What has happened?

The European Banking Authority (EBA) has published the Commission's response to its letter of January 2018 on the regulatory technical standards (RTS) on strong customer authentication (SCA) and common and secure communication under PSD2.

What does this mean?

In its letter, the Commission says that the amendments made to the RTS take on board concerns that the EBA and Member State officials expressed at a July 2017 meeting.

As such, the Commission would regard the amendments as a move towards the EBA’s opinion.

"The changes introduced by the Commission were also explained on numerous occasions, whether at meetings of the EBA Task-Force on Payments (TFPS) or in bilateral conversations with the EBA Secretariat," the letter continues.

The letter adds that it is not possible for the EBA or the Commission to anticipate all possible problems with application programming interfaces (APIs), and to specify in the RTS how they have to be addressed.

The Commission and the EBA will therefore have to rely on market players to develop together APIs that work for all sides – banks, third party providers and payments services users.

"The best way in which we can help national supervisors is by supporting this work by market participants, ensuring that they identify and solve problems themselves at an early state and sparing national competent authorities (NCAs) the difficult task of investigating problems with APIs".

The Commission added that this could be much heavier than granting exemptions from having to adapt the online banking interface as a fall-back option for TPPs.

The Commission also believes that NCAs will cope with the workload in respect of assessing corporate payment processes or systems and whether they deliver security levels that are equivalent to those achieved using SCA.

To finish, the Commission remarked that the "differences between EBA and [it] with regard to the RTS were about processes, not the longer term goal that we aim to achieve, namely an EU-wide open banking environment based on highly standardised dedicated interfaces for third-party providers".

Whether the processes become burdensome for the EBA and NCAs will depend on the behaviour of market players.

For more news and analysis that is tailored to you, as well as access to Hogan Lovells' cutting-edge interactive Lawtech tools, register for free on Engage.

You can also keep track of all the Engage content by following our LinkedIn page.