27 March 2024

EPC - Morley: Creating a sustainable pan-European payment method through SPAA

The SEPA Payment Account Access (SPAA) scheme is the final piece of the puzzle, enabling a commercial model for open banking and introducing additional features beyond the revised Payment Services Directive (PSD2).

The building blocks of an open, pan-European payment method are in place: SEPA Instant Credit Transfers (SCT Inst) and open banking to turn them into a payment method. We wanted to know more about the first SPAA scheme participant, TrueLayer, so we interviewed EU CEO and General Manager, Joe Morley.

The ‘open banking’ regulated through PSD2 has not been considered a complete success. Could you tell us what you think did and didn’t work well with the open banking regulation?

Open banking in PSD2 has been a net positive: it allowed open-banking providers to come to market at low cost and develop new payment methods and data services. While initially associated more with data services like aggregating account information, the ability to initiate payments has quickly proven to be one of the most impactful applications.

There’s huge demand for alternative payment methods from merchants in particular. Merchants have seen service charges paid to card schemes increase by eight hundred and seventy-six million euros between 2015 and 2020 – and they are still increasing¹.

However, it has had a few shortcomings, some of which the EU is addressing through the Payment Services Regulation. For example, the lack of harmonisation and a fragmented implementation of Application Programming Interface (API) standards across providers and Member States.

We also understand that the majority of banks saw open banking purely as a compliance requirement. This has limited the appetite for doing much more beyond that baseline.

How do you think the open banking market will benefit from the SPAA scheme?

Put simply, SPAA introduces financial incentives for banks to participate in open banking and help it grow. We think it will breathe new life into the European open banking ecosystem.

The commercial model will allow banks to monetise APIs and to help develop the next generation of digitally native, account-to-account payment services — all in partnership with fintechs and other payment service providers (PSPs).

SPAA will be a much-needed complement to regulation and will help drive the adoption of instant, open, account-to-account payments....

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