Fintech Law Module A Chapter 3

Question 1

What is the goal of PSD2?

Answer 1

Trying to eliminate bank’s monopoly over customer account information and payment services.

Question 2

What does PISP stand for and what does it do?

Answer 2

Payment initiation service provider - initiates payments

Question 3

What does AISP stand for and what does it do?

Answer 3

Account information service provider - User spending behavior.

Question 4

What are the key issues between PSD2 and GDPR? Name 4.

Answer 4

1. Whether explicit consent means the same under PSD2 as it means under GDPR.
2. Legal basis for the processing of personal data of the recipient of a payment - silent-party personal data.
3. Scope of prohibition of the use of personal data for purposes other than performing the specified service.
4. The basis on which a bank may opt not to provide a customer’s chosen service provider access to transaction data out of fear of breaching the customer’s privacy rights under GDPR.

Question 5

In which Article of PSD2 is explicit consent covered?

Answer 5

Article 94 (2) PSD2

Question 6

Explain what the explicit consent under Article 94 (2) PDS2 means

Answer 6

Explicit consent under article 94 (2) PSD2 is an additional contractual consent and a separate concept to explicit consent under GDPR.

Question 7

What is SCA and when does it come into force? Name 3 situations

Answer 7

SCA is Strong Customer Authentication

1. Whenever a user access its payments account
2. Whenever a user initiates electronic payment
3. Whenever a user carries out any action through a remote channel which may imply a risk of payment fraud or other abuses.

Question 8

What are the advantages of open banking? Name 3.

Answer 8

1. Creation of more open and competitive banking industry
2. Creation of more customer tailored products
3. Banks can extend their API development to offer a new set of services such as specialised fraud monitoring services

Question 9

What are the disadvantages of open banking? Name 3

Answer 9

1. Transfer of banking data to third-party developers could raise concerns regarding date use, especially when this data is monetised through onward sales.
2. With the rise of cyber threats, and when software is free, it is very important to first check the authenticy of the software before connecting it to banking information.
3. With multiple service providers, there will come a point of saturation, where banks and financial institutions will have to introduce innovative and unique services as a differentiating factor from competitors.