How do mandate management and co-signing look in the context of the new PSD2 XS2A channel?
Following our previous blog post on the current status of co-signing, we are looking towards the future. Where do PSD2 and multisignature meet?
We can identify the following PSD2 XS2A and multisignature ‘intersections’:
From a bank payments operations / back end perspective, PSD2 XS2A is just another payments input channel. As such, a bank supporting MultiSignature MultiChannel could accept insufficiently signed payment orders, transmitted via this new XS2A channel.
This XS2A payment order ends up in queue. A process of collecting the missing signatures is instigated. I.e. the fact that such payment is insufficiently signed will not lead to a reject (at least not immediately). It will though follow exactly the same flow and business logic as an insufficiently signed payment initiated via another (proprietary) input channel.
This XS2A introduced pending payment could now be (co-)signed in a bank proprietary channel (supporting the payments co-signing functionality).
Example: husband booking a trip online, paying via a new ‘XS2A’ payment method (offered by a TPP), debiting their joint current account, but the amount requires his wife – also accountholder of this account - to co-sign. Their bank supports MultiSignature MultiChannel, so the wife – on business travel – is notified on her mobile (banking app), ‘inviting’ her to co-sign the pending payment. She can do so within this bank’s proprietary mobile banking app.
- Going one step further, we can imagine that TPP’s might also envision providing co-signing functionalities in their APP:
Offer it alongside the payment initiation functionality. We think in particular of banks (or even non-banks) that envision offering multibanking to Corporates. As explained above, in the non-retail world, it is common practice that high value payments are to be signed by more than one person. Offering multibanking, from a UX perspective, would be opportune if all necessary signatures could be delivered from out of the same application (embedded, and if not, redirected). Meaning, it would avoid the co-signer(s) yet having to use the (debtor) bank’s proprietary online channel to verify if there are payments pending signature(s), and the case being, co-sign in that debtor bank (ASPSP) proprietary channel(s).
Obviously, the ASPSP must then include the PSD2 XS2A channel in question (at least for that TPP) in the list of channels via which additional signatures can be collected. In addition, the interface between the TPP and the bank is to support the related ‘messaging’/APIs (More on that in the next blog post).
One could also imagine TPPs/Fintechs specifically offering co-signing functionalities as such: co-signing of payments and/or other transactions and documents for instance. Here we mean in fact TPPs that not necessarily offer payment initiation services themselves.
They offer possibilities to (co-)sign payments, which were initiated either in another TPP-XS2A channel, or even, why not, within a bank proprietary channel. These ‘TPP’s should also be registered in the ASPSP (debtor bank)s MSMC system as a channel via which signatures can be collected.
We can also expect TPPs offering mandate management services alongside their account information / payment initiation services. Mandate management is typically a value added service that could be added to a multibanking app for corporates.
This would also satisfy the need of non-retail customers that do maintain their (payment) mandates themselves. These can be corporates whose ERP/accounting package does not offer a satisfactory mandate management, or, smaller companies not using a fully-fledged ERP system. They could be interested to pay their invoices, using one payment method, one TPP, which includes a module in which the customer can define and set up payment validation mandates.
Hopefully you have a better view by now on how PSD2 could fit into the multisignature story. This brings us the final chapter in this blog series: The aggregator's role in this story. We dive into this final chapter in the next blog post.
Do you want to learn more about managing co-signing for corporate payments? Then download our in depth white paper below: