PSD2 impact on commercial cards

4 min READ

Posted 05. Sep 2017
By Vladimir Pajkovski
Vladimir Pajkovski

Vladimir Pajkovski is both product owner and responsible for building Cardlay’s partner network and integrations. Vladimir contributes with experience from the largest Nordic banks as a senior executive

There is almost no global bank located in Europe that is not preparing for a new financial regulation to take place in January 2018 and this is called PSD2. But what about Corporate and Commercial Card issuers? Are they prepared for the possible impact of PSD2 and do they know how can they capitalize on such a great opportunity?

Current Commercial Card payment flow


Future Commercial payment flow under PSD2 (without a need of a card)

PSD2 can have an impact on Card Issuers in several ways

Interchange fees – in addition to legal and compliance regulations to cap interchange fees for private consumers, commercial card transaction fees will most likely be capped in the next 2-3 years. But with clients migrating from cards to account payments, non-debit card payments will clearly be impacted with falling revenues.

Merchants – Both small and large merchants are going to find ways to diversify even more from card acceptance and put more effort on an account-to-account digital offering, where they can promote their brand. But most importantly, faster clearing and settlement of funds will reduce merchants liquidity risk.

Loyalty programs will have to change their model significantly, as card issuers will lose the financial strength to support them. This implies that successful loyalty programs will need to find additional sources of capital and significantly increase investments in BigData and Machine Learning technologies. Due to regulations and Anti-Money Laundering requirements, seasonal gift card schemes will be very restricted.  

Smaller Card issuers currently holding a steady client base below 50,000 cards will find it hard to sustain the cost of maintaining a card program. This can result in either finding a co-branded sponsor for their card program, consolidate with a major player that already handles a large number of card programs, or worst case selling off the program.

Corporate Cards with individual liability may not be considered to be company cards anymore, according to EU payments regulators. Such cards are subject to interchange cap as they have individual liability from the cardholder. Companies that decide not to change their expense policy and accept corporate liability from their employee purchases are going to stop offering payment cards to employees and take advantage of new and cheaper payment possibilities offered under PSD2.

Strong customer authentication – for Commercial cards, a corporation is the cardholder and not a single user. Strong customer authentication verification is specific to cardholder-not-present payments. According to the European Banking Authority, authentication measures require the cardholder to provide something only they would know, like a password, or something only the user possesses, like a PIN, or biometric identification. This is being examined for exemptions of Regulatory Technical Standards (RTS).

How can Global Card issuers capitalize on this opportunity?

Cardlay White label platform offers a possibility for a Top-tier card issuer to consolidate all card scheme in a single platform and be able to introduce new co-branded commercial card programs to market very quickly. Due to PSD2, there is a new opportunity to mitigate the risk of possible client migration from the current method of card payments to the new method of account-to-account (or P2P) payments. With integrating account-to-account transactions into the same customer interface of card transactions, companies and employees will have full visibility and overview of all outgoing payments and corporate purchases. This approach will allow companies to capitalize on Cardlay’s data engine for the enrichment of corporate transaction that is a foundation for automation of business processes. So now because of PDS2, the employee of a company will self-own the valuable process of data enrichment of the transaction, instead of only the transaction provided in the cardholder statement.

And for Issuing banks and card issuers, this process of adding additional services to their product offering is going to benefit corporations as issuers can now own the enriched transactions. This will create revenue streams with a much higher earning potential than existing transaction fees, FX conversion, and accrued interest.   

Cardlay is a single platform for issuing and ordering cards, managing corporate expenses and reclaiming VAT.  It is a cloud based 100% digital platform and we strive for providing full automation of business processes for companies.  Contact us to hear more about partnership opportunities at or visit

About the author

Vladimir Pajkovski

Vladimir Pajkovski is both product owner and responsible for building Cardlay’s partner network and integrations. Vladimir contributes with experience from the largest Nordic banks as a senior executive

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