The trouble with payments

Last week four bank experts sat down with Lee Fulmer of IBM to discuss the intended and un-intended consequences of the Payment Services Directive, as part of Finextra ongoing FinextraLive webcast series.

Amongst the 75 minutes of lively chat, our panel grappled with the idea that payments might be more trouble than it's worth for some banks.

Michael Burkie, market development manager, Treasury Services EMEA, at BNYMellon made a point that while transaction fees for payments have plummeted the fixed costs of running a payments business have remained the same.

Burkie goes to wonder whether payments will become a white labelled or outsourced activity, similar to how banks deal with asset services.

James Barclay, VP Treasury Services at JP Morgan commented that the PSD was forcing banks "...to make big changes when payments are not a big priority...banks are concerned with financial stability."

Burkie also warns that the payments innovation of the retail sector (such as Tesco) threaten to overtake banks in the remittance sector.

Tony Richter, head of business development at HSBC added that the PSD "has helped, with non-bank entrants in the market. Knowing that there is a regulation behind that, knowing that that institution has had to jump through hoops to get where they are, gives me a confidence."

IBM's Fulmer reminded that panel that a review of the directive was due in 2012 and that even though the launch date for the PSD was November 1, 2009, the PSD is far from over as more countries move towards compliance.

Simon Newstead, head of Financial Institutions Advisory Group at RBS Global Transaction Services hopes "we can resolve the PSD teething troubles through self-regulation and sensible discussion."