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PSD2 and Open Banking in Credits Digital Wallet

As Credits is creating a new fintech product we thought it is a good idea to tell more about the Bank operations and legal regulations behind the services we provide.

In this article, we will explain in short what PSD2 and Open Banking are and their effect on the digital payment industry.

PSD2 (Payment Services Directive 2) was produced by European Banking Authority and came into force in 2018. A similar law called Open Banking was initiated in the UK. These regulations differ slightly but serve the same purpose: to smooth the path for fintech growth and to increase the safety of a client.

PSD2 and Open Banking brought new fundamentals for payment systems in the UK and EU. By changing the rules for service providers, and allowing new fintech players to the scene, the EU and UK were able to facilitate technology implementation in this niche.  

What are PSD2 and Open Banking?

PSD2 and Open Banking are made to improve payment regulation addressing the current market demand and technology state.

What they introduce?

  • Security requirements for electronic payments processing and the protection of consumers' financial data.

  • Recognition and regulation of Third-Party Providers (TPPs) to access and aggregate accounts and provide payment services.

Consequences for industry 

These documents allowed TPPs to enter the payment market, bringing the eCommerce space and payment industry to a different level.

Young fintech startups are overtaking a large share of the Banks’ clients now. Digital-only banks managing money via intelligent software have become a new standard. 

From a technical point of view, Open Banking is at least as safe as online banking. APIs is the technology used for data transfer. 

Security is guaranteed by the law applicable to all payment service providers to ensure strong customer authentication (verification of the identity of both the user and the service).

Payments solutions in Credits Digital Wallet 

Credits is using Open Banking in Digital Bank and is an Account Servicing Payment Service Provider (ASPSP). As such Credits is required to have a PSD2-compliant way to provide Third Party Providers (TPPs) with access to account data and payment functionality. 

Digital Wallet's built-in settings allow:

  1. “Payment Account” that is held in the name of one or more payment services users (customers), which the customer can access online and initiate payments to other third parties, 

  2. Payment service users (customers) access to an online account which could be considered a “Payment Account”,

  3. Outbound electronic payments from a Credits account via APIs which are instructed in CS’s system by a payment service user (customer).

  4. Customers use the payment account to make day-to-day transactions to pay third parties, such as other individuals, their electricity bill, phone bill, etc. 

What does it imply for Credits?

As Account Service Payment Provider Credits is obliged to guarantee the number of essential things to the client to be compliant with the law. 

Among the most important are: 

  • Authentication code 


  • Data exchange

  • PSU (Payment service user) Authentication 

What does it mean to you as a user? 

Our users when working with accounts/cards inside of the Digital Wallet will be able to make payments/transfers without leaving the application. Let's say you are a client of Credits and Barclays. So you can manage your assets in Barclays bank directly from the Bank Credits and vice versa. You will only need to log in to one of the systems through the call window and confirm the required action. For example, you would like to replenish your Credits bank account from the Barclays bank account. So you simply perform the actions described above and your account is topped up.

Future vision

The Credits team behind the Digital Bank will stay very attentive to the clients’ feedback and needs and will be adding new functionalities when there is a request from the client-side. 

As a fintech player we are following up on all legislature updates and initiatives and we believe that modernization of the banking eco-system is happening now. New banking is digital. 

The next release of Credits Digital Wallet is in this month. Stay tuned. 

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