Sepa Payment Account Access

What it is and isn't.

10/17/20244 min read

SPAA stands for SEPA Payment Account Access. It's a scheme developed by the European Payments Council (EPC) that establishes rules and standards for exchanging payment account information between asset holders (typically banks) and asset brokers (such as third-party providers or fintechs).

Why is SPAA Needed?

The SPAA scheme is a crucial development in the European payments landscape for several reasons:

Beyond PSD2: While PSD2 laid the groundwork for Open Banking, SPAA aims to enable further 'premium' services beyond basic regulatory requirements. This allows for more innovative and value-added services in the market.
Harmonization and Interoperability: SPAA ensures harmonization, interoperability, and reachability across Europe for these advanced payment services. This standardization is essential for creating a truly integrated European payments market.
Fair Value Distribution: The scheme allows for a fair distribution of value and risk between different actors in the payment ecosystem. This balance is crucial for fostering innovation while ensuring sustainable business models.
Stepping Stone to Open Finance: SPAA could serve as a bridge towards broader 'open finance' initiatives beyond payments and even 'open data' beyond finance.
Limited Innovation: By providing a framework for premium services, SPAA encourages the development of new financial products and services, addressing the issue of limited innovation under the PSD2 framework.
Lack of Pan-European Payment Method: SPAA combines instant credit transfers with open banking capabilities to contribute to developing a home-grown, pan-European payment method.

Who Stands to Benefit the Most?

A2A Payment Providers / Fintechs:

They gain access to enhanced APIs and premium services beyond PSD2 requirements.
They can develop more innovative and advanced payment services based on SPAA.
They benefit from a standardized framework for accessing account information and initiating payments across Europe.

Incumbent Banks:

SPAA introduces financial incentives for banks to participate in open banking, allowing them to monetize their APIs.
Banks can offer premium API-based services, creating new revenue opportunities.
They can recoup some of their investments in open banking infrastructure.

Merchants:

Through strong customer authentication (SCA), they benefit from reduced costs, increased operational efficiencies, and enhanced security.
New features like Dynamic Recurring Payments (DRP) enable innovative use cases for e-commerce and subscriptions.

End-users (Consumers):

They gain access to more innovative financial products and services.
Enhanced user experiences through features like seamless recurring payments and one-click checkouts.

Potential Products Enabled by SPAA

The SPAA scheme opens up possibilities for a range of innovative products:

Multi-Party Payments: Services facilitating payments to multiple counterparties in a single transaction.
Enhanced IBAN Validation: More robust and real-time IBAN verification services.
Automated Personal Finance Management: Advanced PFM tools with automated transfer capabilities.
Payment Certainty Mechanisms: Services that provide greater assurance on payment completion and finality.
Rich Data Services: Products that leverage enhanced transaction data for business intelligence or consumer insights.

Monetization of Account Information Access

Custodian banks can monetize account information access under the SPAA scheme. This is one of the key features that distinguishes SPAA from PSD2:

Fee-Based Access: The scheme allows asset holders (banks) to expose data and transaction capabilities to asset brokers (third-party providers) for a fee, with the asset owner's (customer's) permission.
Premium Services: Banks can offer 'premium' API-based services beyond basic PSD2 requirements, creating new revenue streams.
Default Business Conditions: The SPAA scheme is expected to include default asset fees for premium assets and API access fees, providing a framework for monetization.
Value-Added Services: Banks can develop and charge for additional services that leverage their data and infrastructure.

Common Misconceptions about SPAA

It's Just an Extension of PSD2
Many mistakenly believe that SPAA is simply an extension of PSD2. While SPAA builds on PSD2's foundation, it goes significantly beyond it. SPAA enables 'premium' or 'value-added' services not part of PSD2's basic regulatory requirements. This scheme aims to foster innovation and create new business opportunities in the open banking ecosystem.
It's Mandatory for Banks
Unlike PSD2, which was a regulatory requirement, SPAA is a voluntary scheme. Banks and other financial institutions can choose whether to participate. This voluntary nature encourages innovation and competition rather than enforcing compliance.
It Only Benefits Fintechs
While fintechs (Asset Brokers) stand to gain from SPAA, it's a misconception that banks (Asset Holders) don't benefit. In fact, SPAA provides a framework for banks to monetize their APIs and recoup some of their investments in open banking infrastructure. This creates a more balanced ecosystem where traditional banks and fintechs can thrive.
It's Only About Payments
Although payments are a significant part of SPAA, the scheme also covers information services. It allows for exchanging various types of financial data, including account information and transaction history. This broader scope opens up possibilities for innovative financial management tools and services.
It's Immediately Operational
Some might assume that SPAA has been fully operational since the first published rulebook. However, it's essential to understand that SPAA is still evolving. The EPC is still taking change requests for possible modifications to the rulebook until February 2, 2024, with further consultations planned. Full implementation and widespread adoption will take time.
It Solves All Open Banking Challenges
While SPAA addresses many of PSD2's limitations, it is not a panacea for all open banking challenges. Issues like consumer trust, data security, and market adoption will continue to require ongoing attention and effort from all stakeholders.
It's Only Relevant for Large Financial Institutions
Some might think SPAA only matters for big banks and established fintechs. In reality, the scheme can benefit a wide range of players in the financial ecosystem, including smaller banks and innovative startups. The standardization and interoperability it promotes can level the playing field for smaller entities.
It's Limited to Euro Transactions
While SPAA is a SEPA initiative, it's not limited to euro transactions. The scheme supports any country's currency participating in SEPA, including Danish kroner (DKK) and British pounds (GBP). This broader currency support enhances its utility for cross-border transactions within Europe.

As we look to the future of European payments, the SEPA Payment Account Access (SPAA) scheme stands as a pivotal development, poised to reshape the landscape of open banking and financial services. While it's not without its challenges and misconceptions, SPAA represents a significant step towards a more innovative, competitive, and integrated European financial ecosystem.

Its success will ultimately depend on the collaborative efforts of banks, fintechs, regulators, and end-users to embrace and leverage its potential. As we move forward, all stakeholders must stay informed, adaptable, and proactive in their approach to SPAA.

The scheme offers a unique opportunity to drive innovation, enhance customer experiences, and create new business models. Those who can navigate its complexities and capitalize on its opportunities will be well-positioned to thrive in the evolving world of Open Finance. As we stand on the brink of this new era, one thing is clear: the future of payments in Europe is open, interconnected, and full of possibilities.