‘It takes Two-To-Tango’, post-PSD2 in Europe. API/EMI Operators, rush to the floor!


Fintech companies will get enough opportunities to do a ‘double somersault in celebration’ as their potential for tapping business will escalate with the market boom expected to open all across Europe, as the newly designed PSD-2 payment directive by the States will be put into effect by 2018.

Fintech companies will serve as a kind of ‘front-end’ office for banks and financial entities, while the actual banking and similar operations shall be relegated to a ‘back office’ environment, away from customer spotlights.

According to Maxim B. Ivanchenko, Advapay ОÜ, Canopus IT, a leading Fintech expert, “Both types of structures have a right to exist and should add to each other’s functionality. Payment companies, being the partners of banks, a front-end of some kind, are more mobile and flexible and less regulated. They have to considerably change the landscape of the modern payment system”

Between API and EMI, the differences shall be minor, perhaps in the rate structure of the licensing norms. The demand for authorised capital for EMI shall be EUR 350,000 compared to that corresponding investment by API at EUR 125,000.

“In all other aspects both financial entities will be like very much the same. One cannot see API/EMI entities as ‘alternatives to banks’ in this expanded milieu.”, says the expert.

After PSD2, all European banks will have to provide open API and already several banners have adjusted their profile and operations to such an oncoming regime by the Union. Replete with hesitation from the bank’s end, such a collaboration with Payment Solution Providers are seen as an additional security risk. However, over time, the apprehensions will be removed as security measures will be integrated to control and cover risks through legislative norms.

With the arrival of PSD2 by Jan 2018, Fintech companies see it as an immense opportunity to use this licensed payment system for this newborn instrument right across Europe in one big clean sweep of business transactions. With the opening of the market, there will be a kind of gold-rush among API/EMI operators.

Right now, several Fintech companies are applying for licenses for the Authorised Payment Institution PayAlly operations. The availability of such a tool will considerably broaden business possibilities for Fintech players.

Incubation costs of an API/EMI start-up is considerably lower than that for traditional banks. In contrast, however, such companies may render their customers many of the same financial services which banks do offer – bank issue and service payment cards, perform Internet-acquiring, make SEPA/SWIFT payments, convert currencies, etc. They are not strictly regulated and in many cases can replace or complement traditional bank structures. This could prove an advantage to the newcomers.


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