EU Data changes bring new compliance activity for some AUS bank feeds
What is the open banking initiative and PSD2?
New regulations overseas are part of sweeping reforms to banking and payments. In Europe this is known as PSD2, and more commonly in the UK as Open Banking.
The UK’s Open Banking initiative was the result of concern about how poorly a small number of large banks were serving the financial needs of the vast majority of consumer and business customers in the UK.
The Competition and Markets Authority found that a lack of new products and barriers to switching meant that customers were over-paying for credit and being under-rewarded for holding deposits. And options for moving money – making and receiving payments – remained limited and costly.
Across Europe, via the European Banking Authority’s PSD2 (The Second Payment Services Directive) regulation, raised similar concerns and set out to address these by mandating that banks and payment providers open up their data to third parties.
How does this affect AU businesses?
Under the new EU requirements around strong customer authentication, users are required to re-authenticate the bank connection every 90 days.
This ensures that there is continual authorisation for third party providers like Xero and other accounting platforms to access customers’ financial information.
A Spokesperson for Xero contacted by Camphin Boston has confirmed that these new measures internationally have implications for AU based businesses where those business utilise EU based financial products or providers.
By law, everyone with a feed connected through Open Banking will have to do this. This process should be as simple as re-entering online banking credentials, and shouldn't take longer than a few minutes.
Despite the ease of maintaining the bank feeds ongoing under these changes, there has been a general recognition in the industry that the 90 day rule is an inconvenience and there have been significant lobbying efforts to get it turned around. At this stage that looks like it will happen, but may need legislation to be implemented so might take a while to change.
Banks affected by the new requirement:
The banks and financial institutions that Camphin Boston is immediately aware of being affected in Australia by this change are:
ING
American Express
Citibank
Mastercard
Visa
What next?
If you have recently seen a prompt on your Xero dashboard that your bank feeds will need to be reconnected by 17th August 2021 this mean you will may be required to renew your bank feeds.
If you would like assistance in ensuring your bank feeds remain active, or to clarify the changes please don’t hesitate to contact our advisory team and we can assist.
