ghela Boskovich, head of Europe at the Financial Data and Technology Association, explained that there are two stages, and that there is a “desire” for the initial technical pilot to “actually start this year”.
“We’re still challenged in terms of how to coordinate some of the participants,” she said.
Then, there is a second stage of the pilot that Boskovich said is “a bit more robust”, which is about testing the commercial model itself.
“In 2025, we will be looking at a start date …Q2, Q3 are desired start dates.”
“Ideally, by the end of next year, we have something that could go into production,” she said. “This would be able to be more widely adopted across the market.”
During the panel, it was suggested that SPAA could be key in “forging the path” towards the FiDA framework, by creating the commercial foundations for data sharing between banks and third-party providers that goes beyond the obligations that were created by PSD2.
Unlike PSD2, banks can price in compensation for open finance data, which could be crucial for building up incentives to provide ease of access to fintechs that have been able to gather open banking data for free thus far.
According to Boskovich, it presents the “initiating point” that the payments ecosystem can look to in building open finance “in a more commercial way”.
This does not take away from the fact that these forms of data sharing will be mandated by FiDA, she acknowledged. “But how do you actually bring parties together to build a really well oiled, well functioning scheme that every participant in the value chain has the incentive to be active in?”
“SPAA’s not necessarily FiDA, but it is something that can be picked up and replicated,” she suggested. “It serves as a timely starting point to inform how other use cases for financial data verticals can be delivered in a commercial manner.”
Boskovich suggested that this is a “scheme in a box” that firms will be able to customise for their “bespoke needs”, whether credit, insurance, investments or pensions.
“We’ve got this baked in, we understand what the liability model is, we understand the mutual actors' contributions, we understand what those risks are and we’ve understood what that looks like in the commercial space both from the adoption perspective as well as the delivery,” she said.
