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PSD2 Introduction

PSD2 is a European regulation for electronic payment services. It seeks to make payments more secure in Europe, boost innovation and help banking services adapt to new technologies. PSD2 is evidence of the increasing importance Application Program Interfaces (APIs) are acquiring in different financial sectors.

Banks have to open their services to other companies, the so-called Third Party Payment Services Providers (TPPs). The TPPs will have to comply with the same rules as traditional payment service providers: registration, authorization and supervision by competent authorities.

The other major development in PSD2 is the introduction of new security requirements, what is known as Strong Customer Authentication (SCA): this involves the use of two authentication factors for bank operations.

PSD2 regulates and harmonizes two types of services:

  • Payment Initiation Services (PIS);
  • Account Information Services (AIS);

Payment Initiation Services (PIS) other providers facilitate the use of online banking to make payments online

Meanwhile Account Information Services (AIS) include the collection and storage of information from a customer’s different bank accounts in a single place.

PSD2 began gradually entering into force on January 2018, however, the biggest regulatory milestone was the authentication and thirty party access requirements entering into force on September 14, 2019.

Banks supported by Fabrick​

Fabrick supports all Italian banks as well as banks in other European countries; this list is constantly evolving. You can view the complete list here

PSD2 products offered by Fabrick​

Fabrick PSD2 Gateway​

Fabrick Gateway is a software solution that allows banks and ASPSPs to be PSD2 compliant, offering them an API interface for TPPs (Third Party Providers) that provides access to the end customer’s current account allowing them to offer innovative and more personalized services and products. This product requires you are a PSD2 TPP (Third Party Provider).

For all the details see the following page: https://www.fabrick.com/psd2/gateway

Fabrick Active Engine​

Fabrick Active Engine allows, thanks to a set of APIs, to easily access the accounts and to initialize payments to all Italian banks and some other European countries. This product requires you are a PSD2 TPP.

For all the details see the following page: https://www.fabrick.com/psd2/active-engine

Fabrick Pass​

The typical three-party scheme, enabled by the PSD2, leaves room for the fourth parties, i.e. all those who do not have financial services as their core business, but want to take advantage of the opportunities offered by open banking. In this case it is not necessary to be a PSD2 TPP because you will take advantage of Fabrick license. In this case you will be defined FPP (Fourth Party Provider) instead of TPP.

For all the details see the following page: https://www.fabrick.com/psd2/fabrick-pass

AIS: Account Information​

Standard​

The standard product allows FPP to have continuous access to its customer's data for the duration of the consent, i.e. for 180 days. Obviously unless the PSU decides to cancel the consent early. The data is updated 4 times a day by Fabrick (see doc scheduler)

On the other hand, an onboarding phase is required for each PSU for regulatory purposes. Onboarding mainly consists of 3 phases: verification and recognition of the PSU, AML questionnaire, account aggregation and authorization towards the FPP (see details in the specific chapter).

The Fabrick Pass product is only available to individuals (physical persons) of age residing in Italy and Spain, (at the time of writing this document, but adding new countries in the future, Portugal and France soon). It is a product constraint that derives from regulatory reasons. The legal framework/transparency has been designed to comply with these countries regulatory environment and applies to users residing in these countries (and not having citizenship in these countries). Therefore, for example the subject residing in San Marino cannot perform the onboarding process.

One Shot​

In this case no onboarding phase is required, but the user will proceed directly to the account aggregation phase.

FPP will have the ability to access account information (details, balances and transactions) for 30 minutes only. It can therefore be imagined as a photo of the account or accounts at a specific moment in time.

Unlike the standard Pass AIS product, there is no regulatory limit on the customer who can therefore have any residence

Smart Scoring​

Smart Scoring is an additional service offered together with the AIs One Shot Pass. Through API, FPP will have the possibility of obtaining a scoring on its customer (natural or legal person)

PIS​

PIS products (Payment Initiation Services) facilitate the use of online banking to make payments via API from a single point regardless of the bank.

Unlike the TPP, for regulatory reasons the FPP cannot make payments from any two IBANs, but one of the two (credit or debit IBAN) must be established a priori (for example during the setup phase and/or updated by the company portal). FPP) and must be made out to FPP itself.

Obviously both products can be enabled.

Pay by Bank​

In this case the FPP is authorized to collect transfers on one or more accounts in its name.

At the moment it is only possible to onboard FPPs based in Italy, France, Spain, Portugal, United Kingdom (of course no limits as regards the debtor)

AIS & PIS Services for corporates​

In this case the FPP is authorized to make transfers from one or more accounts in its name. In addition the AIS service for debtorAccounts is included.

At the moment it is only possible to onboard FPPs based in Italy (of course no limits as ragards the creditor)

Active Engine or Pass?​

Both products take advantage of the PSD2 regulation thus allowing access to bank accounts and the ability to initiate payments. While to use the Active Engine product it is necessary to be a PSD2 TPP (see Prerequisites section of Active Engine) and therefore have its own license, for Fabrick Pass the FPP will exploit the Fabrick license, thus not having to obtain authorizations and request certificates.

This substantial difference obviously means that two products have different characteristics, mainly due to regulatory obligations that Fabrick must comply with.

Below we list the main advantages and disadvantages for both of the products:

Active Engine​

Pros:

  • Fabrick acts only as a technical provider, that is, it will be totally invisible to the end customer who uses TPP's services
  • Total freedom to customize the product, as Fabrick only exposes the API.
  • As regards the PISP world, it is possible to select both the debit and credit IBANs without any limitation
  • It is possible to request the updating of the account data as many times as desired as long as it is the end customer who makes an explicit request (also through the UI of the FPP)

Cons:

  • It is necessary to obtain authorization to be a TPP and request the certificates required by the eIDAS standard - Implementation could take longer se you want to use native API, but Fabrick to reduce this complexity has created a white label solution that speeds up and facilitates development.

Pass​

Pros:

  • It is not required to be a TPP, therefore no authorizations or certificates are required. - Easier implementation as the management of consent and payment authorization flows is managed entirely by the Fabrick application

Cons:

  • The end customer must authorize his operations on the Fabrick application for regulatory obligations. A redirect and redirect back phase is therefore foreseen between UI FPP and UI Fabrick
  • In case of access to the accounts (excluding the one-shot case), an onboarding phase of the end customer on Fabrick is required.
  • Account data is automatically updated by Fabrick 4 times a day, it is not possible to request an explicit update.
  • As regards the PISP world, one of the crediting IBAN and the debit IBAN must be pre-set during the setup phase.

Given the substantial differences in implementation, it is not possible to exploit part of the development in case you want to change the product. This could happen se an FPP subsequently becomes TPP, in which case a new development is recommended. A TPP will in fact have to use its own license and will no longer be able to exploit Fabrick's.