21 Aug 2019 • 6mins •

What’s PSD2? And what’s SCA? Banking is changing and here’s what it means for you and Yolt


Looking for something? Scroll down to find info on:

  • What’s PSD2?
  • What’s SCA?
  • Why is Yolt API-first?
  • How do I add accounts to Yolt after PSD2/SCA?
  • Looking for info on a specific connection? Check our handy status page

Your banks have been reaching out. Your favourite fintechs probably have, too. But even if you haven’t noticed, there are some big banking changes bubbling on the horizon. If you’ve ever moved money from one account to another, sent or received a payment from friends or used an app to manage your money, these changes relate to you.

From making online payments and fraud prevention to new and faster ways to connect (APIs), the upcoming changes are signaling a new era in the financial industry, and they all boil down to, mainly, one thing: an EU Directive named PSD2 (Payment Services Directive 2) and a new requirement within it called SCA (Strong Customer Authentication). These come into full effect this September, but you may have already started noticing changes to your online and mobile banking – and your favourite fintechs. From September, we’ll be continuing to find and add more API connections to Yolt!

Why is this relevant? Because at Yolt, we offer you two ways to add your accounts – APIs, and via your banking credentials. Both ways will still work, but one is the future and is becoming more seamless (APIs) and the other will be less user-friendly.

First things first: What even is PSD2?

PSD2 stands for Payment Services Directive 2: When it comes to this EU Directive, people and their data are at the forefront. PSD2 was created to ensure a standard and secure way for financial institutions and services to connect to one another, to share data, initiate and receive payments, for the benefit of users and the industry more broadly. Together, these make a more innovative and competitive market, and ultimately create more transparency, more choice, more security, and more ease when it comes to managing your finances.

These positive changes are all being driven by a type of technology known as APIs.

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What's an API?
API stands for Application Programming Interface. In its simplest form, an API allows one program to securely exchange information with another, and then authorises that program to perform a specific action. At Yolt, we champion the use of bank connection via APIs, not only as the backbone of PSD2 but as the future of banking – we believe that APIs deliver the fastest and most reliable experience for our users.

That said, all financial institutions that operate in Europe have to participate in PSD2, even if they don’t have APIs ready. In these cases, they can and should allow other banks and Fintech apps access through banking credentials, but these require you to share extra info (SCA).

What’s SCA? It stands for Strong Customer Authentication:
As part of PSD2, banks have to adhere to a new requirement called Strong Customer Authentication (or SCA for short). SCA requires that banks put new measures in place on certain accounts to reduce fraud and protect consumers; this may require you to provide extra info (like a secure key or a One Time Password) every time you login to your online banking or send a payment. It won’t affect your API connections to banks in Yolt, but if you use banking credentials to connect then you’ll need to go through SCA in Yolt, too.

Yolt is API-First: Delivering a fast, reliable and secure experience for our users

From the very beginning Yolt was built ahead of the curve, with the benefits of PSD2 – and APIs - in mind. In fact, we were already working with banking APIs back in 2017. We were a driving force behind Open Banking back in 2018, becoming the first financial Third Party Provider (TPP) to connect all of the high street banks’ current account APIs.

Now, with that expertise in hand, we’re also leading the way with PSD2 - you might even say we’re something of a PSD2 pioneer! As PSD2 comes into effect across Europe, banking APIs will start to become more readily available than ever before. For this reason, wherever possible, we’ll be working API-first to deliver the best experience for our users.

But, of course, being a pioneer means facing the unknown from time to time - no matter how prepared you are. The next stage of PSD2 and SCA come into effect this September, but we’re anticipating that some banks won’t have APIs ready and will use banking credentials with SCA instead, especially when it comes to their savings accounts and credit cards.

We’re working closely with the banks to make sure everything goes as smoothly as possible, but as some banks begin to implement SCA, how you connect your accounts to Yolt may change a little.

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Connecting your banks and adding your accounts to Yolt: Before and after SCA

Up until now, there have been two ways to securely connect your banks and add accounts to Yolt: using banking APIs or by using your banking credentials.

This will still be the case after SCA, but the in-app experience will vary depending on three different scenarios.

1. Scenario 1: Your bank’s APIs are ready and we’re able to connect them. Huzzah! Some (or all) of your accounts may already be connected by banking APIs. SCA is done and dusted seamlessly – you’re ready to enjoy Yolt.

2. Scenario 2: Your bank doesn’t have an API ready quite yet, but you’re able to add your accounts via banking credentials and a bit of extra info (SCA), ie. secure key or One Time Password.

3. Scenario 3: You can’t find your bank or it’s listed as unsupported. This could be for a number of reasons, such as: your bank’s API isn’t ready, there isn’t enough demand for that connection as yet, or the bank has implemented SCA in a way that makes it virtually unusable in Yolt.

Remember - we’re constantly finding and re-connecting new APIs.

As we find and add new APIs, you may see duplicates if your current API connection starts supporting additional accounts that were previously connected via banking credentials. This just means they’re now connected via a fast, reliable and secure API. To merge a duplicated account, just swipe left on the relevant account and tap ‘Merge’ - we’ll guide you through the simple process in app.

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The future of banking is here – and we’re building it with you

From the beginning, Yolt was built with our community at the forefront of everything we do, and this is why we’re excited about delivering the full benefits of PSD2. This is the future of banking, and we’re excited to continue building it with you! Join the Yolt Facebook group to get involved with everything from product sneak peeks to invites to exclusive meetups.

Have a question - about PSD2 or APIs? We’re here to chat! Shoot us a message at hello@yolt.com.