With the EU’s PSD2 (Revised Payment Service Directive) coming into effect in January 2018, European banks will soon be obligated to provide third-parties with access to customer accounts. This means that third-parties will be able to develop their own financial services on top of existing bank infrastructure through open APIs.

The directive will allow bank customers to use third-parties to manage their finances, pay bills and make payments while their funds stay safe inside their current bank accounts. The key benefit to consumers besides convenience will be increased competition within the financial sector – with banks and non-banks competing against each other. Further, while banks currently need to obtain licenses in each country they operate in, under PSD2, third-parties will only need to be licensed in their home country to operate EU-wide. In effect, cutting costs for financial services and further unifying the European financial market, a key goal for the European Commission.

An Ovum report predicts that the largest changes European consumers will see as a result of PSD2 will be the way they pay for goods and services. Instant payments are expected to reach 29% of European B2C online expenditures in 10 years’ time. However, the degree to which instant payments will be adopted by then varies widely across the EU, at 72% in the Netherlands and under 20% in Italy.

Source: Ovum

The growth of ecommerce will be the driver behind instant payment adoption, with the majority of new online transactions set to take place through instant payments because of the added convenience to consumers. Instant payment’s increased share of online transactions will also result in a significant decline in consumers paying with cards when the manual entry of card details is required.

Source: Ovum

Ensuring your ecommerce platform accepts a wide variety of payment methods, including digital wallets and instant payments, will be key to reducing cart abandonment in the coming decade.

Read the full findings of the study on Icon Solutions.