App2app payments burst into Spain

The app2app authentication is being implemented successfully in Spain as online payments are becoming popular due to their speed and simplicity. In this context, TrueLayer processes more than half of the open banking payments nationwide, for companies such as HeyTrade, Revolut and Paysafe.

What is app2app authentication?

App2app authentication for open banking is a faster and easier way to give a third party permission to access your bank details or make a payment on your behalf. Without app2app, a person trying to make an open banking payment on their mobile phone is redirected to a web version from your online banking, where you have to log in by entering a username and password, before you are asked to confirm the payment.

With app2app, the person is automatically redirected to their online banking application, where they can log in biometrically with facial identification or their fingerprint. The app2app processes have been in place in the UK since 2018 and are a major reason why open banking payments in the UK are taking off (with 500% growth in the last year).

What has happened in Spain?

TrueLayer launched its data and payments platform in Spain in 2020, but found that the performance of bank users’ processes lagged behind other European markets. The main reason for this lower performance was the way in which banks had implemented open banking payments, requiring users an additional step to allow access to their account, in addition to the usual usual payment authorization. Also, if you wanted to make an open banking payment in Spain, you had to manually enter your username and password, which made the process slower, more complex and prone to errors.

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In June 2020, the regulator of the PSD2 Directive in Europe, the European Banking Authority (EBA), intervened. They made it clear that there must be parity between the online banking experience that banks offer directly to their customers and the service they provide through the PSD2 APIs. The EBA stated that if banks did not remove obstacles to the open banking experience by April 2021, national regulators should adopt new supervisory measures, including imposing fines.

Banks went to work improving the open banking authentication experience to match that of their own banking applications. All Spanish banks have enabled app2app biometric authentication, which speeds up and facilitates the authentication of a payment or a request for open banking data, and brings the experience in line with that of countries such as the United Kingdom.

What is the impact in Spain?

These processes have been tested for data and payments since February, and in recent months the conversion rates have increased by 10% de mean. Conversion rates for open banking payments now rival those of other payment methods such as credit cards.

What comes next?

Now that usernames and passwords have been replaced by biometric authentication, the goal is to share more good practices with banks in Spain, building on findings in the UK and Europe to further optimize the user experience. in payments. The next country is France, where the regulatory body has established a schedule for banks to offer app2app services.

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