DOI QR코드

DOI QR Code

Reconnecting the Dots for the Payment Service Directive 2 - Compatible Asian Financial Network

  • Received : 2019.03.08
  • Accepted : 2019.08.26
  • Published : 2019.09.30

Abstract

Unlike the popular belief, digital transformation mainly gets stymied by legal and regulatory issues related with legacy institutions in Asia rather than technical difficulties. The real challenges triggered by the PSD2 (Payment Services Directive 2) are how the region would overcome the overly fragmented, centralized, and hierarchical legacy framework to allow necessary changes to respond to the digital single market initiatives as promulgated by the European counterpart. The PSD2 is expected to bring about substantial changes in the payment ecosystem by allowing payment service providers to access customers' accounts and transactions information via API that have been traditionally controlled by banks. This paper suggests an incentive-compatible mechanism design for open collaboration among legacy institutions in the region to help them adapt to the PSD2. As evidenced by case studies in Korea, the Asian equivalent of PSD2 can be implemented and further expanded to create region-wide PCS (payment-clearing-settlement) network by reconnecting the dots of legacy infrastructures. These decentralized, diverse, small payment networks can be further combined with the expanded RTGS-CDS platform to evolve into the next phase of Asian Financial Network.

Keywords

References

  1. Asian Development Bank (ADB). 2014. Basic Principles on Establishing a Regional Settlement Intermediary and Next Steps Forward: Cross-Border Settlement Infrastructure Forum. Mandaluyong City: ADB.
  2. Asian Development Bank (ADB). 2016. Creating a Regional Settlement Intermediary in ASEAN+3: Cross-Border Settlement Infrastructure Forum. Technical Assistance Report, no. 50055-001. (accessed February 20, 2019)
  3. Bank of Japan. 2016. Payment and Settlement Systems Report. Reports and Research Papers. (accessed February 5, 2019)
  4. Cho, S. 2017. "UK Introduction of Open Banking Enhanced Data Protection Than EU," Hana Finance Focus, Finance Management Brief, vol. 7, no. 25, pp. 10-11. Seoul: Hana Institute of Finance.
  5. Choi, G., Park, S. and Y. Ko. 2016. "Small-sum Money Transfer and its Operations" in Korea. Internal Report. KIF-Ministry of Strategy and Finance.
  6. Choi, G., Park, S. and Y. Ko. 2017. Digital Single Market and the Global Financial Stability. KIF Working Paper, no. 2017-06. Seoul: Korea Institute of Finance.
  7. Choi, G., Park, S. and Y. Ko. 2018. Risk Management in a Network Environment. Medium. (accessed February 5, 2019)
  8. Choi, K. and J. Lee. 2018. "Analysis of the Impact of the European Union's Implementation of PSD2 on the Financial Sector," Payment and Information Technology, no. 69, pp. 1-29. Seoul: Korea Financial Telecommunications & Clearings Institute.
  9. Consumer Financial Protection Bureau. 2016. Promoting Consumer-Friendly Innovation. Project Catalyst Report. Washington, DC: CFPB. (accessed February 21, 2019)
  10. Deutsche Bank. 2016. Payment Service Directive 2: Directive on Payment Service in the Internal Market. White Paper, no. 2015/2366. (accessed February 5, 2019)
  11. Eisenach, J. and B. Soria. 2016. A New Regulatory Framework for the Digital Ecosystem. London: GSM Association. (accessed February 5, 2019)
  12. European Commission. 2015. Payment Services (PSD2) - Directive (EU) 2015/2366. (accessed February 5, 2019)
  13. Fritsch, P., Marechal, O. and A. Christov. 2018. The Revised Payment Service Directive (PSD2): What You Need to Know. Ernst & Young. (accessed February 20, 2019)
  14. Graubins, J. 2016. PSD2 Explained in 3 Simple Gifs. Medium. (accessed February 5, 2019)
  15. HM Treasury. 2015. Call for Evidence on Data Sharing and Open Data in Banking. (accessed February 5, 2019)
  16. Kim, K., Lee, D. and S. Lee. 2014. Payment Service and Policy Tasks of Domestic and Foreign Non-financial Enterprises. Bank of Korea. Payment and Settlement Research Paper, no. 2014-6. (accessed February 5, 2019)
  17. Lane, K. 2017. Examples of the OpenAPI Specification Used for Government APIs. DZone. (accessedFebruary 5, 2019)
  18. Lee, B. 2014. Establishment of International Securities Settlement Infrastructure in ASEAN + 3 Region-Discussions and Tasks. Bank of Korea. Payment and Settlement Research Paper, no. 2014-7. (accessed February 5, 2019)
  19. Lee, J. E. 2015. "Trends and Implications for the Establishment of Open API in Foreign Financial Corporations," Payment and Information Technology, no. 62, pp. 1-27. Seoul: Korea Financial Telecommunications & Clearings Institute.
  20. Lee, K., Seo, T., Cho, M. and G. Kim. 2017. Analysis of Domestic and Foreign Fintech. Issue Monitor, no. 71. Regulation Trends. KPMG Economic Research Institute. (accessed February 5, 2019)
  21. Mahowald, R., Perry, R., Casemore, B. and B. McGrath. 2016. Cloud Going Mainstream: All Are Trying. Some Are Benefiting; Few Are Maximizing Value. IDC White Paper, no. US41685416. Framingham: International Data Corporation.
  22. Mehrotra, M. 2016. Digital Era for ASEAN Conglomerates: Hype or Reality? Monitor Deloitte. (accessed February 5, 2019)
  23. Pollari, I. and A. Ruddenklau. 2019. The Pulse of Fintech 2018: Biannual Global Analysis of Investment in Fintech. KPMG International Cooperative. (accessed February 5, 2019)
  24. Roules, D., Warren, S. and Z. Zhu. 2017. "What Are the Implications of the GDPR in Asia Pacific?" Squire Patton Boggs. (accessed February 5, 2019)
  25. Sandrock, J. and A. Firnges. 2016. The Strategic Implications of PSD2 for Europe's Banks. PwC. (accessed February 5, 2019)
  26. Sibois, A. 2017. EU Data Privacy Laws Will Hit Asia - Marketers Need to Be Ready for Them. Mumbrella Asia. (accessed February 5, 2019)
  27. Snoek, J. 2018. Quick PSD2 Recap: What - When - Who - Where? The Paypers. (accessed February 5, 2019)
  28. Tirole, J. and J. Rochet. 2003. "Platform Competition in Two-sided Markets," Journal of the European Economic Association, vol. 1, no. 4, pp. 990-1029. https://doi.org/10.1162/154247603322493212
  29. Tomlinson, N., Robinson, M. and M. Doyle. 2017. How to Flourish in an Uncertain Future: Open Banking. Deloitte. (accessed February 5, 2019)
  30. Visser, S. 2017. Fintech Year in Review: What We Saw and Where We're Going. IBM. (accessed February 5, 2019)