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Awesome post. Kudos for digging deep into an extremely important area of Open Banking / PSD2 that has received very little attention (at least IME). 

Nice post about future plans on realtime payments in USA. I have one question on present status: 

Re. Merchant Mobile Wallet Apps like Starbucks, WalMart. I know if you top up the wallet with Debit Card or Credit Card, the wallet reflects the credit instantly.

Now, is it possible to top up the wallet from checking account - without using Debit Card details? If yes, does the wallet reflect the credit in real time? (For reference, the answer to both questions in India is Yes - via UPI & NetBanking payment methods.) 

Open Banking / PSD2 must be one of the biggest failures of Big Bank lobbying of all times.

On a side note, when can we expect regs in other industries that will require Amazon to share (opt-in) customer data with Walmart, LinkedIn with Twitter, Verizon with AT&T,  ...?

Interesting comment @FinextraMember. 

A couple of your questions can be easily answered on the basis of the prevailing common narrative in the fintech world. Here goes:

1. Fintechs run on VC money, with little or no need to make profits. As long as they can claim to disrupt someone, they're good, as I highlighted in Fintech Shouldn’t Stop Chanting The Disruption Mantra. So they can finance higher credit card benefits despite receving only lower debit interchange fees. I can name a fintech or two in India that finances many benefits despite receiving no interchange fees. As a customer, I call this "VC Subsidy" and my motto is enjoy it while it lasts.
2. High street banks are too slow. No way they will re-register their debit cards to credit cards to earn more interchange fees.  

Now, I have a question related to your question "Why should acquirers and merchants agree to pay more for a card that in reality is a debit card?": Is it really up to them to agree or disagree? Who really decides MDR? Undercutting is so common in competitive industries - like my own, namely, IT products and services. Banking is also a very competitive industry. Why don't we hear about one bank offering a sweeter MDR to some merchant in return for exclusive / higher share of its business?

Got it, thanks...

Not sure why this needs Open Banking. Functionally, I don't see much difference between this method of payment and EBA Clearing's myBank, which I wrote about in 2011.  

Why I Think EBA Clearing's myBank Will Be A Hit

I haven't heard about myBank since then. Looks like my prediction went horribly wrong.

TY for the clarification.

Key is, who is responsible for having the said API in your line "once the bank has an accessible production level PSD2 API"? Is it the said bank itself or some regulator like (gasp!) EU Parliament / ECB that has mandated PSD2?

Kudos for a great article on the mechanism of screen scraping. When I read the first paragraph, I was wondering how scraping can be used because I thought the only difference between Open Banking and PFM apps like MINT launched 10 years ago was a difference in data access mechanism. The last paragraph confirms my belief when it says PSD2 bans screen scraping. I understand there's lack of API but, still, how are banks allowed to use screen scraping when it's banned?

I got a telephone call from someone claiming to be from this company. They asked me, what's the amount of loan you want. I said, I'll only tell that to your website. They said, your application will be rejected on the website, that's why we're calling you on the phone. 

When I bailed out of the online application journey yesterday, I hadn't disclosed anything more than my name, mobile # and email address - not even zip code. Not sure how this company rejects loan applications with just this much info and then says banks are reluctant to give loans.

On a side note, the caller said, even if I proceeded with the rest of the application process on the phone - which I had no intention of doing - I'd still have to cough up the account creation charges I encountered on the website. Sounded a bit extortionate, if you ask me.

We keep hearing "The entire process is seamless and totally paper free" from many companies. So, I thought I'll test drive your application process. I was slightly put off by one too many CAPTCHAs but I nevertheless braved on. Then I reached a screen which said I should pay money for "account creation". Seriously? I hadn't even stated my loan needs. 

Digital doesn't have legacy systems, human intervention, paper, courier, etc. Accordingly, it's supposed to be low cost. Charging a fee for merely creating an account runs totally counter to the basic premise of a digital process.

Needless to say, I bailed out at this stage.