Mastercard extends secure Open Banking agreements

Mastercard has announced partnerships with three FinTech firms to extend its secure Open Banking system.

The card issuing and payments giant said the agreements struck with business payments provider Modulr, digital banking platform Aion and e-money firm DiPocket, to use Microsoft Open Banking Protect, will help the organisations safeguard customer accounts from compromised or unauthorised third-party providers (TPPs).

The second Payment Services Directive (PSD2) legislation in Europe allows TPPs to access bank accounts, with a customer’s consent, to provide new products and services; however, the account holding institutions remain liable for the funds.

It is therefore important for financial institutions quickly to verify open banking requests from TPPs, with whom they may have no prior relationship, and that robust systems are in place to detect warning signs of potential fraud early on.

Mastercard Open Banking Protect is designed to improve the ability to combat fraud in Open Banking and increase the confidence of financial institutions when approving third-party requests.

The product involves two key services: licence and certificate validations - verification of TPP certification and registration status against all relevant directories - and fraud monitoring - which uses network-level data on a given TPP to spot trends and changes to regular activities through behaviour monitoring in order to stop potentially fraudulent requests.

Jim Wadsworth, senior vice president of Open Banking at Mastercard, said: “While there is strong momentum in the Open Banking ecosystem, financial institutions, TPPs and users continue to be concerned about the potential for fraud and security breaches.

“Collaboration is key to building a resilient open banking market, and we are delighted that Aion, DiPocket, and Modulr are the latest in a series of partnerships for Mastercard as we work to create an even safer system for all participants.”

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